Guidance for Grants and Agreements
| Court | Management And Budget Office |
| Citation | 88 FR 57750 |
| Published date | 23 August 2023 |
| Record Number | 2023-17724 |
| Section | Rules and Regulations |
Federal Register, Volume 88 Issue 162 (Wednesday, August 23, 2023)
[Federal Register Volume 88, Number 162 (Wednesday, August 23, 2023)]
[Rules and Regulations]
[Pages 57750-57790]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-17724]
[[Page 57749]]
Vol. 88
Wednesday,
No. 162
August 23, 2023
Part III Office of Management and Budget-----------------------------------------------------------------------2 CFR Parts 184 and 200Guidance for Grants and Agreements; Final Rule
Federal Register / Vol. 88, No. 162 / Wednesday, August 23, 2023 /
Rules and Regulations
[[Page 57750]]
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OFFICE OF MANAGEMENT AND BUDGET
2 CFR Parts 184 and 200
Guidance for Grants and Agreements
AGENCY: Office of Federal Financial Management, Office of Management
and Budget.
ACTION: Final rule; notification of final guidance.
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SUMMARY: The Office of Management and Budget is revising the OMB
Guidance for Grants and Agreements. The revisions are limited in scope
to support implementation of the Build America, Buy America Act
provisions of the Infrastructure Investment and Jobs Act and to clarify
existing provisions related to domestic preferences. These revisions
provide further guidance on implementing the statutory requirements and
improve Federal financial assistance management and transparency.
DATES: The effective date for the revised guidance is October 23, 2023.
FOR FURTHER INFORMATION CONTACT: Please contact Callie Conroy, Office
of Management and Budget, via phone at 202-395-2747; via email at
[email protected].
SUPPLEMENTARY INFORMATION:
Executive Summary
The Office of Management and Budget (OMB) is revising its guidance
in title 2 of the Code of Federal Regulations (2 CFR) to add a new part
184 and revise 2 CFR 200.322. The revisions implement the requirement
for the Director of OMB to issue guidance to the head of each Federal
agency to assist in the implementation of the requirements of the Build
America, Buy America Act (BABA), Public Law 117-58, 135 Stat. 429,
70901-70927, Nov. 15, 2021.
As required by BABA, the new part 184 of 2 CFR provides clear and
consistent guidance to Federal agencies about how to apply the domestic
content procurement preference (Buy America or BABA preference) as set
forth in BABA to Federal awards for infrastructure projects. See BABA
70915. For example, the new part 184 includes definitions for key
terms, including iron or steel products, manufactured products,
construction materials, and materials identified in section 70917(c)
(section 70917(c) materials) of BABA. These definitions provide a
common system for Federal agencies to distinguish between the product
categories established under the statutory text in BABA. The new part
also offers standards that define ``all manufacturing processes'' in
the case of construction materials.
The new part 184 also includes guidance for determining the cost of
components of manufactured products. The part 184 text uses a modified
version of the ``cost of components'' test found in the Federal
Acquisition Regulation (FAR) at 48 CFR 25.003, which is used for
Federal procurement. Using this approach for determining the cost of
components of manufactured products in the context of Federal financial
assistance aims to provide a consistent approach for industry, with
only minor modifications which are explained in this document.
The new part 184 also includes guidance on proposing and issuing
Buy America waivers. For example, based on the statutory text of BABA,
it restates the circumstances under which a waiver may be justified.
The new part also includes guidance on the type of process that a
Federal agency should implement to allow recipients to request waivers,
including the process a Federal agency should follow in issuing
proposed and final waivers.
The revised provision in 2 CFR part 200 specifies that Federal
agencies providing Federal financial assistance for infrastructure
projects must implement the Buy America preferences set forth in 2 CFR
part 184, as required under section 70914(a) BABA, as of the effective
date of the guidance, unless specified otherwise.
Background
On November 15, 2021, President Biden signed into law the
Infrastructure Investment and Jobs Act (IIJA), Public Law 117-58, which
includes BABA, at sections 70901 through 70927. BABA establishes a
domestic content procurement preference for Federal financial
assistance obligated for infrastructure projects. That preference is
generally referred to in this document as the Buy America preference or
BABA preference. The BABA preference applies to three separate product
categories: (i) iron or steel products; (ii) manufactured products; and
(iii) construction materials. See BABA 70912 and 70914.
BABA required that by May 14, 2022, the head of each covered
Federal agency must ensure that ``none of the funds made available for
a Federal financial assistance program for infrastructure may be
obligated for a project unless all of the iron, steel, manufactured
products, and construction materials used in the project are produced
in the United States [(U.S.)].'' BABA 70914(a). BABA is consistent with
this the Administration's policy in Executive Order 14005, Ensuring the
Future Is Made in All of America by All of America's Workers (E.O.
14005), to ``use terms and conditions of Federal financial assistance
awards . . . to maximize the use of goods, products, and materials
produced in, and services offered in, the [U.S.].''
BABA requires OMB to issue guidance to the head of each Federal
agency to ``assist in applying new domestic content procurement
preferences.'' BABA 70915. BABA also allows OMB to amend 2 CFR, if
necessary, to provide guidance to Federal agencies on imposing the Buy
America preference through the terms and conditions of Federal awards.
Id.
On April 18, 2022, OMB released M-22-11, entitled ``Initial
Implementation Guidance on Application of Buy America Preference in
Federal Financial Assistance Programs for Infrastructure'' (Memorandum
M-22-11). Memorandum M-22-11 provided initial implementation guidance
to Federal agencies on the application of the Buy America preference to
Federal financial assistance programs for infrastructure, the Buy
America waiver process, and other topics. Memorandum M-22-11 also
provided ``preliminary and non-binding'' guidance on the definition of
``construction materials'' and associated standards for determining
when all manufacturing processes of the construction material occur in
the U.S. while OMB obtained stakeholder input to refine that definition
and the associated standard for ``all manufacturing processes'' for
each construction material.
On April 21, 2022, OMB issued a Notice of Listening Session(s) and
Request for Information (RFI) in the Federal Register, which explained
that OMB was beginning the process of seeking public input for its
revised guidance and standards for construction materials. 87 FR 23888
(Apr. 21, 2022).
On February 9, 2023, OMB issued a Notification of Proposed Guidance
in the Federal Register, which explained that OMB was proposing a new
part 184 in 2 CFR chapter I to support implementation of BABA and
clarify existing provisions in 2 CFR 200.322. 88 FR 8374 (Feb. 9,
2023).
In accordance with BABA, through this document, OMB is now amending
2 CFR, subtitle A, chapter I by adding a new part 184 to support
implementation of BABA. OMB is also amending 2 CFR 200.322 to clarify
existing provisions within part 200. The guidance in part 184 is
intended to improve consistency in the implementation of BABA
requirements across the Federal Government.
[[Page 57751]]
Prior to the effective date of the part 184 guidance, OMB will also
issue an updated M-Memorandum to replace Memorandum M-22-11. The
purpose of the update to Memorandum M-22-11 is to remove direct
conflicts between Memorandum M-22-11 and the revised guidance in part
184. Parts and provisions of Memorandum M-22-11 that do not directly
conflict with the revised guidance will generally be retained. OMB
intends to issue the successor M-Memorandum before the effective date
of the new part 184. OMB also intends the updated M-Memorandum to
become effective concurrently with part 184. The updated M-Memorandum
will continue to provide supplemental guidance to Federal agencies on
implementation of BABA, which OMB did not believe was needed in the
more succinct part 184 text. Sometimes, when OMB refers to Memorandum
M-22-11 in this document, it refers to the initial guidance contained
in Memorandum M-22-11, which OMB intends to carry over to the updated
M-Memorandum except in cases of direct conflict.
OMB also notes, as explained in response to several commenters,
that part 184 is not intended as comprehensive guidance on all topics
related to the implementation of BABA. Instead, part 184 is intended to
be high-level coordinating guidance for Federal agencies to use in
their own direct implementation of BABA, as required under section
70914 of BABA. The guidance will help to ensure clear and consistent
application of the key requirements under the statutory text. It is not
possible for OMB to issue comprehensive guidance on every issue that
may arise for different Federal agencies in the context of directly
implementing their own unique Federal financial assistance programs, or
on all topics raised by commenters, some of which are beyond the scope
of what OMB intended to include in part 184.
BABA is a new and complex statute, which became effective in 2022.
As such, establishing governmentwide guidance on these new statutory
requirements has been an iterative process. OMB issued initial guidance
in 2022 through Memorandum M-22-11. Following notice and comment, OMB
is announcing revised guidance, which complements the initial guidance
and, following the effective date, replaces it in cases of direct
conflict. Federal agencies, in directly implementing BABA, may issue
further guidance and provide further information to their recipients
and other stakeholders on their own Federal financial assistance
programs for infrastructure. OMB may also issue additional guidance in
the future as it receives additional stakeholder feedback from Federal
agencies, recipients of Federal awards, contractors, manufacturers,
labor organizations, suppliers, industry associations, and others on
this guidance. The revised guidance OMB announces in this document is
an important next step in OMB's efforts to provide guidance to Federal
agencies on implementing the statutory requirements in a coordinated
way. The revised guidance is also an important step toward achieving
this Administration's policy objectives set forth in E.O. 14005.
Statutory Authority for Final Guidance
OMB is required by section 70915(a) of BABA to issue guidance to
the head of each Federal agency to assist in applying new Buy America
preferences under section 70914 of BABA. Section 70915(a) of BABA also
instructs OMB to, if necessary, amend subtitle A of title 2, Code of
Federal Regulations (or successor regulations), to ensure that domestic
content procurement preference requirements required under BABA or
other Federal law are imposed through the terms and conditions of
awards of Federal financial assistance.
OMB is also required by section 70915(b) of BABA to issue standards
that define ``all manufacturing processes'' in the case of construction
materials. While Memorandum M-22-11 provided ``preliminary and non-
binding'' guidance on the definition of ``construction materials,'' the
new part 184 includes OMB's standards for ``all manufacturing
processes'' for the manufacture of construction materials. In issuing
standards, BABA requires OMB to ensure that each manufacturing process
required for the manufacture of the construction material and the
inputs of the construction material occurs in the U.S. Section 70915(b)
of BABA also requires OMB to take into consideration and seek to
maximize the direct and indirect jobs benefited or created in the
production of the construction material. The standards set forth in the
revised guidance are based on industry feedback, agency consultation,
and public comments received in response to the proposed guidance for
each construction material as detailed further below.
Need for This Final Guidance
The new part 184 provides guidance to Federal agencies on how to
implement the BABA requirements and standards in a consistent and
coordinated way. In addition to providing clarity to Federal agencies
and recipients of federally funded infrastructure project awards, this
part will help to send clear market signals to the industries
manufacturing products about what is needed to satisfy the BABA
requirements.
The congressional findings at section 70911 of BABA (Findings)
recognize several policy justifications for establishing Buy America
preferences. The policy rationale in the Findings includes creating
demand for domestically produced goods, helping to develop and sustain
domestic manufacturing, and supporting millions of domestic
manufacturing jobs. Congress also recognized that a robust domestic
manufacturing sector is a vital component of the national security of
the U.S. In addition, Congress recognized the importance of supporting
domestic manufacturers that meet commitments of the U.S. to
environmental, worker, and workplace safety protections; and in
reinvesting tax dollars in companies and processes using the highest
labor and environmental standards in the world. These justifications
are consistent with the polices of this Administration set forth in
E.O. 14005 to use terms and conditions of Federal awards to maximize
the use of goods, products, and materials produced in, and services
offered in, the U.S.
The revised guidance announced by OMB in this document adopts a
unified scheme addressing how each covered Federal agency should apply
the Buy America preference established by section 70914 of BABA to
Federal awards for infrastructure. This includes providing key
definitions and other provisions on how to classify products in the
categories established under BABA. The revised guidance also includes
other provisions providing manufacturing standards for each identified
construction material. OMB is committed to ensuring strong and
effective Buy America implementation consistent with BABA, other
applicable law, and E.O. 14005.
Summary of Comments
On February 9, 2023, OMB solicited feedback from the public through
proposed guidance published in the Federal Register on February 9,
2023. See 88 FR 8374 (Feb. 9, 2023). The period for public comments
closed on March 13, 2023. Comments were received via Regulations.gov at
Docket No. OMB-2023-0004. OMB received approximately 1,950 public
comments from a broad range of interested stakeholders, such as States
and State departments of transportation, local governments,
manufacturers, labor
[[Page 57752]]
organizations, suppliers, construction contractors, industry
associations, universities, foreign governments, and individuals.
Section-by-Section Discussion
OMB developed this revised guidance following review and
consideration of comments received on the notification of proposed
guidance. In this document, OMB summarizes significant comments
received in response to its proposal and any substantive changes made
to each section of the revised guidance. Minor changes to the language
of the guidance are not addressed in all cases. These include minor
plain language revisions, the addition of paragraph headings, and other
minor editorial changes in the part 184 text. For sections where no
substantive changes are discussed, the substantive proposal from the
notification of proposed guidance was adopted.
Summary of Significant Changes Made in This Final Guidance as Compared
to the Proposed Guidance
Section 184.1 was revised to clarify that the policy in the part
184 text applies to products ``incorporated into'' an infrastructure
project. This is consistent with OMB Memorandum M-22-11 and other
sections of the part 184 text. A similar change was also made to the
definition of ``Buy America Preference'' in Sec. 184.3.
Section 184.2 was revised to further clarify the non-applicability
of part 184 to certain existing Buy America preferences. Section 184.2
was also revised to add an effective date for part 184, a modified
effective date for certain projects, and a severability clause.
Section 184.3 was revised to modify certain definitions and add new
ones.
The definition of ``construction materials'' at Sec. 184.3 was
revised to apply to ``only one'' of the listed materials. The list of
construction materials was expanded to include engineered wood. Text
was added to clarify that drop cable is included within the meaning of
fiber optic cable. Language relating to minor additions was also added
to the second paragraph of the definition.
The definition of ``manufactured products'' at Sec. 184.3 was
revised to provide an affirmative definition for the term instead of
just explaining, in the negative, what the term does not include. The
negative element of the definition was moved to the second paragraph of
the definition. The second paragraph of the definition also includes
clarifying language on items that may be considered components of a
manufactured products.
Section 184.3 was also revised to add definitions for terms
including component, manufacturer, predominantly of iron or steel or a
combination of both, and section 70917(c) materials.
Section 184.4 was revised to provide additional guidance on the
categorization of articles, materials, and supplies and how to apply of
the Buy America preference by item category.
Section 184.5 includes minor changes in terminology but in
substance remains similar to the proposed guidance.
Section 184.6 was revised to modify the manufacturing standard for
certain construction materials including fiber optic cable. The
standard for fiber optic cable was revised to clarify that it
incorporates the standards for glass and optical fiber. The standard
for plastic and polymer-based products was modified slightly to
incorporate the proposed standard for composite building materials,
which are a sub-category of plastic and polymer-based products. Because
composite building materials are intended as a sub-category of plastic
and polymer-based products, the standalone standard for composite
building materials was eliminated. A new paragraph (b) was added to
clarify that, except as specifically provided, only a single standard
applies to a single construction material.
A few editorial changes were made to Sec. 184.7 to provide clarity
on the process for requesting and issuing waivers.
Summary of Significant Changes Made in This Final Guidance as Compared
to the Initial Guidance in Memorandum M-22-11
Section 184.2 modifies existing guidance in Memorandum M-22-11 by
providing an effective date for part 184.
Section 184.3 modifies existing guidance in Memorandum M-22-11 by
modifying certain existing definitions and adding new ones.
The definition of ``construction materials'' at Sec. 184.3 remains
similar to Memorandum M-22-11 in applying to ``only one'' of the listed
materials, but further clarifying language is now provided including
the second paragraph on minor additions. The list of construction
materials is expanded to include fiber optic cable (including drop
cable), optical fiber, and engineered wood.
The definition of ``manufactured products'' at Sec. 184.3 modifies
existing guidance in Memorandum M-22-11 by providing an affirmative
definition for the term as explained above in the summary of changes
relative to the proposed guidance. Other clarifying language is also
provided including on how to categorize products that could fall into
multiple categories and on what items may be considered components of
manufactured products.
Section 184.3 also modifies existing guidance in Memorandum M-22-11
by adding definitions for terms including ``component,''
``manufacturer,'' ``predominantly of iron or steel or a combination of
both,'' and ``section 70917(c) materials.''
Section 184.4 modifies existing guidance in Memorandum M-22-11 to
provide additional guidance on the categorization of articles,
materials, and supplies and how to apply the Buy America Preference by
category.
Section 184.5 modifies existing guidance in Memorandum M-22-11 by
offering more detail on how Federal agencies should implement the cost
of components test.
Section 184.6 modifies existing guidance in Memorandum M-22-11 by
providing revised manufacturing standards for each listed construction
material, including materials that were not included in Memorandum M-
22-11 such as fiber optic cable, optical fiber, and engineered wood.
A few editorial changes were made, but Sec. Sec. 184.7 and 184.8
otherwise remain similar to existing guidance in Memorandum M-22-11.
General Comments--Consistency and Uniformity for Buy America
Requirements
Many commenters emphasized the need for Federal agencies to apply
and implement Buy America preferences in a consistent manner. For
example, some commenters urged OMB to preserve the existing body of
regulations, interpretations, and determinations related to Federal
domestic content preferences as much as possible. Some commenters
suggested using definitions already in use under the FAR in the
procurement context or using existing Buy America standards implemented
by specific Federal agencies with Buy America requirements that existed
prior to passage of BABA in 2021. Other commenters suggested
maintaining continuity with existing BABA guidance provided by OMB in
Memorandum M-22-11.
Other commenters explained that further clarity was needed in the
guidance on a variety of specific topics to ensure consistent
application by Federal agencies. For example, some suggested
establishing a unified certification process for Buy America
compliance. Others suggested operational improvements to the Buy
America waiver process, such as streamlining and expediting the waiver
[[Page 57753]]
process. Other commenters suggested creating a website or database of
BABA approved materials or manufacturers. Some also suggested granting
broad waivers for certain types of projects (for example, water
projects), programs (for example, Broadband Equity, Access, and
Deployment (BEAD)), or products (for example, commercial off the shelf
(COTS) items).
OMB Response: In general, OMB agrees with commenters on the value
of consistent implementation of Buy America requirements. OMB believes
the guidance it issues in this document will help to achieve this. OMB
will also continue to convene inter-agency workgroups on a recurring
basis to ensure, to the extent possible, that Federal agencies
implement BABA in a consistent, uniform, efficient, and transparent
manner.
In the revised guidance, OMB has aimed to provide general
consistency with certain provisions in the FAR. For example, see
discussion below of the definition of ``predominantly of iron or steel
or a combination of both'' in Sec. 184.3, the ``brought to the work
site'' language added in Sec. 184.4, and the ``cost of components''
test used in Sec. 184.5. However, the Buy America requirements
established by Congress under BABA are not identical to the Buy
American Act requirements implemented in the FAR. The FAR implements
the Buy American Act (BAA) (41 U.S.C. 8301-8305). BAA applies to direct
Federal procurement--what the Federal Government buys for its own use.
By contrast, BABA applies to Federal financial assistance for
infrastructure projects--or grants, cooperative agreements, and other
Federal awards that Federal agencies provide to recipients constructing
such projects. See 2 CFR 200.1. There are many substantive differences
between the BAA, implemented in the FAR, and BABA. These differences
include the applicable product categories that the domestic content
preferences apply to and also the standards that apply to the
categories. These differences do not allow for complete consistency on
all topics between the FAR and the implementing guidance for BABA in
part 184. However, OMB has aimed for a reasonable degree of consistency
on certain specific provisions discussed below.
OMB also recognizes that certain Federal agencies, such as the
Environmental Protection Agency (EPA) and operating administrations
within the U.S. Department of Transportation (U.S. DOT), including the
Federal Highway Administration (FHWA) and Federal Transit
Administration (FTA), already had Buy America requirements for Federal
financial assistance that applied to Federal awards for infrastructure
prior to passage of BABA in 2021. OMB also recognizes that section
70917(b) of BABA states that ``[n]othing in this part affects a [BABA
preference] for a Federal financial assistance program for
infrastructure that is in effect and that meets the requirements of
section 70914'' (emphasis added). This topic is addressed specifically
at Sec. 184.2(a) of the guidance, and the discussion of that provision
in this preamble. Section 184.2(a) generally allows Federal agencies to
maintain Buy America preferences meeting or exceeding the requirements
of BABA if the preferences existed before November 15, 2021. However,
to the extent existing Buy America preferences did not meet or exceed
the requirements for all of the product categories under BABA, these
Federal agencies must supplement their existing requirements. For
example, BABA established the Buy America preference for the
``construction materials'' category, which is addressed in several
sections of the new part 184 and throughout this preamble. Because the
construction material category was first established under BABA--and
the term is used there in a novel way--provisions of OMB's guidance
offering definitions and standards related to constructions materials
will be used by all Federal agencies with Federal financial assistance
programs for infrastructure in their own direct implementation of BABA.
See BABA 70912(6)(C), 70914(a), 70915(b), and 70917(b).
Regarding other comments and suggestions for greater consistency on
certification procedures, a database of approved products, and other
topics, OMB notes that its revised guidance in part 184 is intended to
be limited in scope. Some of these topics may possibly be the subject
of future guidance for OMB or individual Federal agencies, but are not
addressed in the current revised guidance issued in this document.
Comments on the waiver process are addressed below.
General Comments--Burden Reduction for Grant Recipients and Industry
Many commenters raised concerns related to the implementation of
BABA requirements and the burden these requirements may impose on
industry and recipients of Federal financial assistance and their
contractors. For example, some of these commenters maintained that
OMB's guidance on Buy America requirements may impose a burden on
companies involved in constructing or providing supplies for federally
funded infrastructure projects, which may lead to project delays or
increased project costs. Many commenters advocated for changes to the
guidance that would reduce the burden for industry. For example, some
commenters maintained that OMB should avoid creating new or different
definitions that would modify existing guidance in Memorandum M-22-11.
These commenters stated that, in some cases, modifying existing
guidance might lead to confusion, project delays, or increased project
costs.
Several State departments of transportation also explained that
they have expended substantial effort and resources to implement OMB's
initial guidance in Memorandum M-22-11. These commenters maintained
that any significant changes to the Buy America preferences would
create additional administrative burden for them. For example, they
noted that significant changes in how to distinguish between product
categories may result in voiding existing product categorization lists
created by State departments of transportation based on OMB's
preliminary guidance, or in making product categorization more
difficult for them. These commenters urged OMB to maintain continuity
with the preliminary guidance in Memorandum M-22-11 on how to
distinguish between product categories.
OMB Response: Responses to comments regarding the effective date
for the guidance are addressed separately under Sec. 184.2(b) below.
OMB must ensure that its revised guidance enables Federal agencies to
implement the Buy America requirements in a way that is consistent with
the text and statutory objectives of BABA and the policy of E.O. 14005.
Memorandum M-22-11 provided initial implementation guidance to Federal
agencies on the application of the Buy America preference to Federal
financial assistance programs for infrastructure, the Buy America
waiver process, and other topics. Memorandum M-22-11 also provided
``preliminary and non-binding'' guidance on the definition of
``construction materials'' and associated standards for manufacturing
processes for an interim period.
BABA requires Federal agencies to ensure that all of the iron,
steel, manufactured products, and construction materials used in
federally funded infrastructure projects are produced in the U.S., and
directs OMB to issue guidance to assist Federal agencies in achieving
this objective. BABA 70914(a) and 70915(a). Congress explained its
policy rationale for the
[[Page 57754]]
Buy America preference in its Findings at section 70911 of BABA, which
includes ensuring that entities using taxpayer-financed Federal
financial assistance should give a commonsense preference for the
materials and products produced by companies and workers in the U.S.
BABA 70911(4). The basic statutory requirements of BABA have been
effective for all covered Federal agencies since May 14, 2022.
In issuing the revised guidance, OMB is fulfilling its obligations
to assist Federal agencies in implementing BABA in a manner consistent
with the statutory text and the polices of this Administration set
forth in E.O. 14005. Implementing the statutory Buy America preference
may impose a burden on some stakeholders in some circumstances;
however, clear and consistent implementation of the BABA standards also
provides significant opportunity for manufacturers across the U.S. On
many topics OMB's discretion is limited, such as in the case of
construction material standards, which must ``require that each
manufacturing process required for the manufacture of the construction
material and the inputs of the construction material'' occurs in the
U.S. BABA 70915(b)(2)(A).
On certain topics, OMB recognized commenters' concerns regarding
how its proposed guidance could have created confusion. For example,
regarding OMB's product categorization system, which is based on OMB's
definitions for the three top-level product categories established by
Congress in BABA, OMB discusses below in this preamble how it has aimed
to maintain continuity with Memorandum M-22-11 on a key element of the
definition of ``construction materials'' that several commenters were
specifically concerned about. Under the revised guidance, OMB returns
to its approach under M-22-11 of classifying a combination of two
separate construction materials as a manufactured product except in
cases where the resulting product is specifically identified by OMB in
the list of construction materials at Sec. 184.3. Consistent with the
preliminary guidance, this approach, for example, results in a plastic-
framed sliding window being treated as a manufactured product, and it
results in plate glass, on its own, being treated as a construction
material. In this case, OMB recognized the concerns raised by
commenters on the proposed guidance. OMB aimed to provide a definition
of ``construction materials'' that would not create additional or
excessive burden while also implementing BABA in a manner consistent
with the statutory intent. While recipients may likely have to make
some adjustments to ensure consistency with the revised guidance, the
structure of the definition of ``construction materials'' should
provide a reasonable degree of continuity for State agencies with
product categorization lists based on Memorandum M-22-11.
OMB acknowledges that other elements of the product category
definitions, and other provisions of the final guidance, which are
explained below, will have some impacts on how products are categorized
under BABA relative to Memorandum M-22-11. OMB's definitions for
construction materials, iron or steel products, and manufactured
products are discussed in more detail below, including OMB's supporting
rationale for the final definitions and changes relative to the
proposed guidance and Memorandum M-22-11.
OMB also acknowledges that is has provided further specification on
certain items from Memorandum M-22-11. As Memorandum M-22-11 itself
explained, OMB never intended to leave all provisions of that guidance
in place permanently; rather, Memorandum M-22-11 provided initial
implementation guidance to Federal agencies on the application of the
Buy America preference to Federal financial assistance programs for
infrastructure, the Buy America waiver process, and other topics. OMB
has consistently explained in public notices on BABA that revised
guidance and standards would follow the initial guidance. Memorandum M-
22-11 identified itself as ``initial'' implementation guidance
providing ``preliminary and non-binding guidance'' with regards to
construction materials. Three days after the issuance of Memorandum M-
22-11, OMB issued the RFI in the Federal Register, which explained that
OMB was beginning the process of seeking public input for its revised
guidance and standards for construction materials. 87 FR 23888 (Apr.
21, 2022). Through the Notification of Proposed Guidance issued by OMB
in February 2023, OMB explained that it was seeking notice and comment
for this revised guidance, which now modifies 2 CFR. 88 FR 8374 (Feb.
9, 2023). To the extent OMB has made material changes to its initial
policy in Memorandum M-22-11, those changes are identified in this
document along with OMB's reasons for making them.
OMB has also sought, where possible, to avoid being overly
prescriptive; for example, this guidance leaves significant discretion
to Federal agencies to apply the term ``minor additions'' for purposes
of the definition of ``construction materials'' in the context of their
own Federal financial assistance programs for infrastructure.
Section 184.1: Purpose and Policy
Section 184.1 of the revised guidance generally restates the
purpose and policy from the statutory text of BABA with minimal
modification. OMB received many comments, however, on the topic of
whether products and supplies temporarily used on a work site, but not
permanently incorporated into an infrastructure project, would be
subject to the Buy America preference. Many commenters expressed
concern that OMB may have intended to modify its policy in Memorandum
M-22-11 on this topic, which stated that BABA only applies to products
that are ``consumed in, incorporated into, or affixed to an
infrastructure project.'' For example, one commenter observed that the
proposed guidance did not include an equivalent provision and requested
OMB to restate this clarifying language in the revised guidance in part
184.
OMB Response: OMB made a slight change in Sec. 184.1(b) to replace
the phrase ``used in the project'' with ``incorporated into the
project.'' The intention of this change is to clarify that OMB's policy
from Memorandum M-22-11 remains unchanged under the revised guidance in
part 184 relative to the distinction between temporary use and
permanent incorporation. As explained above, OMB has not rescinded
Memorandum M-22-11. In cases of direct conflict, certain portions of
Memorandum M-22-11 will be superseded by the revised guidance on the
effective date of part 184--such as the preliminary standard for
construction materials standards--but other parts and provisions of
Memorandum M-22-11 that do not directly conflict with the revised
guidance will remain in effect. OMB intends to issue an updated M-
Memorandum to replace Memorandum M-22-11. The updated version of the
memorandum will be revised to remove conflicts with the revised
guidance in part 184.
On the issue of permanent incorporation, Memorandum M-22-11
explained that the Buy America preference only applies to articles,
materials, and supplies that are consumed in, incorporated into, or
affixed to an infrastructure project. As such, it does not apply to
tools, equipment, and supplies, such as temporary scaffolding, brought
to the construction site and removed at or before the completion of the
[[Page 57755]]
infrastructure project. Nor does a Buy America preference apply to
equipment and furnishings, such as movable chairs, desks, and portable
computer equipment, that are used at or within the finished
infrastructure project, but are not an integral part of the structure
or permanently affixed to the infrastructure project. This policy is
not modified by the revised guidance issued in this document in part
184.
Section 184.2: Applicability, Effective Date, and Severability
Section 184.2(a)--Non-Applicability of This Part to Existing Buy
America Preferences
OMB received a variety of comments on the intended meaning of this
section, such as how it would apply to specific Federal agencies. For
example, some commenters asked how the revised guidance would apply to
agencies like FTA and FHWA with preexisting and long-standing Buy
America requirements. Other commenters were confused by the purpose of
this provision as it appeared in the proposed guidance.
OMB Response: The purpose of this provision is to identify Buy
America preferences to which the revised guidance does not apply.
Certain Federal agencies, such as the EPA and operating administrations
within the U.S. DOT, such as FHWA and FTA, have Buy America preferences
that existed prior to passage of BABA. Section 70917(b) of BABA states
that ``[n]othing in this part affects a [BABA preference] for a Federal
financial assistance program for infrastructure that is in effect and
that meets the requirements of section 70914'' (emphasis added). OMB
notes that BABA's savings provision specifies that existing programs
must meet the requirements of section 70914 of BABA. Hence, part 184
does not apply to a Buy America preference implemented by those
agencies that either meets or exceeds the requirements of section 70914
of BABA if the preference was applied to Federal awards for
infrastructure projects before November 15, 2021. Other provisions of
part 184, however, should be used by agencies with existing
requirements if they do not have comparable standards. For example, the
construction material category--with specific materials identified by
OMB in this guidance--is newly created under BABA. This category should
be used by agencies that continue to apply their own existing
regulations and implementing guidance for other categories. Other
procedural elements of the revised guidance, such as those addressing
the waiver process, will also apply to all Federal agencies. Individual
Federal agencies are best positioned to provide more specific
information on how BABA, part 184, and their existing requirements
apply to specific infrastructure projects or Federal financial
assistance programs that they oversee and implement.
Section 184.2(b) and (c)--Effective Date of This Part and Modified
Effective Date for Certain Infrastructure Projects
OMB received many comments on the effective date for the guidance.
Many commenters requested OMB to provide additional time before the
guidance becomes effective. For example, some of these commenters
indicated that supply chains needed more time to adjust to the
guidance. Other commenters indicated that they needed more time to
educate and train their staff on how to comply with the guidance. Other
commenters indicated that Federal agencies responsible for implementing
the guidance needed additional time to update their policies and
practices and that recipients and subrecipients of Federal financial
assistance subject to the Federal agency policies will then need time
to apply those policies and practices. Still other commenters suggested
that Federal agencies needed additional time to implement changes to
their waiver processes to make it more transparent and efficient before
the guidance goes into effect. OMB received many other comments on
similar themes asking OMB to provide a delayed effective date for all
or some provisions the guidance to allow affected or potentially
affected entities more time to prepare for implementation, oversight,
and compliance.
Many commenters recommended that OMB adopt a phased or incremental
approach that would phase-in the guidance over time. Several commenters
suggested delaying implementation until the next construction season in
2024. Some commenters specifically noted concerns related to projects
started prior to the effective date of BABA.
Regarding the new standards for construction materials in
particular, several commenters also requested phasing-in the standards
over a longer period of time or only applying them after confirming
that a sufficient domestic supply is available for all Federal
infrastructure projects. Again, some commenters also noted concerns
about applying requirements for construction materials on projects that
began prior to passage of BABA or the effective date of the statutory
BABA requirements.
A number of commenters also questioned the advisability of applying
the revised guidance on projects that were already in planning, design,
or later implementation phases prior to its issuance, or that had
received prior Federal awards either before passage of BABA or under
OMB's initial guidance in Memorandum M-22-11. Some commenters
questioned whether this approach would be feasible. Others stated that
additional guidance was needed to reduce uncertainty for such projects.
Other commenters supported rapid implementation of the BABA standards.
OMB Response: By statute, the Buy America preferences under BABA
became effective more than a year ago on May 14, 2022. BABA 70914(a);
see also Memorandum M-22-11. OMB explained in Memorandum M-22-11 that
it was issuing ``initial'' implementation guidance, including
``preliminary'' standards, to be followed by issuance of this revised
guidance. The Buy America preferences under BABA, including the
preliminary and non-binding standards for construction materials under
Memorandum M-22-11, have now applied to Federal financial assistance
for infrastructure for over a year.
Based on guidance in Memorandum M-22-11, many Federal agencies took
the opportunity to propose and issue adjustment period waivers, and
waivers for previously planned projects, finding that an adjustment or
phase-in period was in the public interest after the BABA requirements
initially became effective on May 14, 2022. Memorandum M-22-11 provided
that ``agencies should consider whether brief, time limited waivers to
allow recipients and agencies to transition to new rules and processes
may be in the public interest.'' These waivers provided additional time
beyond the statutory effective date of May 14, 2022 for Federal
agencies to implement the statutorily-required Buy America preference.
For one example of such an adjustment period waiver, see the
``Temporary Waiver of Buy America Requirements for Construction
Materials'' issued by the U.S. DOT in May 2022. 87 FR 31931. For
agencies that took the opportunity to propose and issue adjustment
period waivers, the phase-in period provided recipients of Federal
financial assistance and their suppliers additional time to adjust to,
and plan to comply with, the new Buy America preference established by
Congress at section 70914(a) of BABA as implemented by the relevant
agency.
[[Page 57756]]
Since May 2022, many Federal agencies have also proposed and issued
other types of general applicability waivers based on OMB's guidance in
M-22-11, which also eased the transition to the new statutory
requirements. Consistent with examples provided in Memorandum M-22-11,
these other general applicability waivers included de minimis, small
grant, and minor component waivers that individual Federal agencies and
the Made in America Office at OMB found to be in the public interest
and consistent with policy following the public comment period required
under BABA.
In addition to its guidance on waivers, other sections of
Memorandum M-22-11 also functioned as an on-ramp for phasing-in BABA
requirements. For example, Memorandum M-22-11 provided preliminary and
non-binding standards for the new category of construction materials,
including a preliminary definition for that term. The preliminary
standards in M-22-11 were less stringent than the standards now
provided in the revised guidance. Specifically, the preliminary
construction material standards in Memorandum M-22-11 only covered
``the final manufacturing process and the immediately preceding
manufacturing stage for the [identified] . . . material[s].''
Memorandum M-22-11 explained that, following additional stakeholder
input, OMB would issue further guidance on the meaning of the term
construction materials and revised manufacturing standards for each
identified material consistent with section 70915(b) of BABA.
OMB has now received stakeholder input through issuance of the RFI
in April 2022 and the proposed guidance in February 2023. Based on
consideration of that stakeholder input and the statutory requirements
under BABA, the standards provided in the revised guidance now provide
specific manufacturing standards for agencies to apply to each listed
construction material. Consistent with BABA, the standards now
enumerate the list of ``all manufacturing processes'' to occur in the
U.S. BABA 70915(b). This includes ``each manufacturing process required
for the manufacture of the construction material and the inputs of the
construction material.'' Id. A period with less stringent standards for
construction materials was already provided by Memorandum M-22-11.
OMB acknowledges that it added three construction materials to its
list in the revised guidance in part 184. OMB identified all three
materials in the proposed guidance issued in February 2023, with fiber
optic cable and optical fiber identified in the proposed part 184 text
and engineered wood identified in the preamble as a material that OMB
was considering for its final list. To the extent that supply chain
concerns arise due to the addition of these materials, or due to the
clarification of the applicability of BABA to other construction
materials, a Federal agency may use the waiver process described at
section 70914(a) of BABA, and in Sec. 184.7 of the guidance, to
provide additional relief on the construction materials standards set
forth in the revised guidance.
In addition to providing guidance on waivers and preliminary
guidance on construction materials, Memorandum M-22-11 also provided
initial implementation guidance on many other topics including iron or
steel products, manufactured products, the applicability of BABA, the
meaning of infrastructure and infrastructure projects, and exemptions
to BABA. As discussed in this preamble, OMB acknowledges that the
revised guidance makes changes and adjustments on several topics
relative to the initial guidance. In many cases, however, OMB believes
these changes are modest or limited in scope. The revised guidance
remains consistent with the statutory framework provided by Congress in
November 2021 and generally consistent with the framework provided by
OMB through Memorandum M-22-11 over a year ago in April 2022. Thus, the
revised guidance does not represent a wholesale change or replacement
of the initial guidance, but only a refinement and revision of certain
elements in responses to comments that OMB received related to both the
RFI and the proposed guidance. As explained above, OMB is not
rescinding the guidance in Memorandum M-22-11, but it is superseded in
cases of direct conflict. OMB intends to issue an updated M-Memorandum
to eliminate conflicts between the two sources of guidance.
From before the May 2022 effective date of BABA through the
present, OMB has actively engaged with a wide array of stakeholders
including Federal agencies, manufacturers, labor organizations,
suppliers, nonprofits, State and local governments, and other entities
and individuals that may be affected by Federal agencies'
implementation of OMB's guidance. Engagement activities included public
listening sessions, public comment periods, inter-agency coordination
with the Federal Government, meetings with industry, and other public
engagements. OMB has carefully considered public comments received in
response to the proposed guidance in developing the revised guidance in
this document. OMB intends to continue active engagement with
stakeholders, but does not believe that an additional phase-in period
is needed beyond the phase-in period provided by Memorandum M-22-11 and
the adjustment period and other waivers issued by Federal agencies.
Accordingly, OMB has decided on an effective date of 60 days after
publication for the revised guidance.
OMB acknowledges commenters' concerns about applying the revised
guidance on projects that had received prior Federal awards under OMB's
initial guidance in Memorandum M-22-11. For infrastructure projects
that received prior Federal awards on or after May 14, 2022, but before
the effective date of the revised guidance, OMB adds language
clarifying that Federal agencies should allow a project that receives a
subsequent Federal award within one year of the effective date to be
subject to Memorandum M-22-11 instead of the revised guidance. In this
case, the project would remain subject to the original version of
Memorandum M-22-11 published on April 18, 2022, not the updated or
successor version that will remove direct conflicts with part 184. The
purpose of this language is to provide additional flexibility for
certain projects in the implementation phase.
OMB also includes clarifying language related to projects in the
category described in the preceding paragraph that make significant
design or planning changes after the effective of the revised guidance.
If significant design or planning changes are made to the
infrastructure project, the Federal awarding agency may apply the
revised guidance to the additional Federal award instead of Memorandum
M-22-11. This provision recognizes that, depending on their scope or
nature, design or planning changes may warrant application of the
revised guidance, such as in cases where the changes introduce novel
project elements that were never evaluated under Memorandum M-22-11.
However, the provision leaves discretion to the agency to consider the
fact-specific circumstances of the project and which guidance should be
applied.
OMB also includes language to clarify that even in the case of
projects that qualify to continue applying Memorandum M-22-11 to
obligations within one year of the effective date, Federal agencies
eventually should apply the revised guidance if the projects receive
additional Federal awards after the one-year period.
[[Page 57757]]
OMB also acknowledges commenters' concerns about applying the
revised guidance on other projects that were in the planning, design,
of other phases of implementation before the effective date of the
revised guidance, but which had not received prior Federal awards. OMB
finds that the waiver process is generally the appropriate mechanism
for additional relief on these projects. If the Federal agency finds
that a waiver is justified under the circumstances--and follows the
processes set forth in Sec. 184.7 of the revised guidance--a waiver
may be available. The waiver process may also be the appropriate
mechanism where the revised guidance may be considered excessively
disruptive and contrary to the public interest. OMB will continue
working with Federal agencies to identify any additional flexibilities
that agencies can deploy to address the concerns raised in the comments
about timelines.
Section 184.2(d)--Severability
BABA requires OMB to issue coordinating guidance and standards to
Federal agencies on how to apply the statutorily required Buy America
preferences. BABA 70915. For the reasons discussed in the preamble, OMB
believes that its decisions on all provisions and elements of the
revised guidance are well-supported by its authority under BABA and
should be upheld in any legal challenge. OMB also believes that its
exercise of its authority in the revised guidance reflects sound
policy.
In the revised guidance, OMB adopts a unified scheme addressing how
each covered Federal agency will apply a Buy America preference to
Federal awards for infrastructure. While the unified scheme best serves
the statutory objectives of BABA if left intact as adopted by OMB, the
benefits of the revised guidance related to coordination across the
Federal Government do not hinge on any single element or provision of
the guidance. Accordingly, OMB considers individual elements and
provisions adopted in the revised guidance to be separate and severable
from one another. In the event of a stay or invalidation of any element
or provision of the guidance, or any element or provision as it applies
to a particular person or circumstance, OMB's intent is to otherwise
preserve the revised guidance to the fullest possible extent. The
elements that remained in effect would continue to provide vital
guidance to Federal agencies to ensure coordinated implementation of
the Buy America preference set forth in BABA.
Specifically, in the event that any element or provision of the
revised guidance is held to be invalid or unenforceable as applied to a
particular person or circumstance, the part 184 text explains that the
provision should be construed so as to continue to give the maximum
effect permitted by law as applied to other persons not similarly
situated or to dissimilar circumstances. If any provision is determined
to be wholly invalid and unenforceable, it should be severed from the
remaining provisions of the revised guidance, which should remain in
effect.
Regarding its coordinating function, the product categorization
system provided by the definitions of key terms in Sec. 184.3 and
other provisions in Sec. 184.4 ensure that Federal agencies will apply
the Buy America preference in consistent, uniform, efficient, and
transparent manner. The revised guidance, along with Federal agencies'
coordinated efforts to directly implement the guidance, will send an
important signal to recipients of Federal awards, contractors,
industry, and suppliers on how to comply with BABA. Congress expressly
recognizes the need for coordinating guidance and standards from OMB in
section 70915 of BABA.
The guidance OMB issues in this document will continue to provide
necessary coordinating information to Federal agencies and stakeholders
even if individual elements or provisions were stayed or invalidated.
For example, although OMB believes that the final list of construction
materials in Sec. 184.3 is well-supported and sound policy, if a
reviewing court issued a stay or invalidation of OMB's inclusion of any
individual item on the list, Federal agencies could still continue to
implement the remainder of the revised guidance. This approach would
allow Federal agencies to continue to implement statutory requirements
under BABA, based on OMB's coordinating guidance, pending further
decisions by the court or action by OMB on the stayed or invalidated
provisions. The same would also be true if a reviewing court issued a
stay or invalidation of OMB's inclusion of any specific types of
products or components of products under the definition of
``manufactured products.''
Similarly, the construction material standards under Sec. 184.6
each provide important coordinating information to Federal agencies,
recipients and subrecipients of Federal awards, contractors,
manufacturers, suppliers, and other stakeholders in the relevant
industries. If any one of the construction material standards were
stayed or invalidated by a reviewing court, the remaining standards
should remain in effect. For any stayed or invalidated standard, as an
interim measure, for that standard only, a reviewing court could revert
to the preliminary and less stringent standard for construction
materials that applied under Memorandum M-22-11. In that circumstance,
Federal agencies could continue to implement the remaining standards
for other construction materials without interruption and meet the
statutory requirements under BABA.
Many commenters also expressed concerns on the topic of whether
materials identified in section 70917(c) of BABA--referred to
collectively in this document as the section 70917(c) materials--should
be included in the category of manufactured products. In the revised
guidance, as discussed below, OMB defines the circumstances in which
section 70917(c) materials may be considered components of manufactured
products under the Buy America preference at section 70914(a) of BABA.
In the event that a reviewing court stayed or invalidated elements of
OMB's guidance as applied to section 70917(c) materials, as an interim
measure those materials could be excluded from BABA coverage without
impacting the remainder of the guidance. This approach would allow
Federal agencies to continue to fully implement remaining provisions of
the OMB guidance pending further decisions by the reviewing court or
action by OMB on treatment of section 70917(c) materials.
OMB believes that it is in the interest of Federal agencies,
recipients and subrecipients of Federal awards, contractors,
manufacturers, suppliers, other stakeholders, and the nation as a whole
to leave the final coordinating guidance in place to the fullest extent
possible and permitted by law. In addition to more fully implementing
the statutory requirements of BABA, the revised guidance provides
common guidelines, to be implemented by Federal agencies, for all
stakeholders. It also provides important market signals to industry--
many of which are making significant investments in American
manufacturing and production in response to these standards--which will
best allow the Federal Government to achieve the statutory objectives
provided by Congress under BABA.
Section 184.3: Definitions
Section 184.3--Definition of Component
OMB received many suggestions on how to define the term component,
which is used in the cost of components
[[Page 57758]]
test in Sec. 184.5. Many commenters believed that OMB should use the
definition of component in FAR 25.003. OMB also received suggestions to
provide a definition for the related term ``end product,'' in which
components are incorporated. Commenters indicated that it was important
to be able to distinguish between end products and their components.
OMB Response: OMB defines component to mean an article, material,
or supply, whether manufactured or unmanufactured, incorporated
directly into: (i) a manufactured product; or, where applicable, (ii)
an iron or steel product. This definition is a modified form of the
definition used at FAR 25.003. The definition recognizes that the term
component is used in the revised guidance in the context of both
manufactured products and iron or steel products. Although the revised
guidance does not directly use the term end product, the process for
identifying end products--as distinguished from components--is
generally addressed at Sec. 184.4, at paragraphs (e) and (f), and in
the associated preamble text in this document.
Section 184.3--Definition of Construction Materials--General
OMB received many comments on its proposed definition of
``construction materials.'' Some commenters stated that OMB should
include only materials specifically listed in the Findings in section
70911(5) of BABA. Some of these commenters maintained that OMB did not
have statutory authority to expand the list beyond the specific items
mentioned in the Findings.
Other commenters urged OMB to more closely adhere to the definition
of construction materials provided in Memorandum M-22-11. For example,
one commenter expressed concern that the newly proposed definition
would expand the scope of covered construction materials far beyond the
initial guidance. This commenter observed that the proposed definition
would include combinations of listed materials that would better be
categorized as manufactured products. The commenter explained that this
change would lead to significant confusion among contractors,
suppliers, and recipients of Federal awards. The commenter also
explained that State departments of transportation developed approved
products lists and material vendor lists based on Memorandum M-22-11.
The commenter feared that OMB's proposed revision would void months of
work put in by State departments of transportation to implement the
original non-binding implementation guidance. For related reasons, many
commenters were opposed to OMB adding an ``other construction
materials'' category because it would be too open-ended and create too
much uncertainty for both Federal agencies and Federal award
recipients.
A few commenters suggested that OMB should consider using the FAR's
definition of construction materials at FAR 25.003. These commenters
believed that using a similar definition to the FAR would reduce
administrative burden and increase consistency across the Federal
Government. However, another commenter observed that the FAR's
definition of construction materials does not match the specific way
the term is used in the statutory text of BABA. This commenter
suggested that using the FAR definition would be confusing to
administer because the more general definition under the FAR would not
allow for distinguishing between construction materials and other
product categories such as manufactured products. This commenter
preferred the structure of a specific list of materials provided by OMB
in Memorandum M-22-11.
Other comments suggested that OMB should modify the list of
construction materials based on studies on the availability and costs
of specific materials. These commenters also maintained that further
market research should be completed to verify that any additional
construction materials added to the list are produced in the U.S. in
the quantities necessary to implement Federal financial assistance
programs for infrastructure under the IIJA and other laws.
OMB also received many comments on specific construction materials.
These comments are discussed further below.
OMB Response: In reaching its final list of construction materials
for the guidance, OMB used the list provided by Congress in its
Findings at section 70911(5) of BABA for guidance. Congress identified
non-ferrous metals, plastic and polymer-based products, glass, lumber,
and drywall. OMB acknowledges that the congressional findings do not
constitute a statutory definition of the term. However, because no
statutory definition is provided under BABA at section 70912, the
congressional findings were helpful indicators of specific types of
materials and items that Congress considers to be ``common construction
materials used in public works infrastructure projects'' that ``are not
adequately covered by a domestic content procurement preference.'' See
BABA 70911(5).
The final list of construction materials is generally consistent
with the list of items in the Findings in section 70911(5) of BABA and
that were previously identified by OMB in Memorandum M-22-11. The list
continues to include non-ferrous metals, plastic and polymer-based
products, glass, lumber, and drywall.
OMB acknowledges the concerns raised over adding additional
construction materials to its final list. However, OMB determined that
certain items that represent a clear-cut logical extension of materials
specifically mentioned in the Findings at section 70911(5) of BABA
should also be treated as construction materials. Each new item added
to the list in the proposed or revised guidance--fiber optic cable,
optical fiber, and engineered wood--represents an extension of items
already listed in the Findings and identified in Memorandum M-22-11.
For example, the congressional list of ``common construction
materials'' includes ``polymers used in fiber optic cables'' as an
example of ``plastic and polymer-based products.'' The congressional
list also includes ``optic glass'' as an example of ``glass.'' These
two are the primary constituent elements of fiber optic cable, which
are not, in general, incorporated on their own into an infrastructure
project related to fiber optic cable. The congressional list also
includes both lumber and plastic, which are constituent elements of
engineered wood. Accordingly, OMB added these items to its final list.
Based on the structure of the final definition of ``construction
materials,'' which is discussed further below, if these three items
were not added they would instead be treated as manufactured products
because they consist of inputs of more than one listed item. Fiber
optic cable includes inputs of at least plastics and polymers, glass,
and non-ferrous metals. Optical fiber includes inputs of at least
plastics and polymers and glass. Engineered wood includes inputs of at
least lumber and plastics and polymers. Treating these items as
manufactured products instead of construction materials would result in
a different and less-stringent domestic content preference applying to
them. See BABA 70912(6).
OMB believes its decision to set forth in this guidance that
Federal agencies should add these three items to its list of
construction materials is well-supported by its authority under BABA
and reflects sound policy. All three items are direct extensions of
common construction materials identified by Congress in its Findings in
section 70911(5) of BABA. By treating these
[[Page 57759]]
items as construction materials, OMB can define manufacturing standards
for each item in Sec. 184.6 of the guidance and seek to maximize the
impact of taxpayer-funded Federal awards to enhance supply chains for
their production in the U.S. This approach is consistent with the
statutory framework in BABA. It will also support key statutory
objectives including incentivizing domestic manufacturing of these
items.
OMB also believes that adding these three items to its list
provides needed clarity on its intent. For example, based on the
definition proposed in February 2023, many commenters indicated that
further guidance was needed on how to apply BABA to hybrid or composite
items--consisting of inputs of more than one construction material--
like engineered wood or fiber optic cable. OMB provides further
discussion of each of these items below. Except for items specially
included in the list, other hybrid or composite products, which combine
listed construction materials to make a new product, will be treated as
manufactured products. This topic is also discussed below. Further
analysis is provided on the inclusion of fiber optic cable, optical
fiber, and engineered wood under the topic headings for those items
below under both Sec. Sec. 184.3 and 184.6.
OMB also acknowledges that the congressional list of ``common
construction materials'' in section 70911(5) of BABA includes three
items that are not included in OMB's list of construction materials.
These items are steel, iron, and manufactured products. It is clear,
however, from sections 70912(2), 70912(6), and 70914(a) of BABA that
Congress did not intend iron or steel products or manufactured products
to be included in the construction material product category. For
example, section 70912(6) of BABA establishes three separate product
categories with different domestic manufacturing standards applicable
to each one of them.
Based on review of public comments, OMB finds that including
additional items to the list of construction materials--such as
coatings, paint, or bricks--is not warranted at this time. This
decision is discussed further below. In future revisions of part 184,
OMB may consider adding new items to its list of construction materials
or revising the definition in other ways consistent with BABA.
Another topic related to this definition that received many public
comments was OMB's proposal to change its approach for how to apply the
list in distinguishing between construction materials and manufactured
products. Memorandum M-22-11 provided that a construction material is
an item that ``is or consists primarily of'' only one of the listed
materials. By contrast, the proposed guidance provided that a
construction material is an item consisting ``of only one or more of''
the listed materials. 88 FR 8374 (emphasis added). Commenters were
often confused by this change and observed that it would result in the
key example of a manufactured product in Memorandum M-22-11--a plastic-
framed sliding window made of glass and plastic--being reclassified as
a construction material. Commenters also observed that, based on this
proposed change, the construction material category would expand far
beyond its current scope to include many item that industry currently
considers manufactured products.
OMB acknowledges commenters' concerns on this topic and has
returned to an approach that is more consistent with Memorandum M-22-
11. In the revised guidance OMB defines construction materials to mean,
``articles, materials, or supplies that consist of only one of'' the
listed materials. OMB also identifies certain specific exceptions to
this provision in the including listed items that contain inputs of
other listed items. Another exception to the general rule for
distinguishing between construction materials and manufactured products
in the revised guidance is in the case of minor additions of other
materials to construction materials, which are discussed in paragraph
(2) of the definition of ``construction materials.'' This topic is also
discussed further below.
Consistent with the preliminary guidance, the approach in the
revised guidance results in the example of a plastic-framed sliding
window being treated as a manufactured product. As under Memorandum M-
22-11, OMB intends that categorization as a manufactured product should
generally be clear if a single item incorporated into an infrastructure
project is not specifically identified on the list of construction
materials and contains significant inputs of multiple listed or non-
listed materials. Maintaining general consistency with Memorandum M-22-
11 on this particular topic should prevent imposing unnecessary
administrative burden on contractors, suppliers, and recipients, which
commenters indicated was of significant concern.
OMB also recognized commenters' concerns that, under the approach
in the proposed guidance, hybrid construction materials could have many
standards applicable to them, which would create many implementation
questions and complexities. For example, under the approach in the
proposed guidance in February 2023, a product made of glass, plastic
and polymer-based products, and copper could have been subject to three
or more applicable standards. By contrast, under the approach in the
revised guidance, the definition at Sec. 184.3 and the standards at
Sec. 184.6 clarify that only a single standard applies to a single
item, which is defined at Sec. 184.6 in the case of each item. This
approach should reduce administrative burden and ease the
implementation of both the ``construction materials'' definition and
associated standards.
To clarify how OMB intends agencies to implement the final
definition in practice, following completion of all manufacturing
processes for an item listed in paragraph (1) of the definition, if the
finished item is combined together with another item listed in
paragraph (1), or with a material that is not listed in paragraph (1),
before it is brought to the work site, then except as provided in
paragraph (2) of the definition regarding minor additions, the
resulting article, material, or supply should be classified as a
manufactured product, rather than as a construction material. However,
the definition also explains that to the extent one of the items listed
in paragraph (1), such as fiber optic cable, contains as inputs other
items listed in paragraph (1), such as glass or plastics in the case of
fiber optic cable, it is nonetheless a construction material. Minor
additions to construction materials are addressed in paragraph (2) of
the definition. This topic is discussed in further detail below.
Consistent with the example from Memorandum M-22-11, a plastic
framed sliding window should be treated as a manufactured product while
plate glass should be treated as a construction material. For another
example, engineered wood, as a standalone product, should be classified
as a construction material. However, if before the engineered wood is
brought to the work site, it is combined together through a
manufacturing process with glass or other items or materials to produce
a new product, which is not listed in paragraph (1), such as a sliding
window, the new product should be classified as a manufactured product.
OMB also observes that the manufacturing process standards in Sec.
184.6 for some construction materials include the application of
``coatings.'' Coatings frequently constitute different materials than
the construction material
[[Page 57760]]
itself and may or may not be considered minor additions under paragraph
(2) of OMB's definition of ``construction materials.'' To clarify OMB's
intent, other additions, such as coatings, do not change the
categorization of a construction material if they are added through a
manufacturing process specifically described in the standard for that
construction material at Sec. 184.6. For example, adding a coating to
aluminum, even if not considered a minor addition, would not convert
the aluminum ``construction material'' to a ``manufactured product''
because coatings are specifically identified in the manufacturing
processes for non-ferrous metals. However, the coatings themselves do
not require domestic sourcing in this scenario if comprised of
different materials. In other words, it is not OMB's intent to require
domestic sourcing directly for the coating itself. See also discussion
at Sec. 184.4(f).
OMB believes the definition provided in the revised guidance on the
meaning of construction materials will provide clarity to stakeholders.
OMB also believes its approach in the revised guidance will provide
continuity with certain key elements of its initial guidance in
Memorandum M-22-11.
Section 184.3--Definition of Construction Materials--Inclusion of Non-
Ferrous Metals
OMB received several comments on whether and how to include non-
ferrous metals in its list of construction materials. Some commenters
concurred with OMB's inclusion of non-ferrous metals while others
questioned this choice. Other commenters indicated that additional
information was needed to help differentiate between a construction
material and a manufactured product, including specifically in the case
of non-ferrous metals. The commenter maintained the non-ferrous metal
category includes complex products that should be considered
manufactured products.
Regarding aluminum, one commenter urged OMB to make explicit in its
final guidance that primary aluminum is a ``construction material.''
Another commenter asked OMB to specifically define ``construction
materials'' to include aluminum extrusions. Some commenters suggested
that the domestic supply of aluminum is inadequate and that it should
be excluded on that basis. One commenter requested clarity on whether
copper or aluminum wire with a protective coating or sheathing made of
plastic should be treated under the new regulations as a construction
material or manufactured product.
OMB Response: In reaching its final list of construction materials
for the revised guidance, OMB started with the list provided by
Congress in its Findings in section 70911(5) of BABA for guidance. More
detailed discussion on that approach is provided above. Non-ferrous
metals are included on that list and OMB includes that term in the
revised guidance without modification.
OMB does not believe it is necessary to further define or provide
specific examples of non-ferrous metals in the part 184 text. OMB
understands a non-ferrous metal to be a metal not containing,
including, or relating to iron or steel. As discussed by commenters,
examples include aluminum and copper. OMB addresses how to distinguish
between construction materials and manufactured products in other
sections of the guidance and associated areas of this preamble. Further
discussion of the manufacturing standard for non-ferrous metals is
provided in Sec. 184.6. If stakeholders believe that waivers are
justified under section 70914(b) of BABA and Sec. 184.8 of the revised
guidance in relation to non-ferrous metals, the waiver process would be
the appropriate mechanism to address concerns such as non-availability.
Section 184.3--Definition of Construction Materials--Inclusion of
Plastic and Polymer-Based Products
OMB received several comments on whether and how to include plastic
and polymer-based products in its list of construction materials. Many
of these commenters requested further clarity on how differentiate
between a construction material and manufactured product, including
specifically in the case of plastic and polymer-based products. The
commenter maintained the plastic and polymer-based products category
includes complex products that should be considered manufactured
products. Commenters stated that further clarity was needed on this
topic to understand what manufacturing standards would apply to
specific items. As an example, one commenter noted that ``epoxies and
adhesives'' can be treated differently by different organizations,
which would create uncertainty for manufacturers. Another commenter
noted that epoxies, which are used in infrastructure projects, should
be specifically addressed, such as by including them in the definition
of ``plastic and polymer[hyphen]based products''.
Another commenter suggested that providing a definition of
``plastic and resin'' would be sufficient. This commenter argued that
as long as the composite material is made up of all plastic or resin,
then creating a separate category for ``composite building materials''
was not needed. This commenter added that the term ``composite
material'' is vague and could be interpreted differently by
stakeholders.
See also discussion of comments on the topic of composite building
materials below.
OMB Response: In reaching its final list of construction materials
for the revised guidance, OMB used the list provided by Congress in its
Findings in section 70911(5) of BABA for guidance. More detailed
discussion on that approach is provided above. Plastic and polymer-
based products are included on that list and OMB includes that term in
the revised guidance. By a plastic and polymer-based product, OMB
refers to a product comprised primarily of inputs of plastics and
polymers, but which may also include some minor additions of other
materials. OMB discusses how to distinguish between construction
materials and manufactured products--including its understanding of the
term ``minor additions''--in other sections of the guidance and
associated areas of this preamble. Further discussion of the
manufacturing standard for plastic and polymer-based products is
provided in Sec. 184.6.
Section 184.3--Definition of Construction Materials--Modified Inclusion
of Composite Building Materials as a Plastic and Polymer-Based Products
Many commenters observed that composite building materials are more
appropriately categorized as a subset of plastic and polymer-based
products. The commenters raised concerns that if composite building
materials were included in a standalone category, it could encompass
far more materials than was intended by the use of that term in section
70911(5) of BABA. For example, one commenter stated that composite
building materials may include a multitude of materials, such as
concrete, reinforced plastics, cement, steel, reinforced concrete, and
composite wooden beams. Similarly, some commenters pointed to language
in Memorandum M-22-11, which included composite building materials as a
subset of plastic and polymer-based products.
One commenter suggested that if a separate category were maintained
for composite building materials, the term could be defined as
``products made with combinations of polymer and reinforcing fiber,
where the polymer and fiber remain as distinct components but
[[Page 57761]]
the combination results in properties not found in the individual
materials, such as high strength combined with low weight.''
Alternatively, some commenters noted that if composite building
materials remained a standalone category of construction material, the
definition should simply be clarified to ensure that it only includes
materials made of plastic and polymers. Some commenters suggested that
epoxies should be included in the definition of composite building
materials.
OMB Response: After considering public comments on the issue, as
well as the language in BABA and Memorandum M-22-11, OMB has adjusted
the revised guidance to remove the standalone category for composite
building materials. Plastic and polymer-based composite building
materials should instead be evaluated under the category of plastic and
polymer-based products, described above.
Section 184.3--Definition of Construction Materials--Inclusion of Glass
OMB received many comments on whether and how to include glass
products in its list of construction materials. Again, many of these
commenters requested further clarity on how to differentiate between a
construction material and manufactured product.
Several commenters agreed that OMB should classify glass (including
optic glass) as a type of construction material. Other commenters
opposed including glass as a construction material. For example, one
commenter suggested that OMB's inclusion of glass in the definition of
``construction materials'' could threaten safety, reduce competition,
and impact costs for Federal recipients because certain glass ceramics
are processed and produced internationally. This commenter suggested
that OMB should revise its definition of ``construction materials'' to
eliminate glass entirely or, alternatively, provide an exception for
all glass used to support safety and chemical protection.
Other commenters requested clarification on the inclusion of
``optic glass'' in the ``glass'' category of construction materials.
One commenter was unsure if the term should include glass in
telecommunications cables, corrective eyewear, or lenses like in a
lighthouse. One commenter urged OMB to not create new subsets of
definitions for materials such a ``optic glass.'' Another commenter
suggested that optic glass should be included in the manufacturing
standard for optical fiber. Other commenters requested clarification on
the application of the guidance to recycled glass. Several commenters
had specific questions about optic glass in the context of the
broadband industry, with one commenter suggesting that OMB does not
need to define ``optic glass'' as part of the glass construction
material because OMB had added ``optical fiber'' as a separate item to
the list of construction materials in Sec. 184.3. Other commenters
thought that OMB provided sufficient guidance in the preliminary
guidance.
Multiple commenters sought guidance on what types of glass should
be considered a construction material versus a manufactured product.
Several examples provided by commenters included glass utilized in
plate glass, traffic line painting, glass insulator, fiber optic
communications, windows, doors, and skylights. One commenter suggested
that the distinction could be based on whether glass is: (i) delivered
in panes to an infrastructure project; (ii) not treated with coating;
(iii) optical or structural glass; or (iv) not used in complex
applications or meeting advanced specifications, such as is used in
certain types of U.S. DOT and FHWA road-marking projects.
Commenters also had specific questions about these classifications
within the context of specific glass products. For example, several
commenters requested clarification on the issue of glass beads used for
retro-reflective pavement markings. Commenters indicated that there is
uncertainty on how to classify these products under Memorandum M-22-11.
For example, approaches may differ based on what materials the glass
beads are combined with and when. The manufacturing process also
includes steps such as selecting a specific formula of glass inputs,
blending to customer specifications, formulaic combination using a
blending auger machine, and application of complex, multi-purpose
coatings. As a result, high-performance glass beads are of a wholly
different type of glass than that used for typical construction
material purposes, such as windows, doors, insulation, and external
glazing. Consequently, one commenter suggested that glass beads should
be considered manufactured products. However, another commenter urged
OMB to clarify that glass used for retro-reflective pavement markings
is a construction material. That commenter noted that those glass beads
are never used by themselves. The commenter was concerned that State
departments of transportation had reached inconsistent determinations
on this topic based on M-22-11.
OMB Response: In reaching its final list of construction materials
for the revised guidance, OMB used the list provided by Congress in its
Findings in section 70911(5) of BABA for guidance. OMB notes that
Congress specifically identified ``glass'' in section 70911,
``Findings,'' as one of several ``common construction materials.''
While OMB believes that this list is not exhaustive, OMB includes all
items in the Findings section as listed construction materials. Thus,
OMB has included glass in the revised guidance as a construction
material. More detailed discussion on that approach is provided above.
OMB has not included a separate category for optic glass in the
revised guidance. The general principles that apply throughout the
revised guidance should be used to determine how to treat glass
products such as recycled glass and glass beads. Federal agencies may
decide to provide additional guidance on those topics for products that
are used on infrastructure projects they provide funding for. If
stakeholders believe that waivers are justified in the public interest
or for other reasons in relation to glass, the waiver process would be
the appropriate mechanism to address concerns related to this topic.
However, OMB has included a separate category for ``optical fiber.'' As
described in further detail below, OMB believes that given the unique
features of the broadband industry, it is appropriate to provide more
specific guidance.
OMB discusses how to distinguish between construction materials and
manufactured products in other sections of the guidance and associated
areas of this preamble. Further discussion of the manufacturing
standard for glass is provided in Sec. 184.6. OMB believes that this
discussion will provide commenters with the guidance that they need to
classify the glass-based products identified above, including glass
beads.
Section 184.3--Definition of Construction Materials--Inclusion of Fiber
Optic Cable and Optical Fiber
Many commenters--including industry, State and local governments,
trade groups, and potential grant recipients--sought additional clarity
and guidance from OMB on the treatment of fiber optic cable and optical
fiber under BABA. Multiple commenters noted that BABA could have a
significant impact on service providers' ability to participate in the
Broadband Equity, Access, and Deployment (``BEAD'') program, which is
administered by the National
[[Page 57762]]
Telecommunications and Information Administration (``NTIA''), and other
Federal broadband programs.
Several commenters, including certain State departments of
transportation, supported the OMB's classification of ``fiber optic
cable'' and ``optical fiber'' as construction materials in Sec. 184.3.
One commenter requested a definition of what counts as ``optical
fiber'' to better implement the requirements under BABA. Several
commenters supported the classification but suggested amending Sec.
184.6, which specifies the standards required for a construction
material to be considered ``produced in the United States.''
Other commenters opposed including either fiber optic cable or
optical fiber as new standalone categories of construction materials.
Some commenters based their opposition on the statutory text of BABA.
Others questioned OMB's rationale for distinguishing between
construction materials and manufactured products. Some also questioned
the capacity of domestic supply chains to produce optic fiber and fiber
optic cables meeting the Buy America preference for construction
materials.
Commenters opposing the classification based on the statutory text
of BABA offered a variety of suggestions on interpreting the statutory
text. Some commenters believed that Congress enumerated only five items
as ``common construction materials'' in its Findings in section
70911(5) that ``are not adequately covered by a domestic content
procurement preference.'' These commenters noted that while the
Findings explicitly identify ``polymers used in fiber optic cables''
and ``optic glass,'' they do not explicitly identify fiber optic cable
itself as a construction material or any other elements of fiber optic
cable. They suggested that Congress, by including only polymers and
glass, was excluding fiber optic cable and other inputs of fiber optic
cable as ``common construction materials'' by omission.
One commenter suggested that the inclusion of ``fiber optic cable''
and ``optical fiber'' as construction materials would exceed section
70915(b)(2) by reaching back many stages into the manufacturing
process. According to that commenter, OMB's proposed guidance would
require a manufactured product, fiber optic cable, to effectively
satisfy a compliance test that is more stringent than the 55 percent
standard provided by Congress under section 70912(6)(B) by layering
construction material manufacturing standards on the principal
components of fiber optic cable.
This group of commenters generally suggested that the inclusion of
``fiber optic cable'' and ``optical fiber'' as construction materials
would run contrary to the intent of BABA. They suggested that OMB
instead should consider only components of fiber optic cables and
optical fibers, that Congress specifically enumerated, as construction
materials.
One commenter suggested that OMB could set the ``manufacturing
process'' standards for these two construction materials in a manner
that would create uniform standards for all fiber optic cabling.
Another commenter suggested that classifying only optic glass and
polymers as construction materials was preferable because it would
reduce compliance costs and avoid confusion.
Several commenters also questioned the logical coherence of
including ``optical fiber'' and ``fiber optic cable'' as construction
materials. For ``optical fiber,'' some commenters sought clarity on how
to distinguish between optical fiber and optic glass. These commenters
questioned whether OMB intended ``optical fiber'' to represent ``optic
glass'' or if it was an additional, separate material. One commenter
noted that these two terms can be used colloquially in imprecise ways.
For instance, a State department of transportation suggested that OMB
did not need to make a standalone category for ``optic fiber'' because
OMB had already defined ``optic glass'' as a construction material in
Sec. 184.3. Some manufacturers also stated that a separate definition
is not necessary.
However, other commenters warned that the definitions and
manufacturing processes of polymers and optic glass in other industries
and products may not be appropriate in the context of fiber optic
cables. Thus, one commenter suggested that OMB's guidance should
provide separate definitions of ``optical fiber, ``optic glass,'' and
``polymers'' that apply to these other construction materials and
industries. The commenter suggested that separate definitions of these
items in Sec. 184.3 would allow OMB provide a comprehensive standard
uniquely applicable to fiber optic cable in Sec. 184.6. The commenter
cautioned against layering other standards on top of the fiber optic
cable standard. A State department of transportation also suggested
that providing specific guidance for each different construction
material would avoid misinterpretation.
On comments suggesting that ``fiber optic cables'' should be
classified as a ``manufactured product,'' commenters provided a variety
of rationales. Some noted that while ``optic glass'' is listed as a
subset of glass products, fiber optic cables are a distinct product. To
create a fiber optic cable, these commenters noted that a manufacturer
needs to combine several of the listed construction materials,
including optic glass and polymers, through multiple, complex, and
capital-intensive processes. For example, fiber optic cables are
fabricated using optical fiber encased in a sheathing made from various
materials by the different manufacturers. Several commenters stated
that an end product, such as fiber optic cable, should not be
classified as a construction material. Some commenters suggested the
appropriate test should be whether you could walk into a store and buy
it. For instance, one could buy a roll of fiber optic cable, which
would make it an end product, rather than an input into an end product.
One commenter suggested that OMB be consistent with other domestic
preference regimes--noting that it was unaware of any other domestic
preference regime where Congress or any agency had classified a
construction material to be made up of other construction materials.
Other commenters focused on Memorandum M-22-11. Under their
understanding of OMB's initial guidance, a fiber optic cable would have
been categorized as a manufactured product, unlike the proposed
guidance, which would have treated it as a construction material.
Several commenters wanted to better understand OMB's rationale for the
classification. Relatedly, several commenters stated that the proposed
classification runs counter to congressional intent and the logical
meaning of manufactured product. They suggested that OMB should revert
to the list of construction materials published in Memorandum M-22-11,
which did not include either ``fiber optic cable'' or ``optical fiber''
as standalone construction materials.
Relatedly, several commenters suggested that OMB use a single
category--instead of spelling out ``optical fiber'' and ``fiber optic
cable.'' One commenter noted that a broadband grant recipient will only
purchase fiber optic cable. Because optical fibers are a construction
material for fiber optic cable, rather than an independent final
product, every material in optical fibers will already be included in
fiber optic cables. Another commenter noted that optical fiber and
fiber optic cable ultimately serve a singular, similar purpose.
Several commenters also suggested that OMB consider the capacity of
domestic supply chains before
[[Page 57763]]
categorizing either ``optical fiber'' or ``fiber optic cable'' as
construction materials. For example, some commenters emphasized the
unique nature of the broadband manufacturing sector, differentiating it
from some sectors, like steel, cement, or wallboard, in which the U.S.
has established industrial capacity. These commenters believed that
other industrial sectors could grow more easily to meet the demand
occasioned by the IIJA programs and other Federal funding for
infrastructure.
Alternatively, other commenters noted that substantial domestic
manufacturing capacity already exists for fiber optic cables and that
this capacity can be expanded to meet the demands of Federal programs
such as BEAD. According to one commenter, more than 100 businesses
currently manufacture fiber optic cables in the U.S., representing
annual aggregate revenues of approximately $4 billion utilizing
approximately 7,000 total employees. Commenters identified several
existing manufacturing companies, including AFL, CommScope, Corning,
OFS, and Prysmian. One commenter indicated that the domestic industry
for optical cable has grown by 22 percent since 2020 and is expected to
continue to grow as these firms and others have announced substantial
investments to enhance domestic capacity. While this commenter
acknowledged that supply chain constraints have increased delivery
intervals for fiber optic cable, the commenter still believed that it
was viable to treat fiber optic cable as a construction material.
However, the commenter proposed some modifications to ``all
manufacturing processes,'' as detailed below under Sec. 184.6. Other
commenters, focusing on the treatment of the electronics that go into a
broadband network, stated that industry would have an easier time
complying with BABA for fiber optic cables. Others noted the fact that
a waiver of Buy America requirements for broadband under the American
Recovery and Reinvestment Act (``ARRA'') of 2009 excluded fiber optic
cable.
However, several other commenters stated that they believed the
U.S. lacks sufficient domestic production capacity. Commenters
indicated that there has been a shortage of fiber optic cables and
optical fiber for several years due to global supply chain issues--
which they predicted will continue for several more years. According to
these commenters, infrastructure developers rely on imports or assembly
work from other countries, such as Mexico and Korea. One commenter
specifically noted that--even with the doubling of its domestic optical
fiber capacity--it would still need to supplement its optical fiber
production from Japan and Denmark, its preform inputs from Germany and
Japan, and its fiber optic cable and optical connectivity from Mexico.
Its domestic facilities rely on a complex web of U.S.-based and
international facilities. Commenters also noted that the BEAD program
would also greatly increase the demand for fiber, increasing supply
chain issues. Consequently, they maintained that excluding foreign
sources may make significantly less fiber available for BEAD
deployments, leading to an increase in prices and schedule delays.
These commenters feared that higher prices and delays would translate
into reduced quantity of high-speed broadband mileage built through
Federal programs and may also lead to price polarization--as the
private market may turn to imported products--which could negatively
impact smaller U.S.-based companies in the private market sector. A
State department of transportation expressed that this may be a
particular issue for utility owners and requested that OMB investigate
this issue further.
Given the above concerns, several commenters sought a delay of BABA
compliance until 2024 for fiber optic cables, optical fiber, and other
materials now listed as construction materials that were not listed in
M-22-11. Some of these commenters noted that States have already worked
hard to develop contract specifications based on materials listed in
Memorandum M-22-11 and requested stability.
Separately, several commenters noted that the actual composition of
fiber optic cables may vary greatly, whether in the number of strands
of glass and other specifications. For instance, cable designed for
residential use may have a limited number of strands, while a transport
fiber may have hundreds of strands, and cable designed for underground
use may have additional armoring to reduce the chance of the cable
being cut. Cable for aerial use may have minimal armor to reduce the
weight the poles must bear.
Some commenters requested additional specifications on, or carve
outs for, ``specialty cables,'' which they argued possess substantively
distinct characteristics, manufacturing processes, and supply chains.
These include drop cables and submarine cables, which have distinct
supply chains that commenters claim would not be sufficient for BABA
compliance as construction materials. For example, drop cables are
typically classified together with connectivity products as they are
cut to very short lengths and are utilized for the last hundred feet
from a network to a home, business, or other end user (versus outside
plant cables which can span multiple miles and have high fiber count).
This leads to a different manufacturing process.
OMB Response: After careful review of the comments, OMB has decided
to categorize ``optical fiber'' and ``fiber optic cable'' as separate,
standalone construction materials in Sec. 184.3. OMB notes that this
categorization is consistent with the proposed guidance, although it
differs from Memorandum M-22-11, which did not explicitly address the
classification of either material. OMB believes that classifying these
items as construction materials is consistent with BABA, has a logical
basis, and furthers BABA's goals of enhancing domestic supply chains.
On comments regarding the statutory text, OMB believes that the
classification of ``fiber optic cable'' and ``optical fiber'' is
consistent with BABA. OMB recognizes that Congress identified in its
Findings in section 70911(5) several ``common construction materials,''
including non-ferrous metals, plastic and polymer-based products
(including polymers in fiber optic cables), glass (including optic
glass), lumber, and drywall. This list also included steel, iron, and
manufactured products, which Congress explicitly treated differently in
the subsequent parts of BABA. For the reasons set forth above, OMB
decided that items that represent a clear logical extension of
materials specifically mentioned in the list should be treated as
construction materials. This includes fiber optic cable and optical
fiber.
OMB notes that Congress had the opportunity to define the term
``construction materials'' in section 70912, ``Definitions.'' While
section 70912 defines several terms, including ``Domestic Content
Procurement Preference,'' and ``Produced in the United States,'' which
specifically use the term ``construction materials,'' it does not
define ``construction materials'' itself. OMB also recognizes that the
statute intentionally defines ``infrastructure'' to include ``broadband
infrastructure,'' of which one of the main construction inputs is fiber
optic cables. OMB also notes that section 70915 of BABA, ``OMB Guidance
and Standards,'' explicitly requires OMB to ``issue guidance . . . to
assist in applying new domestic content procurement preferences under
section 70914,'' which implies that OMB has flexibility to determine
what constitutes
[[Page 57764]]
a ``construction material'' as long as it is consistent with the
statute.
Because OMB has defined fiber optic cable as a ``construction
material,'' OMB believes it has avoided the issue of ``reaching back
many stages into the manufacturing process'' that one commenter had
flagged. In fact, by identifying fiber optic cable and optical fiber as
separate, singular construction materials and applying specific
standards to each in Sec. 184.6, OMB believes that it will reduce
confusion and compliance costs. For example, commenters specifically
noted the confusion and compliance costs that may have resulted from
attempting to separately apply every construction material standard
that applied to different components of fiber optic cable, such as the
standard for plastic and polymer-based products.
On OMB's rationale for the classification of these items as
construction materials, OMB believes that the classification of ``fiber
optic cable'' and ``optical fiber'' is logically consistent with BABA.
A fiber optic cable primarily consists of optical fiber, aluminum (in
the buffer tube) and plastic and polymer-based products (in the casing
or jacketing that surrounds the optical fiber and buffer tube). An
optical fiber primarily consists of glass, or plastic, or both.
Consequently, OMB does not view the proposed guidance as necessarily
adding additional items to the list of construction materials, but
rather clarifying the standards for ``optic glass'' and ``polymers used
in fiber optic cables'' in the context of broadband, creating a
coherent and straightforward definition and standard, rather than
shoehorning everything into those two definitions.
OMB recognizes, as several commenters noted, that the fiber optic
manufacturing sector is unique, relative to other glass or plastic
products. Even within the fiber optic manufacturing industry, fiber
optic cables can be produced with similar, yet distinct, manufacturing
processes, such as is the case for drop cable. Because of these
nuances, OMB believes that it would be confusing to industry if it
tried to capture these items in the definition and manufacturing
process standards for ``optic glass'' and ``polymers used in fiber
optic cables.'' As a result, OMB believes it is important to separately
define ``fiber optic cable'' and ``optic fiber.'' Because optic fiber
is an input into a fiber optic cable, it is important that the
processes of producing optic fiber are captured in the manufacturing
process for fiber optic cable. However, per industry guidance in the
public comments, they are seen as two separate items. By spelling out
both, OMB believes that its guidance is in line with industry
standards, minimizing confusion and compliance costs.
In terms of the capacity of supply chains to produce fiber optic
cables, OMB notes that several commenters identified both existing
capacity and new investment in domestic fiber optic cable
manufacturing. Per the statute, OMB recognizes that key elements of
fiber optic cable are ``not adequately covered by a domestic content
procurement preference'' and that Congress has specifically applied the
Buy America preference to ``broadband infrastructure.'' IIJA 70911(5)
and 70912(5)(J). To the extent justified under section 70914 of BABA,
Sec. 184.7 of the revised guidance, and E.O. 14005, relevant Federal
agencies retain the flexibility to propose waivers on this topic.
Related to concerns about supply chain availability and increased
costs, the waiver process recognizes both as potential rationales for
the head of a Federal agency to propose a waiver. OMB notes that a
waiver was recently issued on April 19, 2023, applicable to certain
Federal awards under NTIA's Middle Mile Grant program for broadband
infrastructure.
In addition, OMB has clarified in the revised guidance that ``fiber
optic cable'' includes ``drop cable,'' a frequently used sub-type of
fiber optic cable. Based on public comments, OMB recognizes that the
industry sometimes views drop cable as a separate product. However,
because the process for creating drop cables is considered less complex
than that of a standard fiber optic cable, OMB believes that the
standards that apply to fiber optic cables generally--as outlined in
Sec. 184.6--are appropriate to also apply to drop cables. In terms of
additional variation with fiber optic cables, Federal agencies may, as
necessary, provide clarifying guidance to recipients and stakeholders
to avoid any additional ambiguity or confusion. Because this guidance
influences all Federal awards for infrastructure programs generally,
OMB does not want to offer overly prescriptive, granular definitions
that may constrain innovation or variability in industry practice. Such
variations may be more appropriately recognized and addressed by the
awarding Federal agency.
Section 184.3--Definition of Construction Materials--Inclusion of
Lumber
Several commenters proposed removing lumber from the list of
construction materials based on concerns about the limited supply of
lumber. One commenter expressed concerns about including lumber and
drywall on the list of construction materials due to existing supply
constraints for each of these materials. This commenter observed that
lumber is a key component in residential housing construction and
domestic lumber production has never been high enough to fully meet
demand at the national level. Accordingly, lumber has been imported
from other countries to make up the shortfall. The commenter noted that
Canada is one of the largest exporters of softwood lumber products to
the U.S. The commenter indicated that including lumber on the list of
construction materials would compound the challenges with already
existing supply constraints and add significant challenges for the
residential construction industry.
Another commenter suggested that to avoid disrupting the North
American softwood lumber market for federally funded infrastructure
projects, OMB should ensure that the process of obtaining a waiver for
Canadian lumber is clear, expeditious, consistent with international
obligations, and supportive of the American public interest. The
Government of British Columbia urged OMB in the final guidance to: (1)
exclude lumber and non-ferrous metals entirely from its definition of
``construction materials;'' or (2) specifically exempt lumber and non-
ferrous metals from Canada from the definition of ``construction
materials.''
Other commenters noted that lumber should include ``dimensional
lumber only'' and not a combination of materials.
OMB Response: In reaching its final list of construction materials
for the revised guidance, OMB used the list provided by Congress in its
Findings in section 70911(5) of BABA for guidance. More detailed
discussion on that approach is provided above. Lumber is included on
that list and OMB includes it in the revised guidance. OMB understands
a lumber product to be a product comprised primarily of lumber, but
which may also include some minor additions of other materials (such as
glue or other binding agents). Further discussion is provided on the
newly listed material ``engineered wood'' below. If stakeholders
believe that waivers are justified under section 70914(b) of BABA and
Sec. 184.8 of the revised guidance in relation to lumber, the waiver
process would be the appropriate mechanism to address concerns related
to this topic.
[[Page 57765]]
Section 184.3--Definition of Construction Materials--Inclusion of
Engineered Wood
Several commenters supported including ``engineered wood'' as a
separate construction material from lumber. Several commenters noted
the unique manufacturing processes and complex supply chains for
engineered wood products.
Some commenters suggested that the separate category should be
titled ``other wood products'' to also include non-lumber manufactured
wood products. They suggested the category be expanded to include
plywood, oriented strand board, I-joists, glue laminated timber, cross-
laminated timber, and structural composite lumber.
Other commenters agreed that engineered wood was a construction
material but opposed the proposal to create a new stand-alone category
for ``engineered wood'' items because they believed the ``lumber''
category already captured engineered wood. The commenters believed that
a separate classification could create confusion, as some products
could be considered both lumber and engineered wood. Another commenter
noted that engineered wood is a laminar composite and already meets the
requirements of lumber mixed with a binding agent, making a new
category unnecessary.
Finally, other commenters thought that engineered wood should not
be considered a construction material at all, and instead should be
categorized as a ``manufactured product.'' Many commenters, as
discussed prior, were generally opposed to including any new materials
on the list of construction materials. Some commenters had specific
concerns. For example, some commenters opposed classifying engineered
wood products as a construction material because they consist of a
mixture of multiple raw materials. Another commenter noted that
engineered wood products are part of a system and that installation is
not accomplished with simple binding agents. Several State departments
of transportation noted that they already interpreted engineered wood
to be a manufactured product and that labeling it as a construction
material would be a significant change and require additional time to
implement. Other commenters cautioned against including engineered wood
products as a construction material based on domestic availability and
supply chain concerns. One commenter noted engineered wood is highly
price-sensitive to supply and demand. That commenter believed that
applying the Buy America requirements to extremely price-sensitive
materials would generate excessive requests for waivers due to project
cost escalation, creating administrative backlog and project delays.
Separately, other commenters, who were neither explicitly
supportive or opposed to the inclusion of engineered wood as a
standalone category, sought further clarification from OMB. One
commenter indicated that fiberboard and plywood are typical examples of
engineered wood products and was uncertain how OMB would treat them.
One of these commenters expressed a concern that a number of products
could inappropriately be included under engineered wood, including
hardwood plywood, hardwood veneer, and engineered wood floors. This
commenter emphasized that particular parts of the manufacturing process
for these products, such as splicing, currently occur in Canada and
cannot be easily transitioned to the U.S. Another commenter noted that
it interpreted lumber to be a narrowly defined construction material
that does not generally include engineered wood products. Similarly, a
separate commenter wrote that, as written in the preliminary guidance,
it would treat the wood component as lumber and the adhesive as a
manufactured product. One commenter suggested that OMB clarify the
definition based on the domestic industry's ability to provide 100% of
the required materials necessary for Federal projects.
OMB Response: After careful review of the comments, OMB has decided
to categorize ``engineered wood'' as a separate, standalone
construction material in Sec. 184.3. Multiple commenters viewed
engineered wood as an input into an infrastructure project. In
addition, engineered wood can represent a logical extension of the
categories of lumber, on the one hand, and plastic and polymer-based
products, on the other, both of which are listed in the Findings in
section 70911(5) of BABA and identified in Memorandum M-22-11. Both
lumber and plastic and polymer-based products are constituent elements
of engineered wood.
Engineered wood is also an input into an infrastructure project
that is a substitute for traditional, non-engineered lumber. While
manufacturers typically buy engineered wood in the specific forms that
commenters identified, such as structural composite lumber and cross-
laminated timber, they may then apply it to an infrastructure project
in a similar manner as lumber. For example, a wood frame for roofing or
flooring could be made out of either lumber or engineered wood.
Manufacturers may choose one type over the other for a variety of
reasons, including better quality, weight resistance, or
appropriateness for the specific nature of an infrastructure project.
Both products can serve identical functions in an infrastructure
project and have similar manufacturing processes. Other similarities
between engineered wood and lumber include the generally cohesive
nature of standalone products and the lack of discrete components. Also
like lumber, it is feasible, in most cases, to define a single
manufacturing standard applicable to the engineered wood products that
OMB intends to include in this category.
OMB also observes, however, that the manufacturing processes
applicable to lumber and engineered wood, while similar in some ways,
are not identical. Engineered wood involves additional material inputs
that strengthen or modify it. Given the complementary nature of
engineered wood with traditional lumber, and the fact that engineered
wood consists of lumber, OMB did not want to artificially incentivize
economic activity toward engineered wood over lumber simply because the
former was categorized differently under OMB's guidance and thus
subject to different domestic content preferences. Based on the
structure of the final definition of ``construction materials,'' if
engineered wood was not added to the list of construction materials, it
would instead be treated as a manufactured product because it consists
of inputs of more than one listed item. Because converting lumber into
engineered wood only involves additions that would represent a small
percentage of engineered wood's overall cost, OMB believes it would be
possible for manufacturers to buy ``engineered wood'' subject to a
different and less-stringent domestic content preference to avoid the
domestic content preference for lumber. See BABA 70912(6). In doing so,
it would defeat the purpose of including ``lumber'' as a specific
construction material because it would disproportionately advantage
engineered wood as an input into an infrastructure project.
To ensure that the construction material standard would apply to
engineered wood, OMB added it to the list of construction materials in
instances where an input is lumber. OMB notes that there may be cases
where an engineered product is made up of non-lumber manufactured wood
products. Such products do not fall under this category. However, if
they are
[[Page 57766]]
made up of plastic and polymer-based products, they may be a
construction material under the ``plastic and polymer-based products''
category. Further information on OMB's rationale for the products
included under the category of construction materials is provided
above, which was generally guided by the Findings in section 70911(5)
of BABA.
OMB acknowledges the concerns raised by commenters on adding
additional construction materials to its list. However, in the case of
engineered wood, OMB found that this step was necessary to ensure
treatment of this product as a construction material, and to allow
stakeholders to distinguish between lumber, plastic and polymer-based
products, and engineered wood when applying the standards at Sec.
184.6.
While OMB believes that engineered wood could be seen as a subset
of lumber, OMB recognized multiple commenters noted that engineered
wood products have a unique production process that differs from
lumber. Lumping both products in one general category could create
confusion when applying the standard at Sec. 184.6. OMB also notes
that it has modified the standard in Sec. 184.6 for engineered wood:
``All manufacturing processes from the initial combination of
constituent materials until the wood product is in its final form,
occurred in the United States.'' OMB believes that this will provide
further clarity. Additional explanation on these changes can be found
below.
Section 184.3--Definition of Construction Materials--Exclusion of
Additional Materials
OMB received multiple comments about adding additional materials to
the list of construction materials, such as paint, coatings, bricks,
and geotextiles. Several commenters supported including paint and
coatings as a construction material, and provided specific suggestions
for defining the manufacturing processes for this item, which could
range from mixing of the raw materials through packaging. Other
commenters expressed opinions on whether coatings should, or should
not, be considered construction materials, including both field-applied
coatings and shop-applied coating. These commenters explained practical
consequences that may result from this distinction.
For paint and coatings, some parties observed that requiring all
manufacturing process to occur in the U.S.--from mixing of pigments,
resin solvents and additives through final canning/packaging--could be
difficult to monitor. For example, one commenter believed that it would
be impossible to track where all components of coatings come from. Some
commenters raised concerns that requiring the mixing of pigments in the
U.S. could eliminate certain coatings that do not contain pigments.
Other commenters questioned whether paint and coatings should be
included on the list at all. These commenters suggested that paint and
coatings would more appropriately be categorized as a ``manufactured
product'' because they consist of a disparate mixture of materials and
chemicals. Other commenters suggested that paint and coatings are not
construction materials, but instead should be treated as ``de minimis''
additions to construction materials that do not change the
categorization of listed items. Another commenter suggested
incorporating the application of coatings into the standards in Sec.
184.6 of the guidance for items already listed, such as non-ferrous
metals, rather than identifying coatings as a separate construction
material. Other commenters observed that classifying paint and coatings
as a type of construction material would represent a significant change
from OMB's initial guidance in Memorandum M-22-11 that could impose an
additional burden on stakeholders and take additional time to
implement.
On bricks, some commenters noted that bricks should be considered a
``manufactured product'' because they are a mixture of multiple
materials. Other commenters noted that bricks are a mixture of section
70917(c) materials. These commenters--beginning their analysis from the
premise that combinations of section 70917(c) materials should not be
treated as either construction materials or manufactured products--
believed that OMB should not apply a Buy America to bricks under either
category that reason. Some commenters did not express a strong
preference, observing that bricks could reasonably be considered either
a construction material or a manufactured product.
OMB Response: In reaching its final list of construction materials
for the revised guidance, OMB used the list provided by Congress in its
Findings in section 70911(5) of BABA for guidance. More detailed
discussion on that approach is provided above. Paint, coatings, and
bricks are not included on that list, nor does OMB consider these items
to constitute a clear logical extension of items that are included on
the list, at least as would warrant including them as separately listed
construction materials. OMB aimed to generally adhere to the Findings
in developing its final list for the guidance in part 184. Thus, at
this time, OMB does not include these items in its list of construction
materials in the definition in Sec. 184.3.
In reaching this conclusion, OMB acknowledges the concerns and
questions raised by several commenters about adding items such as paint
and coatings to the list. Some commenters expressed concerns about
complexity, confusion, and administrative burden that could be added to
process of applying the Buy America preference if these items were
included as listed construction materials. Consistent with guidance and
principles explained elsewhere in part 184, paint, coatings, and brick
incorporated into an infrastructure project will generally continue to
be classified as manufactured products. This is generally consistent
with the initial guidance provided in Memorandum M-22-11. OMB may
consider adding additional items to the list of constructure materials
in future iterations of its guidance through revisions to part 184. OMB
will follow appropriate notice and comment procedures before adding
additional items to the list.
Regarding comments maintaining that bricks are excluded as section
70917(c) materials, OMB explains its treatment of section 70917(c)
materials below. Under the approach set forth in the revised guidance,
bricks will generally be treated as manufactured products.
Section 184.3--Definition of Construction Materials--Topic of Minor
Additions and Binding Agents
Many commenters recommended that OMB establish a reasonable
standard for de minimis additions to construction materials, which
would specify which minor additions of other materials would not change
a construction material into a manufactured product.
Some commenters advocated for clear and specific metrics for
determining what should be considered a de minimis addition. For
example, one commenter requested OMB to provide a specific de minimis
exception for construction materials to ensure that minor components or
inputs--such as fillers, waxes, or similar materials--do not result in
the exclusion of items such as structural engineered wood products from
the construction material category.
Other commenters noted that trying to define and apply a single de
minimis percentage or amount for all construction materials could be
time-consuming, burdensome, and a
[[Page 57767]]
potentially a poor fit in some circumstances, such as for specific
materials or agency programs.
OMB also received a mix of comments on binding agents, with some
comments supporting OMB's proposal and others seeking further
clarification. Many of the comments on binding agents came from the
aggregate, paving, and cement industries. These comments are addressed
separately below in the context of manufactured products.
There were also comments that expressed concerns over introducing
``new rules'' related to binding agents that have yet to be defined.
OMB Response: In the revised guidance, OMB adopts a simplified
approach for the topic of both minor additions and binding agents.
Instead of treating binding agents separately, the revised guidance
provides that minor additions of articles, materials, supplies, or
binding agents to a construction material do not change the
categorization of the construction material. OMB elected to use the
term ``minor additions'' instead of ``de minimis'' additions to reduce
potential for confusion with de minimis waivers, which are described
separately in Memorandum M-22-11 and have a different meaning and
application.
OMB does not propose a specific definition of minor additions in
this revised guidance, nor does OMB provide a specific percentage or
amount that the term must correspond to in all cases for all Federal
agencies. Instead, OMB emphasizes that Federal agencies should exercise
reasonable discretion in applying this term within their respective
Federal financial assistance programs for infrastructure. OMB has
decided on this approach based on recognition of the wide diversity of
infrastructure programs and projects funded by the Federal Government.
For example, considering that the cost of construction materials may
vary widely, a specific dollar amount threshold appropriate for the
types of construction materials incorporated on smaller-scale projects
funded by one agency may not be appropriate for much larger-scale
projects funded by a different agency. Similarly, a single percentage
threshold may not always be an equally good fit for all of the
different the types of construction materials used on federally funded
infrastructure projects. OMB will continue to engage with stakeholders
to monitor and assess the implementation of the minor additions
provision and may revisit this topic as necessary. Although not
identical, OMB believes that this approach is generally consistent with
the approach already in use by Federal agencies under Memorandum M-22-
11 and BABA, and is also consistent with OMB's goals as outlined in the
proposed guidance. OMB also believes that this approach--which leaves
some flexibility--may also reduce burden on stakeholders.
For an example of OMB's intended application of this provision, wax
added to engineered wood generally should not disqualify the engineered
wood from being categorized as a construction material. However, if
before the engineered wood is brought to the work site, it is combined
with glass or other items or materials to produce a new product, which
is not listed in paragraph (1) of the definition, such as a sliding
window, the new product would be classified as a manufactured product,
not a construction material.
To reduce complexity and potential for confusion, OMB has blended
the provision in the proposed guidance related to binding agents into
the new provision related to minor additions. This approach avoids the
need for a new definition of the term binding agent in this context,
which could potentially be confused with the alternative use of that
term in the context of section 70917(c) materials. Instead, as with
other additions or inputs, the relevant consideration is whether the
binding agent added to a construction material is a minor addition.
OMB also explains above in this preamble that other additions, such
as coatings, do not change the categorization of a construction
material if they are added through a manufacturing process specifically
described in the standard for that construction material at Sec. 184.6
of the guidance. An example in the case of non-ferrous metals is
provided above.
Federal agencies may consider issuing their own guidance on the
topic of minor additions for their respective Federal funding programs
for infrastructure. For example, agency guidance may provide additional
qualitative or quantitative factors to consider in making a
determination on whether an addition should be considered a minor
addition. A relevant factor could be whether the addition will, or will
not, constitute a significant portion of the total cost of the
construction material.
Section 184.3--Definition of Infrastructure Project
Several commenters advocated for a more precise definition of
``infrastructure project'' and suggested possible changes to the
definition to reduce confusion. For example, some comments suggested
removing the phrase ``any activity related to,'' which they believe was
unnecessary and could be confusing. Some commenters suggested using
``physical structures or facilities'' to define infrastructure. Another
commenter suggested removing ``in the United States'' because this
commenter believed that BABA applies to federally funded infrastructure
without any limitations on where the infrastructure is built. Another
commenter suggested adding ``using federal funds'' to the definition
for additional clarity. Other commenters provided a range of other
suggestions to further clarify, expand, or narrow the definition of
this term.
A State agency observed that several independent infrastructure
projects are often funded under one Federal award. Alternatively, in
some cases only a portion of an infrastructure project, which is part
of a larger project, may receive Federal funding. This State agency
explained that it had received many questions regarding whether the
term ``infrastructure project'' refers just to the federally funded
parts of the project, an entire Federal award that may include other
non-infrastructure components, the minimum amount of recipient funds
required to receive a Federal award, or all matching recipient funds
associated with a Federal award. The commenter recommended providing a
clear definition of what the ``infrastructure project'' to resolve
these questions and facilitate compliance with BABA requirements.
OMB Response: The definition of ``infrastructure project'' in Sec.
184.3 is based on guidance already provided in Memorandum M-22-11,
which was based on the definitions of ``infrastructure,'' ``project,''
and ``Federal financial assistance'' in section 70912 of BABA in
addition to other statutory provisions. OMB added a ``see also'' signal
to the definition to direct stakeholders to additional guidance
provided in Sec. 184.4 at paragraphs (c) and (d).
Regarding concerns about the phrase ``any activity related to,''
OMB notes that other effective guidance provides limiting principles
related to the application of this term, such as the distinction
between temporary use and permanent incorporation in Memorandum M-22-
11, as discussed above, which remains effective. Although temporary
items may fall under the broad scope of an infrastructure project, the
Buy America preference does not apply to them if they are not
permanently incorporated into the project. The initial guidance in
Memorandum M-22-11, through the successor M-Memorandum, remains in
effect except in cases of direct conflict
[[Page 57768]]
with part 184. OMB retains the phrase ``any activity related to'' for
consistency with the guidance in Sec. 184.4(d), which explains that
Federal agencies should interpret the term ``infrastructure'' broadly.
This broad interpretation, however, remains subject to other specific
limiting principles in part 184, Memorandum M-22-11, or any successor
M-Memorandum that OMB issues to replace Memorandum M-22-11. For similar
reasons, OMB does not find it necessary to specifically limit the
definition to ``physical structures or facilities.''
On the comment suggesting removing ``in the United States,'' OMB
notes that the definition of ``infrastructure'' at section 70912(5) of
BABA is limited to ``structures, facilities, and equipment . . . in the
United States.'' Regarding the suggestion to add ``using federal
funds,'' this topic is addressed elsewhere in the guidance such as
Sec. Sec. 184.1(b) and 184.4(b).
On the comment requesting more specificity on the scope of an
infrastructure project, OMB first reminds stakeholders of its existing
guidance in Memorandum M-22-11, which defines ``project'' as the
construction, alteration, maintenance, or repair of infrastructure in
the U.S. OMB explains in its initial guidance that the Buy America
preference ``only applies to the iron and steel, manufactured products,
and construction materials used for the infrastructure project under an
award.'' OMB explains that if ``an agency has determined that no funds
from a particular award under a covered program will be used for
infrastructure, a Buy America preference does not apply to that
award.'' Similarly, OMB explains that, ``for a covered program, a Buy
America preference does not apply to non-infrastructure spending under
an award that also includes a covered project.'' This should clarify
the commenter's concern on application of BABA to other non-
infrastructure components of an infrastructure project.
OMB also clarifies in Memorandum M-22-11 that a ``Buy America
preference applies to an entire infrastructure project, even if it is
funded by both Federal and non-Federal funds under one or more awards''
(emphasis in original). This guidance from Memorandum M-22-11 remains
in effect. Federal agencies may consider providing further guidance on
this topic to further address the risk of improper segmentation of
infrastructure projects by funding source or in other ways in order to
avoid BABA coverage. As Memorandum M-22-11 explains, the BABA
preference should be applied to the entire infrastructure project. At
this time OMB leaves Federal agencies with discretion on how best to
ensure proper application of the Buy America preference to the entire
infrastructure project receiving a Federal award.
On the definition of this term in general, considering the guidance
already available on this topic from BABA itself, in Memorandum M-22-
11, and in other provisions of the revised guidance in part 184, OMB
did not find it necessary to make additional changes to the definition
in the part 184 text beyond inserting the ``see also'' signal directing
readers to further guidance in Sec. 184.4 at paragraphs (c) and (d).
Further discussion on those paragraphs is provided below in this
preamble.
Section 184.3--Definition of (1) Iron or Steel Products and (2)
Predominantly of Iron or Steel or a Combination of Both
Because the definition of ``iron or steel products'' is closely
intertwined with the definition of ``predominantly of iron or steel or
a combination of both,'' OMB discusses comments related to both
definitions here. Many commenters supported providing a clear
definition in the revised guidance for ``predominantly'' iron or steel
items. Commenters generally agreed that using the definition at FAR
25.003 would provide the needed clarity. Some commenters also expressed
support for including in that definition language from the FAR that
would provide an exception for commercial off the shelf (COTS)
fasteners. Other commenters recommended clarifying that the calculation
could be defined by weight, volume, cost, or other measures. Some
commenters also suggested increasing the threshold for ``predominantly
iron or steel'' products above the 50 precent threshold used in the
FAR.
Other commenters suggested adopting the definition of iron and
steel from the American Iron and Steel (AIS) standard used by EPA. Some
commenters also suggested using the word ``primarily'' as it is used in
the AIS standard in place of the word ``predominantly.''
Some commenters observed that the word ``predominantly'' does not
appear in the statute, and questioned whether it should be included in
the revised guidance at all. Commenters also sought clarity on topics
including what domestic content standard applies to components that are
not made of iron or steel and when stakeholders should determine the
cost of the iron or steel in the product.
OMB Response: In part 184, OMB adopts a definition for
predominantly of iron or steel or a combination of both, which is
generally consistent with the FAR definition. The definition adopted by
OMB, however, does not incorporate FAR-specific waivers or exemptions,
such as the language related to COTS fasteners. OMB also notes that
when determining whether the product meets the applicable threshold,
labor costs are not included.
OMB believes that a clear method is needed to distinguish between
iron or steel products and other product categories to ensure that
stakeholders will understand what domestic content standards to apply
to individual items. OMB finds that using a definition based largely on
the existing FAR definition will provide consistency and predictability
for stakeholders, ensuring that similar principles are applied in the
context of both Federal procurement and Federal financial assistance.
OMB also observes the similarity of its adopted standard to the AIS
standard used by EPA. OMB acknowledges that the standards are not
identical, but their use of a common 50 percent threshold should lead
to similar results on product classification in many cases. OMB also
clarifies that it does not modify the AIS standard used by EPA through
this guidance. EPA is the best source of information on what Federal
awards made by EPA are subject to its AIS standard based on section
70917 of BABA and Sec. 184.2(a) of this guidance. OMB also observes
that the term ``predominantly'' as used in the revised guidance is not
identical to the term ``primarily'' used by EPA. Again, the terms both
use a 50 percent threshold, but have other variations and will lead to
different results on product classification in certain cases.
OMB addresses questions on what domestic content standard applies
to components that are not made of iron or steel in other sections of
the guidance and preamble.
Section 184.3--Definition of Manufactured Products--General
OMB received many comments on its proposed definition of
``manufactured products.'' For example, OMB received many comments
requesting additional guidance on how to identify what constitutes a
``manufactured product'' relative to a construction material, an iron
or steel product, or a section 70917(c) material (referred to as an
``excluded material'' in the preamble to the proposed guidance). Some
commenters noted that the proposed guidance did not provide sufficient
clarity on how to treat products that are a combination of multiple
construction materials. Other commenters, including many State
departments of transportation, questioned OMB's rationale for proposing
to deviate from
[[Page 57769]]
the initial guidance in Memorandum M-22-11 on this topic, and
potentially reclassifying many manufactured products as construction
materials. These commenters explained various practical consequences of
a deviation from the initial guidance on this topic, which are
discussed above under the general comment summary for the definition of
``construction materials.''
Other commenters maintained that OMB's proposed definition of
manufactured products was overly broad and should be narrowed and more
tailored. For example, one commenter stressed the importance of
providing an affirmative definition of the term, which would define
what set of items OMB intends to be included in the category, rather
than just explaining what items are not included. This commenter
favored the affirmative language proposed in the preamble to OMB's
proposed guidance, which would only classify an item as a manufactured
product if it was either ``processed into a specific form and shape''
or consisted of a combination of raw materials ``to create a material
that has different properties than the properties of the individual raw
materials.''
Some commenters who favored narrowing the definition of
``manufactured products'' believed that the intent of BABA was only to
include products that are commonly or frequently used in federally
funded infrastructure projects. Some also suggested that a product
should only be included if its use on federally funded infrastructure
projects is broad or substantial enough to encourage or drive
investment in American manufacturing based specifically on application
of the Buy America preference. Commenters also expressed concerns that
supply chains were already stressed and projects were already delayed
prior to the enactment of BABA. These commenters suggested that an
overly broad application of the Buy America preference for manufactured
products could lead to further project delays and cost increases or
overruns.
Some commenters supported the use of the FAR for supplemental
definitions of the terms ``end product'' and ``component,'' which could
be applied to the category of manufactured products. These commenters
suggested that the supplemental definitions could provide further
clarity for stakeholders. Other commenters questioned the
appropriateness of using the FAR definitions in this context.
Additionally, some commenters raised concerns about the burden of
tracking a wide range of material components in an ``end product,''
which could encompass a range of different manufactured components
brought to the site at different times.
Some commenters also requested that OMB clarify the treatment of
``kits'' or systems under the revised guidance. Specifically, one
commenter requested confirmation that if a manufactured product is a
kit or system consisting of multiple components that are required in
order to implement the product solution at a site, the kit or system
would be evaluated as a single manufactured product subject to the 55
percent cost component analysis, rather than viewing each of the items
in the kit or system as a separate manufactured product each subject to
its own separate analysis.
OMB also received one comment from a State department of
transportation requesting clarification on classifications for topsoil,
compost, and seed. Another commenter provided more detail on seeds,
explaining that they are often used on infrastructure projects to
prevent soil erosion, protect water quality, and comply with
environmental requirements, such as those under the Clean Water Act.
OMB Response: OMB recognizes concerns expressed by commenters on
the need to provide further clarity on the meaning and classification
of manufactured products. To address these concerns, OMB has added an
affirmative definition of the term ``manufactured products,'' which now
comes before the limiting definition explaining what manufactured
products are not. The affirmative definition is based largely on the
elements for an affirmative definition proposed by OMB in the preamble
to the proposed guidance. In the final guidance, the first paragraph of
the definition of ``manufactured products'' defines the term to mean
articles, materials, or supplies that have been: (i) processed into a
specific form and shape; or (ii) combined with other articles,
materials, or supplies to create a product with different properties
than the individual articles, materials, or supplies.
Paragraph (1)(i) of the definition remains unchanged relative to
the language included in the preamble of OMB's proposed guidance based
on the definition of ``manufactured good'' at 2 CFR 176.140(a)(1). The
second element of the affirmative definition of ``manufactured
products'' in paragraph (1)(ii) was modified in the revised guidance
relative to 2 CFR 176.140(a)(1). OMB dropped the reference to raw
materials to clarify that a manufactured product may also be created by
combining manufactured components, which are not raw materials.
However, OMB retained the language specifying that the combination of
materials would create a product with ``different properties'' than the
individual articles, materials, or supplies. By retaining the language
on ``different properties,'' OMB acknowledges that not just any
combination of materials produces a manufactured product. For example,
a mixture of raw materials in an unprocessed or minimally processed
state, such as minimally-processed fill dirt, should not be classified
as a manufactured product.
One important purpose of both elements of the affirmative
definition of ``manufactured products'' in paragraph (1) is to
recognize that some items, like certain raw materials, are not
meaningfully ``manufactured'' before they are brought to the work site.
Raw materials may include unprocessed or minimally-processed materials
such as natural resources, which serve as the basic materials used in
manufacturing processes for other finished products and components of
finished products. OMB does not believe that Congress intended to apply
the Buy America preference for manufactured products to non-
manufactured or raw materials if they are brought to the work site in
an unprocessed or minimally-processed state (such as topsoil, compost,
and seed). Thus, OMB agreed with commenters that it was important to
provide affirmative content and meaning for the definition to provide
further clarity. If non-manufactured or raw materials are brought to
the work site in an unprocessed or minimally processed state, Federal
agencies should not classify these items as manufactured products in
their implementation of BABA preferences.
OMB further clarifies that non-manufactured or raw materials mixed
off-site with other non-manufactured or raw materials of similar types,
or with similar but not identical properties, would not necessarily
result in classifying the mixed material brought to the work site as a
manufactured product if it remains in an unprocessed or minimally
processed state. OMB recognizes that an overly strict application of
the revised definition of ``manufactured products'' could potentially
result in classifying certain technically composite or compound raw
materials, such as fill dirt, as manufactured products, which is not
OMB's intent. Even if there are some limited or marginal changes to the
properties of the combined material, it may be reasonable to continue
to classifying the combined material as a non-manufactured or raw
material in at least the circumstances described above.
[[Page 57770]]
OMB also notes that certain waste or recycled materials, as discussed
by some commenters, may also potentially be classified as non-
manufactured raw materials if they remain in an unprocessed or
minimally-processed state--or the equivalent of such a state for waste
and recycled materials. OMB does not issue specific guidance to Federal
agencies on the topic of waste or recycled materials through this
document.
Paragraph (2) of OMB's revised definition of ``manufactured
products'' again clarifies that if an item is classified as an iron or
steel product, a construction material, or a section 70917(c) material,
then it is not a manufactured product. OMB's responses to comments
about treatment of combinations of different construction materials are
addressed in the response to comments on the general construction
material definition above. As explained under that section of the
preamble, OMB has returned to an approach more consistent with
Memorandum M-22-11 on that topic than was reflected in the proposed
guidance. OMB returns to classifying items that consist of two or more
of the construction materials listed in the definition at Sec. 184.3,
or that combine a listed construction material with non-minor additions
of other non-listed items, as manufactured products, rather than as
construction materials.
It was necessary to maintain what is now the first sentence of
paragraph (2) of the definition of ``manufactured products'' to
continue allow for distinguishing between product categories, which
have different domestic content requirements applicable to each of
them. Section 184.4(e) of the revised guidance explains that products
only fall in a single category, but does not explain how to decide
which category a product falls in. The definitions in Sec. 184.3
provide that information. The first sentence of paragraph (2) of the
``manufactured products'' definition ensures that this definition does
not conflict or overlap with other product category definitions in
Sec. 184.3. For example, many construction materials are also
processed into a specific form and shape. Moreover, listed construction
materials such as fiber optic cable and engineered wood are also
produced by combining different materials through manufacturing
processes. Paragraph (2) explains that the other definitions continue
to take priority.
Paragraph (2) of OMB's revised definition also now clarifies that
an item classified as a manufactured product may include components
that are construction materials, iron or steel products, or section
70917(c) materials. In addition to the listed items, the components of
a manufactured product may also include components that are non-listed
raw materials or other types of articles, materials, or supplies.
Although not addressed directly in the part 184 text, OMB
recognizes that some items may be acquired from a manufacturer or
supplier as a kit intended for final assembly or installation on the
work site. In such cases, the items comprising the kit should be
treated the same with regard to the cost of components test. Even in
the case of a kit, for the purposes of applying the cost of components
test at Sec. 184.5, the manufacturer should be considered the entity
that manufactured the elements of the kit, not the recipient or
contractor that acquires the kit or the contractor that assembles or
installs the kit on the work site. The kit concept is discussed in
further detail under Sec. 184.4(e) below.
OMB believes the definition provided in the revised guidance on the
meaning of manufactured products will provide needed clarity to
stakeholders for the vast majority of product classifications. OMB also
believes its approach in the revised guidance will provide continuity
with certain key elements of its initial guidance in Memorandum M-22-11
on how to distinguish between manufactured products and construction
materials. Where fringe or marginal cases arise, further guidance may
be needed in the future.
Section 184.3--Definition of Manufactured Product--Relationship to
Section 70917(c) Materials
Numerous commenters maintained that the revised guidance should
clarify that section 70917(c) materials are entirely excluded from
coverage under BABA. In the preamble to the proposed guidance, at
question 9 labeled ``Aggregates,'' OMB indicated that section 70917(c)
materials were only excluded by statute under the category of
``construction materials'' and sought comments on how they should be
treated under the category of ``manufactured products'' in the revised
guidance. The section 70917(c) materials include: (i) cement and
cementitious materials; (ii) aggregates such as stone, sand, or gravel;
and (iii) aggregate binding agents or additives. Section 70917(c)(1) of
BABA states that ``the term `construction materials' shall not
include'' the section 70917(c) materials. Section 70917(c)(2) of BABA
states the ``standards developed under section 70915(b)(1) shall not
include'' the section 70917(c) materials as ``inputs of the
construction material.'' These materials were referred to as ``excluded
materials'' in the preamble to the proposed guidance based on their
exclusion from the ``construction materials'' category.
Commenters offered many arguments and reasons why the section
70917(c) materials should be entirely excluded from all categories
under BABA, including manufactured products. Some commenters noted that
the adoption of the proposed guidance would have a negative impact on
industry, such as narrowing the sources for aggregates that could be
used in infrastructure projects. Some commenters also noted that local
aggregates may not meet quality standards, which could limit the life
of projects. Further, some commenters noted that alternative sources
for aggregates are often more costly than current (foreign) sources.
One commenter also noted that the domestic supply of aggregates is
limited by environmental and land use regulations (many of them
localized in scope), and subject to week-to-week fluctuations in
availability. This commenter explained that supplies are not flexible
in times of rising demand.
Some commenters believed that OMB failed to consider the provision
at section 70917(c)(2), which prohibits the section 70917(c) materials
from being considered inputs of a construction material under the
standards called for under 70915(b)(1). These commenters argued that
section 70917(c) materials, such as aggregates, should be fully
excluded from BABA domestic content preferences, whether as standalone
materials or as components in other materials such as precast concrete.
These commenters also noted the close link between cement and concrete,
observing that concrete cannot be produced without cement and that
cement has no function other than to produce concrete. Some commenters
maintained that Congress established the exclusion at section 70917(c)
to acknowledge fluctuations in the availability of section 70917(c)
materials, particularly cement. Some commenters also suggested that
that if a Buy America preference were applied to section 70917(c)
materials, the cost of the materials may significantly increase. Thus,
these commenters argued that both cement and concrete products should
be entirely exempt from BABA coverage.
Some commenters also stressed the importance of excluding asphaltic
concrete from Buy America coverage for similar reasons to the comments
stressing the importance of excluding
[[Page 57771]]
Portland cement concrete. These commenters explained that asphaltic
concrete is made of aggregates and aggregate binding agents and
additives (including asphalt), which are all section 70917(c)
materials. Some comments also focused specifically on Portland cement
concrete, which is made of aggregates, Portland cement (a form of
cement and aggregate binding agent), and other additives.
Other commenters questioned why a combination of section 70917(c)
materials with other section 70917(c) materials would create a new form
of product that is not excluded. They observed that there is nothing in
the statute to suggest that OMB should treat a product made of a
combination of section 70917(c) materials differently than it treats
the individual materials. One commenter noted that the listing of the
section 70917(c) in a single list indicates that Congress intended to
exclude not just single materials from BABA coverage, but also
combinations of the listed materials when they are bound together. This
commenter maintained that, under the statute, combinations of the
section 70197(c) materials are excluded from BABA requirements in the
same way as any individual material.
Many commenters questioned OMB's statement in the preamble to the
proposed guidance that section 70917(c) materials could be treated as
``manufactured products'' subject to the Buy America preference at
section 70914(a) of BABA. Some commenters indicated that only a
combination of non-excluded construction materials can properly
constitute a manufactured product under the statutory framework.
A few commenters also noted their agreement with OMB's observation
that BABA did not specifically exclude section 70917(c) materials from
the category of manufactured products. These commenters agreed that
section 70917(c) should be subject to the relevant domestic content
requirements for the category of manufactured products but not for the
category of construction materials. For example, one commenter
indicated that items made with inputs of section 70917(c) materials,
such as precast concrete shapes and reinforced precast concrete
structures, should be subject to the domestic content requirements for
the manufactured product category established under BABA.
OMB Response: After careful consideration of the comments received
on this topic and the statutory text of BABA, OMB clarifies that
section 70917(c) materials, on their own, are not manufactured
products. Further, section 70917(c) materials should not be considered
manufactured products when they are used at or combined proximate to
the work site--such as is the case with wet concrete or hot mix asphalt
brought to the work site for incorporation. However, certain section
70917(c) materials (such as stone, sand, and gravel) may be used to
produce a manufactured product, such as is precast concrete. Precast
concrete is made of components, is processed into a specific shape or
form, and is in such state when brought to the work site.
The revised guidance clarifies the circumstances under which the
section 70917(c) materials should be treated as components of a
manufactured product. That determination will be made based on
consideration of: (i) the revised definition of the ``manufactured
products'' at Sec. 184.3; (ii) a new definition of ``section 70917(c)
materials'' at Sec. 184.3; (iii) new instructions at Sec. 184.4(e) on
how and when to categorize articles, materials, and supplies; (iv) new
instructions at Sec. 184.4(f) on how to apply the Buy America
preference by category; and (v) additional discussion in this preamble
clarifying that wet concrete should not be considered a manufactured
product if not dried or set prior to reaching the work site.
Based on these provisions, the revised guidance clarifies that a
manufactured product may include components that are section 70917(c)
materials, construction materials, iron or steel products, manufactured
products, raw materials, or any other articles, materials, or supplies.
As explained below, an item should be distinguished from its
components for the purposes of BABA categorization based on the status
of the product when brought to the work site. When brought to the work
site, an article, material, or supply should only be classified into
one of the following categories: (1) iron or steel products; (2)
manufactured products; (3) construction materials; or (4) section
70917(c) materials. See 2 CFR 184.4(e) (as revised). Examples of how
the revised provisions should be applied in practice to section
70917(c) materials are provided below.
Before discussing specific examples applying the revised
provisions, OMB first explains its analysis of the statutory text on
which the revised provisions are based. OMB agrees with commenters that
the category of construction materials must not include section
70917(c) materials. The statute clearly excludes the section 70917(c)
materials from categorization as construction materials and as
components or inputs in the associated standards for these materials.
The revised guidance recognizes these limitations. It does not include
section 70917(c) materials in the list of construction materials at
Sec. 184.3 or in the standards at Sec. 184.6. However, as explained
in the preamble to the proposed guidance, the statutory text does not
explain how section 70917(c) materials should be treated relative to
the manufactured product category.
The section of BABA addressing the section 70917(c) materials
applies only to the category of construction materials, not
manufactured products. Section 70917(c) provides that ``the term
construction materials shall not include cement and cementitious
materials, aggregates such as stone, sand, or gravel, or aggregate
binding agents or additives.'' BABA 70917(c)(1) (emphasis added). The
same section also provides that ``the standards developed under section
70915(b)(1)''--entitled ``standards for construction materials''--shall
not include ``cement and cementitious materials, aggregates such as
stone, sand, or gravel, or aggregate binding agents or additives as
inputs of the construction material.'' BABA 70915(b)(1) (emphasis
added) and 70917(c)(2). Notably, the standards developed under section
70915(b)(1) apply only to construction materials and not iron or steel
or manufactured products.
The separate categories for ``construction materials,'' ``iron or
steel'' products, and ``manufactured products'' are required by the
plain text of BABA sections 70912(2), 70912(6), and 70914(a)--and were
also applied under OMB's initial guidance in Memorandum M-22-11. Under
the definition at section 70912(2), the statute recognizes that Federal
agencies should apply three separate ``domestic content procurement
preference[s]'' for: (i) iron and steel products; (ii) manufactured
products; and (iii) construction materials. Under the definition for
``produced in the [U.S.]'' at section 70912(6), the statute also
recognizes these categories. The three top-level categories mandated by
Congress are again reiterated at section 70914.
Relative to the ``manufactured products'' category, a more
stringent standard applies to the ``construction materials'' category,
for which ``all manufacturing processes'' are required to occur in the
U.S. See section 70912(6)(C) of BABA, with standards to define ``all
manufacturing processes'' to be developed by OMB under section
70915(b)(1). Based on these provisions, the section 70917(c) materials
should be excluded under the more stringent standard for ``construction
materials.''
[[Page 57772]]
No exclusion, however, is provided under the category for
``manufactured products'' on which BABA is silent relative to these
materials.
OMB's revised guidance in part 184 is consistent with the statutory
framework of BABA, establishing three separate categories for Buy
America preferences. Consistent with section 70917(c), OMB does not
include the section 70917(c) materials under its proposed definition
for ``construction materials'' at Sec. 184.3, or as inputs for
``construction materials'' in the manufacturing standards at Sec.
184.6.
OMB also properly recognized that the statute did not exclude the
section 70917(c) materials from the ``manufactured products'' category,
to which an alternative domestic content standard applies. BABA only
excluded the section 70917(c) materials from the more stringent
domestic content preference for ``construction materials,'' which
requires ``all manufacturing processes'' for the material to occur in
the U.S., but not from the alternative domestic content preference for
manufactured products, which requires application of the 55 percent
``cost of components'' test.
The preamble to the proposed OMB guidance sought public comment on
how the section 70917(c) materials should be treated in the context of
the ``manufactured products'' Buy America preference category. OMB now
provides guidance on that topic in part 184. In doing so, OMB aims for
a harmonious interpretation of section 70917(c) of BABA, which bars
classification of section 70917(c) materials as construction materials,
and other sections of BABA, including sections 70912 and 70914, which
require Federal agencies to apply a Buy America preference for
manufactured products. Based on thorough review and consideration of
all comments received, and careful consideration of congressional
intent reflected in the statutory text, OMB's guidance gives effect to
all of these provisions and renders them compatible.
OMB agreed with commenters that it should not apply the
``manufactured products'' Buy America preference to standalone section
70917(c) materials if they have not been combined with different
section 70917(c) materials, or other materials, to create a
manufactured product. An item can be classified as only one of the
following: an iron or steel product, a construction material, a
manufactured product, a section 70917(c) material, or none of the
above. Thus, no individual item on the list of section 70917(c)
materials should be treated, in isolation, as a manufactured product.
OMB further clarifies in this preamble that wet concrete should not be
considered a manufactured product if not dried or set prior to reaching
the work site. The setting or drying of a combination of section
70917(c) materials into a finished product prior to reaching the work
site is generally the circumstance in which a combination of only
section 70917(c) materials would be considered a manufactured product.
OMB's approach for distinguishing a single section 70917(c)
material from a manufactured product is functionally similar--but not
identical--to its approach for distinguishing a single construction
material from a manufactured product. First, like the construction
material definition, ``articles, materials, or supplies that consist of
only one of the items listed'' in the definition of ``section 70917(c)
materials'' should be classified as section 70917(c) materials. 2 CFR
184.3 (as revised) (emphasis added). Just like a plastic item by itself
cannot be a manufactured product, stone by itself also cannot be a
manufactured product. Second, to the extent one of the listed section
70917(c) materials contains, as inputs, other items listed in the
definition--such as cement that requires aggregate binding agents as
inputs--the listed item is still considered a section 70917(c)
material. Third, when two or more section 70917(c) materials are
combined together at or proximate to the work site to make an item that
is not specifically listed--such as asphaltic or Portland cement
concrete--agencies should rely on how such items were classified at the
time they reached the work site.
In the case of section 70917(c) materials, OMB clarifies in this
preamble that, to the extent the section 70917(c) materials were only
combined as an unsettled mixture without final form when reaching the
work site, such as in the case of wet concrete or hot mix asphalt, the
unsettled mixture should not be considered a manufactured product to
which a Buy America preference applies. Wet concrete is not yet
``processed into a specific shape or form.'' Although it may have
``different properties'' than individual section 70917(c) materials,
OMB finds that it is more consistent with the intent of BABA to only
treat section 70917(c) materials that have set or dried into a
particular shape or form prior to reaching the work site, such as
precast concrete, as manufactured products. OMB recognizes that certain
section 70917(c) materials (such as stone, sand and gravel) may be used
to produce a manufactured product such as is the case with precast
concrete. Precast concrete consists of components processed into a
specific shape or form and is in such state when brought to the work
site, making it a manufactured product.
A key difference between the categories of construction material
and section 70917(c) materials is that, unlike construction materials,
no Buy America preference is applied directly to individual section
70917(c) materials. The parallels or similarities above relate only to
how materials are classified as falling within one of those categories.
To illustrate this approach, if an individual item included in the
list of section 70917(c) materials is brought to the work site for
incorporation into an infrastructure project, then that item is still a
section 70917(c) material and not a manufactured product. Agencies
should not apply the Buy America preference under BABA to an individual
section 70917(c) material that is not a component of a manufactured
product.
There may be circumstances, however, when section 70917(c)
materials will be treated as components of manufactured products to
which a Buy America preference will apply. If the individual section
70917(c) material is combined with other section 70917(c) materials and
non-minor additions of other materials before it is brought to the work
site, then the new product should be classified as a manufactured
product and the section 70917(c) materials should be treated as
components in the circumstances described in this preamble. For the
reasons explained above, including the value of section 70917(c)
materials in the 55 percent cost of components requirement is
consistent with BABA, which requires a Buy America preference to be
applied to all manufactured products. Examples of minor additions that
would not change the categorization of a section 70917(c) material are
provided under the discussion of aggregates below.
Based on the revised guidance, products like precast concrete
should be treated as manufactured products--or when applicable, iron
and steel products--with components including but not limited to
aggregates, cement, and aggregate binding agents, as well as, where
applicable, reinforcing iron or steel. OMB recognizes that in some
circumstances a precast concrete product may instead be classified as
an iron or steel product, such as when the product is predominantly of
iron or steel or a combination of both. OMB also recognizes that BABA's
savings provision, which is discussed above in this preamble, may
affect product
[[Page 57773]]
classification in some circumstances. Federal agencies are in the best
position to provide specific guidance on the application of BABA's
savings provision to their awards. Specific examples of how the
provisions of the revised guidance should be applied to section
70917(c) materials are provided below.
Aggregates should be classified as a section 70917(c) materials.
The fact that an aggregate is processed into a specific form or shape--
for example, to meet certain construction specifications--would not
affect its classification. The aggregate would still be classified as a
section 70917(c) material. Similarly, aggregates combined with minor
additions of other materials that do not impact the commonsense
identification of the material as an aggregate--for example, gravel
combined with additives to increase traction or resilience or for some
other purpose--would also not impact the classification of the
aggregate as a section 70917(c) material. In addition, aggregates mixed
only with other aggregates--such as sand mixed with gravel--remain
aggregates and section 70917(c) materials.
In classifying aggregates this way, OMB recognizes that many
aggregates are not ``manufactured'' in the ordinary sense of the term.
For example, rocks and stone are not manufactured. Even in cases in
which an aggregate is processed or altered in some way--for example, to
meet construction specifications--provided that the product brought to
the work site remains best classified as an aggregate, its
categorization as a section 70917(c) material would not change.
As commenters observed, OMB acknowledges that cement is an input of
concrete. Thus, in some cases, as specified in this preamble, a Buy
America preference will apply to cement and cementitious materials as
components of precast concrete. A precast concrete product, which
contains cement as an input, should be classified as a manufactured
product, not a section 70917(c) material. Circumstances when a Buy
America preference does not apply include when cement and cementitious
materials are brought to the work site as standalone products (to be
mixed on site) or in combination with other section 70917(c) materials,
such as in the case of wet concrete mix, which has not yet settled into
a specific form or shape before reaching the work site. As with cement,
in some cases, aggregate binding agents and additives will ultimately
be treated as components of a manufactured product. The circumstances
are similar to those described for cement and are therefore not
repeated here.
Section 184.3--Definition of Manufacturer
OMB added this definition in the revised guidance to address
comments received on the cost of component test for manufactured
products at Sec. 184.5. OMB addresses those comments under Sec.
184.5. In the revised guidance, manufacturer is defined to mean the
entity that performs the final manufacturing process that produces a
manufactured product.
Section 184.3--Definition of Produced in the U.S.
OMB received a range of comments on its definition of produced in
the U.S. As this definition is closely related to the manufacturing
standards for construction materials at Sec. 184.6, and the cost of
components test for manufactured products, many of the comments are
addressed under those sections.
Regarding the definition of ``produced in the [U.S.]'' for iron and
steel products, some commenters suggested adding language to clarify
that the standard does not require that other non-iron or -steel
components must be produced in the U.S. One commenter suggested
relocating Sec. 184.6 of the revised guidance to the definition of
``produced in the [U.S.]'' in Sec. 184.3. One commenter suggested
moving language about ``binding agents'' into the definition of
``construction materials'' to the definition of ``produced in the
[U.S.].'' Another commenter suggested revising the definition of
``produced in the U.S.'' for manufactured products to clearly
differentiate between products that have all components manufactured in
the U.S. and those with components manufactured in other countries.
OMB Response: OMB has adhered closely to the statutory definition
for this term at BABA section 70912(6). OMB made minor clarifying
edits, such as adding ``see also'' signals to other sections of the
guidance with relevant information, such as a reference to Sec. 184.5
in the case of manufactured products and Sec. 184.6 in the case of
construction materials.
On the definition applicable to iron or steel products, Sec.
184.4(e) clarifies than an article, material, or supply incorporated
into an infrastructure project must meet the Buy America preference for
only the single category in which it is classified. Thus, in the case
of iron or steel products, the Buy America preference does not apply
directly to non-iron or -steel components. In addition, consistent with
existing practice, the requirement for iron or steel does not restrict
the origin of the raw materials used in production of the iron or
steel, but requires that all manufacturing processes of the iron or
steel product occurred in the U.S.
Comments on the definition as applied to manufactured products are
addressed under Sec. 184.5. Comments on the definition as applied to
construction materials are addressed under Sec. 184.6.
Section 184.3--Definition of Section 70917(c) Materials
OMB has summarized comments related to section 70917(c) materials
under its discussion of the relationship of section 70917(c) materials
to manufactured products.
OMB Response: OMB has defined section 70917(c) materials to mean
only one of the following categories of items: (i) cement and
cementitious materials; (ii) aggregates such as stone, sand, or gravel;
or (iii) aggregate binding agents or additives. As discussed above on
the relationship of section 70917(c) materials to manufactured
products, OMB has incorporated a definition of ``section 70917(c)
materials'' based on the materials listed in that section of BABA. OMB
also added clarifying language to the definition, which is consistent
with the policy explained above, which OMB uses to distinguish between
section 70917(c) materials and manufactured products. OMB interprets
section 70917(c) of BABA harmoniously with the Buy America preference
for manufactured products, giving effect to both provisions.
OMB agrees with commenters that section 70917(c) materials are
excluded from the category of construction materials and from being
considered inputs to listed construction materials. OMB also agrees
with commenters that the Buy America preference for manufactured
products should not apply directly to section 70917(c) materials, such
as aggregates, which are not meaningfully manufactured in the ordinary
sense. In its discussion above, however, OMB also recognizes the
statutory mandate to apply a Buy America preference to manufactured
products, and explains the circumstances under which section 70917(c)
materials should be considered components of manufactured products.
OMB notes that the statutory text of BABA is generally silent on
the interaction between the two categories. OMB defines that
relationship in this revised guidance in a way that is consistent with
the statute reflected in both section 70917(c) of BABA, which excludes
section 70917(c) materials from the category of construction materials,
and sections 70912 and
[[Page 57774]]
70914(a) of BABA, which require application of a Buy America preference
to manufactured products. The text of BABA does not indicate that
Congress intended to exclude section 70917(c) materials from the latter
category. OMB's revised approach interprets the statutory provisions on
section 70917(c) materials and manufactured products in a way that
renders the provisions compatible. Based on thorough review and
consideration of all comments received, and careful consideration of
congressional intent reflected in the statutory text, the policy of the
Made in America Office in OMB on defining the interrelationship of the
categories is set forth above in this preamble and in the part 184
text.
Section 184.4: Applying the Buy America Preference to a Federal Award
Section 184.4(a) and (b)--Applicability of Buy America Preference to
Infrastructure Projects and Including the Buy America Preference in
Federal Awards
Some commenters questioned the earlier guidance in Memorandum M-22-
11, which only applied BABA to non-Federal entities as defined at 2 CFR
200.1. These commenters questioned the rationale for the non-
applicability of BABA to for-profit entities and explained certain
practical consequences of this policy. For example, non-Federal
entities, such as nonprofit organizations, may compete against for-
profit entities in applying for discretionary grants for
infrastructure. Thus, they feared this policy in Memorandum M-22-11
could create an unlevel playing field for grant applicants. These
commenters asked OMB to clarify that for-profit entities are also
subject to BABA.
One commenter maintained that the guidance exempting for-profit
entities from BABA has already created confusion and added ambiguity
into the grant application process. This commenter explained that not-
for-profit electric cooperatives are put on unequal footing with for-
profit entities when applying for competitive Federal grant programs
and faced with a barrier to entry in pursuing Federal funding
opportunities. The commenter believed that it was not congressional
intent to see America's nonprofit organizations be disadvantaged as the
Federal Government makes generational investments in infrastructure
such as broadband.
Alternatively, another commenter urged OMB to add language directly
in part 184 expressly stating that the BABA preference does not apply
to for-profit entities.
OMB Response: Except for minor editorial changes, OMB did not
change the text of these provisions in Sec. 184.4. Paragraph (a)
explains that BABA applies to Federal awards where funds are
appropriated or otherwise made available for infrastructure projects in
the U.S., regardless of whether infrastructure is the primary purpose
of the Federal award. Paragraph (b) provides information on including
the Buy America preference in Federal awards.
The guidance in Memorandum M-22-11 was based on the definition of
Federal financial assistance at section 70912(4)(A) of BABA, providing
that the term Federal financial assistance has the meaning given the
term in ``section 200.1 of title 2, Code of Federal Regulations (or
successor regulations).'' Memorandum M-22-11 explained that Federal
financial assistance means ``assistance that non-Federal entities
receive or administer in the form of grants, cooperative agreements,
non-cash contributions or donations of property, direct assistance,
loans, loan guarantees, and other types of financial assistance.''
Section 70912(4)(B) of BABA also explains that the term Federal
financial assistance includes all expenditures ``by a Federal agency to
a non-Federal entity for an infrastructure project.''
In OMB Guidance for Grants and Agreements at 2 CFR 200.1, Federal
financial assistance means assistance that non-Federal entities receive
or administer in the form of grants, cooperative agreements, and
several other forms of assistance. Memorandum M-22-11 clarified how the
term should be applied to BABA. OMB does not modify that guidance
through this document. In the same section of part 200, non-Federal
entity means ``a State, local government, Indian tribe, Institution of
Higher Education (IHE), or nonprofit organization that carries out a
Federal award as a recipient or subrecipient.'' In Sec. 184.4, OMB
uses the term Federal awards, the meaning of which includes ``Federal
financial assistance that a recipient receives directly from a Federal
awarding agency or indirectly from a pass-through entity.'' 2 CFR
200.1.
Based on the direction in the statute and the definitions at 2 CFR
200.1, Memorandum M-22-11 explained that for-profit organizations are
not considered non-Federal entities. However, Memorandum M-22-11 also
explained that the initial guidance it contained did not alter
independent statutory authorities that agencies may have to include
domestic content requirements in awards of Federal financial assistance
issued to for-profit organizations.
In response to comments on applicability of BABA to for-profits,
OMB further clarifies that 2 CFR 200.101(a)(2) allows Federal agencies
to apply subparts A through E of the OMB Guidance for Grants and
Agreements in 2 CFR part 200 to for-profit entities. Thus--although OMB
does not require them to do so--Federal agencies are allowed, under the
existing structure of part 200, to apply part 200, including the
domestic preferences at Sec. 200.322, to for-profit entities. Federal
agencies may consider applying the revised guidance in this way, at
their discretion, to create a level-playing field, with respect to
application of BABA, for discretionary grant programs or other reasons.
OMB also notes that, through a separate process, OMB will be proposing
revisions later in 2023 to the OMB Guidance for Grants and Agreements
in 2 CFR part 200, and other parts of 2 CFR. See 88 FR 8480 (Feb. 9,
2023).
Section 184.4(c) and (d)--Infrastructure in General and Interpretation
of Infrastructure
OMB received several comments on the meaning and interpretation of
infrastructure. Many of these comments are discussed above under the
definition of ``infrastructure project'' in Sec. 184.3. Other comments
are addressed here.
Some commenters asked OMB to clarify that infrastructure built
solely to support affordable housing should not be covered by BABA. One
commenter asked OMB to clarify that ``buildings and real property'' do
not include single family and multifamily residential properties. This
commenter believed that paragraph (d) and language in Memorandum M-22-
11 supported its request. The commenter was particularly interested in
privately-owed multifamily housing assisted by the U.S. Department of
Housing and Urban Development (HUD) and the U.S. Department of
Agriculture (USDA). The commenter requested a broad exemption for
Federal financial assistance used to construct or rehabilitate single-
family and multifamily residential housing projects. Another commenter
noted a major bottleneck in housing deliveries and that applying BABA
to building and real property could be a major headwind into efforts to
close the minority homeownership gap.
Another commenter observed that because the proposal references
``public transportation'' broadly, it is not entirely clear whether OMB
intends to
[[Page 57775]]
include rolling stock such as buses, subway cars, and commuter rail
cars, in the definition of ``infrastructure project.'' This commenter
believed that because rolling stock was not specifically listed in
Sec. 184.4 of the proposed guidance, OMB did not consider rolling
stock to be an infrastructure project, and FTA's rolling stock
regulation at 49 CFR 661.11 would continue to stand. The commenter
asked OMB or U.S. DOT to clarify. The commenter believed that FTA's
current regulation pertaining to rolling stock (49 CFR 661.11,
discussed above) should continue to survive. The commenter noted that
certain FTA rolling stock provisions may conflict with part 184.
OMB Response: Except for minor editorial changes, OMB did not
change the text of these provisions in the revised guidance. OMB
reminds commenters that additional guidance on the interpretation of
infrastructure is available in Memorandum M-22-11. Given the guidance
already provided on this topic in Memorandum M-22-11, and in other
provisions of the revised guidance in part 184, OMB did not find it
necessary to make additional changes to these provisions.
On the comments regarding infrastructure built to support
affordable housing, OMB notes that Memorandum M-22-11 instructed
Federal agencies to consider whether the project will serve a public
function, including whether the project is publicly owned and operated,
privately operated on behalf of the public, or is a place of public
accommodation, as opposed to a project that is privately owned and not
open to the public. Projects with the former qualities have greater
indicia of infrastructure, while projects with the latter quality have
fewer. Projects consisting solely of the purchase, construction, or
improvement of a private home for personal use, for example, would not
constitute an infrastructure project. Federal agencies will have more
specific information on how BABA applies to their specific programs.
OMB also notes that HUD and USDA have issued certain general
applicability waivers, which may apply to some of the relevant housing
projects. Recipients may consider requesting waivers from Federal
agencies for evaluation by the relevant Federal agency under the waiver
process in Sec. 184.7 of the guidance.
On comments and questions related to FTA regulations and rolling
stock, FTA and U.S. DOT are in the best position to provide specific
responses on how FTA's regulations apply today and interact with BABA
and part 184. OMB notes that Sec. 184.2(a) allows a Buy America
Preference meeting or exceeding the requirements of section 70914 of
BABA to remain in effect if applied by the agency to Federal awards
before November 15, 2021.
Section 184.4(e)--Categorization of Articles, Materials, and Supplies
OMB received many comments related to the categorization of
articles, materials, and supplies. For example, some commenters
observed that Memorandum M-22-11 provided that an ``article, material,
or supply should only be classified into one of the following
categories: (1) iron or steel; (2) a manufactured product; or (3) a
construction material.'' Other commenters noted that the proposed
guidance did not provide sufficient clarity on how to treat products
that are a combination of multiple construction materials. Many of
these commenters strongly felt that OMB should not deviate from the
initial guidance found in Memorandum M-22-11. Specifically, Memorandum
M-22-11 explained that for ``ease of administration, an article,
material, or supply should not be considered to fall into multiple
categories.'' These commenters questioned why this guidance was not
carried over into part 184 and wondered about practical consequences of
a product falling into multiple categories.
In the proposed guidance, OMB also asked if it should use the
definition of the term ``end product'' at FAR 25.003, which prompted
many comments on how to identify and differentiate the end products to
which the Buy America preference applies, which would be separated by
category. ``End product'' is defined in the FAR to mean ``those
articles, materials, and supplies to be acquired for public use.'' FAR
25.003.
Some commenters supported using the FAR definition of ``end
product'' to provide further clarity for stakeholders. Other commenters
questioned the usefulness, suitability, or both, of using the FAR
definition in the revised guidance. For example, some commenters raised
concerns over the reasonableness and burden of tracking the material
components in a vaguely defined ``end product.'' Many commenters sought
clarity on how to specifically identify the end products to which the
Buy America preference applies and how to distinguish the end product
from its components. In other words, some comments sought clarity, or
noted confusion, on how to distinguish between: (i) categorized end
products to which the Buy America preference directly applies; and (ii)
the components of categorized end products.
To the extent an item may be classified as a manufactured product,
but also includes components made of iron, steel, or construction
materials, where to draw the line around the end product relative to
its components makes a significant difference on how to apply the Buy
America preference. This is one reason why this topic was of special
concern to commenters. A broad end product with many disparate
components may be subject to only the 55 percent cost of components
test for a manufactured product. Alternatively, if each component of
that product were identified as a separate end product, they could each
be subject to the more stringent domestic content preferences
applicable to iron, steel, and construction materials. Many commenters
sought further clarity on this topic.
OMB Response: In the revised guidance, OMB agreed with commenters
that it should further clarify that items should only be classified as
falling into a single category or bucket. The revised guidance explains
that an article, material, or supply should only be classified into one
of the following categories: (1) iron or steel products; (2)
manufactured products; (3) construction materials; or (4) section
70917(c) materials. The fourth category was added in the revised
guidance for consistency with OMB's approach on distinguishing between
manufactured products and section 70917(c) materials discussed above.
The revised guidance further explains that an ``article, material, or
supply should not be considered to fall into multiple categories.'' The
guidance also notes that, in ``some cases, an article, material, or
supply may not fall under any of the categories listed in paragraph
(e)(1).'' For example, see the discussion above on temporary items
brough to a work site, which are not permanently incorporated into an
infrastructure project, and on non-manufactured raw materials that do
not meet the newly added affirmative definition of ``manufactured
products.''
The revised guidance also explains that the ``classification of an
article, material, or supply as falling into one of the categories
listed in paragraph (e)(1) must be made based on its status at the time
it is brought to the work site for incorporation into an infrastructure
project.'' Although OMB did not choose to define the term ``end
product'' in the revised guidance, through this sentence OMB has aimed
to provide clarity for stakeholders on how to identify the articles,
materials, and supplies to which the Buy America preference applies.
The part 184 text now explains
[[Page 57776]]
that items are generally categorized when they are ``brought to the
work site.''
The sentence is based in part on language from part 25 of the FAR,
which defines a construction material, in relevant part, as ``an
article, material, or supply brought to the construction site by a
contractor or subcontractor for incorporation into the building or
work.'' FAR 25.003. Although the term construction material under the
FAR has a different meaning, OMB found this language useful to identify
the time at which articles, materials, and supplies are classified as
falling into one category or another. OMB does not incorporate the
language in the FAR definition on ``emergency life safety systems'' but
separately addresses the concept of a ``kit'' below.
By using the term ``work site,'' OMB generally refers to the
location of the infrastructure project at which the iron, steel,
manufactured products, and construction materials will be incorporated.
Federal agencies should use reasonable discretion on how to apply this
term. For example, for projects in environmentally sensitive areas,
products may not initially be delivered directly to the location at
which they will be incorporated. In other scenarios, components may be
assembled at off-site locations and delivered to the work site after
assembly. Not knowing all the potential variations on this topic, OMB
leaves Federal agencies with a reasonable degree of flexibility on how
the term should be applied. Federal agencies may consider providing
guidance to their recipients on the meaning or scope of the work site.
OMB may also consider providing further guidance on this topic in the
future.
OMB cautions stakeholders that the ``brought to the work site''
language does not mean that Federal agencies will now require the Buy
America preference to be applied directly at the time a product is
brought to a work site. OMB has not changed its initial guidance in
Memorandum M-22-11 that a Buy America preference ``only applies to
articles, materials, and supplies that are consumed in, incorporated
into, or affixed to an infrastructure project.'' Thus, this new
language does not mean that Federal agencies will require compliance
checks for all products brought to the work site, which may include
temporary items that will never be incorporated into the project,
excess supplies, or incorrect deliveries. The purpose of the language
is to clarify when categorization occurs--not when Buy America
compliance is required. If a product is brought to the work site but
never incorporated into the infrastructure project, the BABA preference
would never apply to it. BABA applies only to products ``incorporated
into an infrastructure project.'' See 2 CFR 184.1(b) and the definition
of ``Buy America Preference'' at Sec. 184.3 (as revised). The language
also does not necessarily require actual classification to occur at the
time that products are brought to the work site, but only that, in
general, classification is based on the ``status'' of a product at the
time it was brought to the work site.
If categorization occurred instead at the time of ``incorporation''
into the project, after products are further combined through various
assembly and manufacturing processes on the work site, the resulting
``end products'' and their ``components'' would often look very
different and lead to different outcomes on product classification and
the applicable domestic content preference. The same would be true if
categorization occurred based on assessment of the status of products
in a finished infrastructure project. Categorization at the time of
``incorporation'' or project completion could result in wide-ranging
systems assembled on the site, which include many different products
from different manufacturers, being categorized as a one large
manufactured product. The resulting system could include many separate
iron or steel products or construction materials from different
manufacturers and suppliers. Shifting the level of analysis in this way
could result in only applying the domestic content preference for
manufactured products to the system as a whole. In the absence of any
guidance on this topic, it is conceivable that some recipients or
contractors may even seek to classify an entire infrastructure project
as one manufactured product. OMB's revised guidance avoids these
results by specifying that classification occurs based on the status of
products brought to the work site.
Another consequence of classifying at the time of ``incorporation''
or project completion could be eliminating almost all circumstances in
which the affirmative standard in paragraph (1) of the definition of
``manufactured products'' would not apply to an article, material, or
supply. While certain unmanufactured or raw materials brought to a work
site may not meet the definition, following ``incorporation'' or
project completion, the permanently incorporated materials would
generally have a specific form or shape, or have been combined with
other materials through manufacturing processes. Classifying materials
based on their status at the time they are brought to the work site is
more likely to result in at least some articles, materials, or supplies
not falling under any of the listed categories, which OMB recognizes as
a possibility.
OMB also clarifies here in the preamble that in certain cases a
manufactured product purchased from a single manufacturer or supplier
as a ``kit'' may be classified as a manufactured product even if its
components are brought to the site separately or at different times.
OMB does not define the term kit in the text of the revised guidance,
but leaves Federal agencies with reasonable discretion on how this
concept should be applied in practice when classifying products under
Sec. 184.4(e).
In general, by the term kit OMB means a product that is acquired
for incorporation into an infrastructure project from a single
manufacturer or supplier that is manufactured or assembled from
constituent components on the work site by a contractor. A kit may be
treated and evaluated as a single and distinct manufactured product
regardless of when or how its individual components are brought to the
work site. In contrast to a kit, other manufactured products are
manufactured or preassembled before they are brought to a work site.
When determining if products brought to a work site constitute a kit or
separate end products, Federal agencies should generally interpret the
term kit as limited to discrete products, machines, or devices
performing a unified function. A more wide-ranging system of
interconnected products, machines, or devices (such as a heating,
ventilation, and air conditioning system for an entire building) should
not be considered a kit. OMB also instructs agencies that a kit should
not include an entire infrastructure project.
On kits, OMB also clarifies that for the purposes of applying the
cost of components test at Sec. 184.5, the manufacturer should be
considered the entity that performs the final manufacturing process
that produces the kit, not the contractor that manufactures or
assembles it on the work site. Thus, transportation costs to the work
site should not be considered. In this context, the place of
incorporation does not mean the place of incorporation into the
infrastructure project, but the place at which the manufacturer
established the elements of the kit to be acquired for the
infrastructure project.
[[Page 57777]]
Section 184.4(f)--Application of the Buy America Preference by Category
Some commenters urged OMB to apply the standard for iron and steel
products to the components and subcomponents of other product
categories. For example, one commenter suggested that the iron and
steel standard should be applied directly to components and
subcomponents of manufactured products and construction materials. The
commenter noted that BABA explicitly states, under one of the prongs
for the term ``domestic content procurement preference,'' that no
Federal financial assistance may be obligated for a project unless
``all iron and steel used in the project are produced in the United
States.'' Based on this language, the commenter believed that BABA
requirements should apply directly to iron and steel components and
subcomponents of other product categories.
Some commenters also had questions and comments regarding what
domestic content preference should apply to coatings. Some of these
commenters observed that if galvanized coatings were to require
domestic sources of zinc ingots, there could be substantial problems
with sourcing.
OMB Response: In Sec. 184.4(f), OMB explains that an article,
material, or supply incorporated into an infrastructure project must
meet the Buy America Preference for only the single category in which
it is classified. This provision was added to address concerns from
commenters that it was unclear which standard, if any, should be
applied to components of items that do not match the product category
that the item is classified in.
For example, in the case of iron and steel products, there is no
restriction on the place of production or manufacture of components or
subcomponents that do not consist of iron or steel. In the case of
construction materials, there is no restriction on the place of
production or manufacture of minor additions, or the materials used for
additions specifically described in the standards at Sec. 184.6, such
as coatings for non-ferrous metals.
An additional example could be a steel guardrail consisting
predominantly of steel, but coated with aluminum. In this case, the
steel must be produced in the U.S., consistent with the requirements of
BABA, but there would be no restrictions on the other components of the
guardrail.
Section 184.5: Determining the Cost of Components for Manufactured
Products
Many commenters provided opinions on the definition of ``cost of
components'' in Sec. 184.5. Some commenters suggested continuing to
use the definition as provided under the FAR. Some of those commenters
indicated that the definition should include a statement that the costs
are based on a good faith estimate of the cost, as provided in the FAR
in the context of ``predominantly iron and steel'' products.
Many commenters recommended adjusting the FAR definition, but
removing the term ``contractor'' and replacing it with the term
``manufacturer.'' They noted that, in the case of Federal financial
assistance, it is generally the manufacturer that would be in the best
position to certify whether a product is manufactured in the U.S. One
commenter explained that contractors are the entities that build the
infrastructure facilities in the field with materials and products that
have been manufactured or produced elsewhere. Even with job-produced
materials such as Portland cement concrete, this commenter indicated
that there are most often separate material producers. This commenter
recommended using the term manufacturer with a definition that includes
material producers.
Some commenters also expressed support for retaining use of the
term ``contractor.'' For example, one commenter explained that many
products are altered from their manufactured state before installation
on an infrastructure project. Using an alternate subject like
``manufacturer'' could require additional definitions on what separates
field alterations like cutting to size or drilling holes from more
extensive modifications that would fall into the category of being
manufactured.
At least one commenter recommend that OMB use both ``contractor or
manufacturer'' as the appropriate subject. This commenter explained
that circumstances exist in which equipment arrives to the work site as
one piece and does not involve any work by the contractor other than
installation. Other times, equipment may arrive in pieces that require
assembly by the contractor. This commenter also recommended that the
labor and overhead required for a contractor to assemble the equipment
or system on the site be considered a part of the calculation of ``cost
of components.''
Other commenters suggested replacing the term ``contractor'' with
the term ``assistance recipient'' or ``vendor.'' In addition, some
commenters suggested simply removing the term ``by the contractor''
from the definition.
Other commenters advocated for various other revisions to the
``cost of components'' test to include other costs, such as those
associated with the manufacture or assembly (including machining and
tooling) of the end product, research and development, intellectual
property, freight and overhead, acquisition costs, and labor. Other
commenters suggested that OMB should more clearly define the term
``overhead'' to avoid ambiguity.
Some commenters also suggested further adjustments to the
definition in the proposed guidance. For example, some advocated
removing the term ``construction materials'' from the definition. Other
commenters objected to removing this term.
Some commenters also recommended that OMB incorporate the
definitions for ``end product,'' ``component,'' and ``system'' from the
FTA's Buy America regulations at 49 CFR 661.3. Alternatively, some
commenters suggested that incorporating those definitions, and
particularly the definition for ``end product,'' could cause further
confusion for stakeholders.
Some commenters also question whether OMB should use the FAR
definition at all. These commenters suggested considering other
standards for the cost of components test, such as the standard used
for ARRA implementation. Finally, some commenters requested that OMB
clarify the treatment of ``kits'' or similar concepts under the revised
guidance.
OMB Response: OMB agrees with commenters who recommended using the
term ``manufacturer'' in this context. OMB separately defines that term
in Sec. 184.3 of the guidance to mean the entity that completes the
final manufacturing process that produces a manufactured product. As
products are classified based on their status when brought to the work
site, this refers to the final manufacturing process that occurred
before that point in time. How this term should be applied in the case
of ``kits'' is described above under Sec. 184.4(e).
With the exception of replacing the term ``contractor'' with
``manufacturer'' and the term ``end product'' with ``manufactured
product,'' OMB adheres closely to the FAR definition. OMB believes this
choice will promote uniformity and predictability for stakeholders and
ensure that similar provisions are applied for both Federal procurement
contracts under the FAR and Federal financial assistance under part
184.
OMB also notes that labor costs associated with the manufacturing
of the manufactured product are not included in the costs of components
[[Page 57778]]
test, which is consistent with the approach under the FAR. For
components manufactured by the contractor, the FAR standard
specifically excludes ``any costs associated with the manufacture of
the end product.'' OMB follows this approach in the case of components
manufactured by the ``manufacturer.''
Section 184.6: Construction Material Standards
Section 184.6(a)(1)--Standard for Non-Ferrous Metals
Several commenters emphasized that OMB should not modify the
definition of ``produced in the United States'' that OMB provided in
Sec. 184.6 of the preliminary guidance for non-ferrous metals. One
commenter emphasized that ``all manufacturing processes'' for non-
ferrous metals, in the context of aluminum, should capture the smelting
and casting process. Several other commenters emphasized that OMB
should consider ``final assembly'' to be a part of the manufacturing
process as manufacturers add ``real-world value'' at that stage of
production.
However, several other commenters suggested revisions to the
proposed standard. Some commenters sought more clarity without
providing specific feedback or suggestions. Other commenters focused on
specific parts of the production process. One commenter noted that the
phrase ``initial smelting or melting'' could cause confusion if not
explained further. In particular, that commenter sought feedback on
whether this provision covered the rolling process. Another commenter
suggested that OMB replace the ``initial smelting'' requirement with a
``last melting'' requirement.
One commenter suggested that OMB adopt a completely different
framework for determining the ``manufacturing process.'' That commenter
suggested that OMB determine the manufacturing process based on the
existing United States-Mexico-Canada Agreement (USMCA) Rules of Origin
criteria of ``substantial transformation'' for assessing qualification
for domestic preference procurement. According to this commenter, OMB
should consider a non-ferrous metal to be ``produced in the United
States'' if the process that causes a corresponding shift in a
material's 4-digit Harmonized Tariff Schedule (HTS) code classification
occurs in the U.S.
Several commenters suggested that the definition of ``produced in
the United States'' for non-ferrous metals should be expanded to
include any manufacturing processes that occur ``in the United States
and/or Canada.'' To justify this decision, one commenter cited the
statutory language in the 1950 U.S. Defense Production Act, which
considers both the U.S. and Canada to be a ``domestic source.'' This
commenter noted that Canada and the U.S. share a highly integrated
aluminum market. Domestic aluminum producers rely on a mix of domestic,
Canadian, and globally sourced primary aluminum, of which 75 percent
represents U.S. imports. Another commenter cited logistical concerns,
noting that many companies that supply non-ferrous metals to the U.S.
operate on both sides of the border between the U.S. and Canada. This
commenter warned that manufacturers may have a hard time accounting for
where the production has occurred and flagged that manufacturers often
comingle inventory, making it difficult to trace the origin of specific
products.
Some commenters noted that ``non-ferrous metals'' is a broad
category. Consequently, as written, it may capture non-ferrous metals
whose components are not produced domestically, such as zinc. OMB did
not receive specific significant comments on other types of non-ferrous
metals, such as nickel, tin, or titanium.
OMB Response: OMB notes that it has not made any revisions to Sec.
184.6 for ``non-ferrous metals'' compared to the preliminary guidance.
The definition of ``produced in the United States'' for non-ferrous
metals is: ``All manufacturing processes, from initial smelting or
melting through final shaping, coating, and assembly, occurred in the
United States.''
OMB believes that this standard accurately reflects the discrete
manufacturing processes used in the production of non-ferrous metals.
In general, commenters agreed that ``melting,'' where the ore of a non-
ferrous metal is converted into a liquid, and ``smelting,'' where the
ore is converted into its purest form, are the beginning of the
manufacturing process. Similarly, commenters who addressed it agreed
that ``assembly'' represented the end point of the manufacturing
process. However, OMB has chosen to not offer additional granularity.
As one commenter noted, non-ferrous metals is a broad category. Non-
ferrous metals can be produced in many forms across residential,
commercial, and industrial applications, ranging from wires to piping
to roofing.
As written, Sec. 184.6(a)(1) already covers any manufacturing
processes involved in the manufacturing of non-ferrous metals that
occur between the initial smelting or melting and final assembly. OMB
believes that this would logically cover rolling--the process in which
a non-ferrous metal is passed through one or more pairs of rolls to
reduce the thickness or to achieve uniform thickness. OMB is concerned
that expressing more specific processes would imply that those not
provided are by default excluded from the manufacturing process, and
thus the requirement to be ``produced in the United States.''
In terms of where the manufacturing process begins and ends, OMB
notes that the statutory text of section 70912(6)(C) states that ``in
the case of construction materials, that all manufacturing processes
for the construction material occurred in the United States'' (emphasis
added). While OMB recognizes that several commenters had noted separate
stages of the process where the ``manufacturing process'' could begin
or end, OMB believes it does not have flexibility to distinguish
between ``initial'' and ``final'' stages of the same process, as with
melting/smelting. Given the explicit statutory requirement that all
manufacturing processes occur in the U.S., OMB believes that it must
include all processes that industry has recognized.
One commenter expressed a concern that a lack of existing domestic
capacity would make it difficult to produce certain types of non-
ferrous metals, such as zinc, in the United States. In reaching its
final list of construction materials for the revised guidance, OMB used
the list provided by Congress in its Findings in section 70911(5) of
BABA for guidance. More detailed discussion on that approach is
provided above. Non-ferrous metals are included on that list and OMB
includes that term in the revised guidance without modification.
However, OMB also notes that Congress also provided an established
waiver process to address concerns, including those related to supply
chain availability.
Section 184.6(a)(2)--Standard for Plastic and Polymer-Based Products
One commenter suggested modifications to the definition of
``plastic and polymer-based products.'' Specifically, the commenter
suggested adjusting the definition to include all manufacturing
processes, including a reference to ``plastic or polymer-based fibers
or filaments.'' Another commenter argued that the definition of
``plastic and resin'' is sufficient, noting that as long as the
composite material is made up of all plastic or resin, then creating a
separate category for ``composite building materials'' was not needed.
[[Page 57779]]
This commenter added that the term ``composite material'' is vague and
could be interpreted differently by stakeholders. Further comments on
the standard for the proposed category of composite building materials,
which is eliminated in the final guidance, are addressed below.
OMB Response: OMB notes that it has made minor revisions to the
standard in Sec. 184.6(a)(2) for ``plastic and polymer-based
products.'' The definition of ``produced in the United States'' for
plastic and polymer-based products is: ``All manufacturing processes,
from initial combination of constituent plastic or polymer-based
inputs, or, where applicable, constituent composite materials, until
the item is in its final form, occurred in the United States.'' OMB
believes that this standard accurately reflects the discrete
manufacturing processes used in the production of plastic.
The statute requires ``all manufacturing processes'' to occur in
the U.S. and directs OMB to define all manufacturing processes. OMB
requested comment on the definition in its proposed guidance, which
aimed to ensure all manufacturing processes were captured in a manner
consistent with the statute and that would be administrable and well
understood by manufacturers and industry participants. Based on review
of comments, OMB believes the standard laid out in the final guidance
follows this statutory requirement.
OMB recognizes that many commenters were confused by the reference
to ``composite building materials.'' As discussed below, that category
of construction material has now been reintegrated into the broader
category of plastic and polymer-based products. Although the broader
plastic and polymer category incorporates an element of the standard
for composite building materials--referring to ``constituent composite
materials''--into the standard for plastic and polymer-based products,
OMB notes that the category itself remains limited to plastic and
polymer-based products. As discussed in Sec. 184.3 above, the standard
should only be applied to a product comprised primarily of inputs of
plastics and polymers, although such a product may also include minor
additions of other materials.
Section 184.6(a)--Standard for Composite Building Materials (Eliminated
as Standalone Material)
Many commenters indicated that additional guidance was needed on
``composite building materials'' and how OMB intended to distinguish
them from ``plastic and polymer-based products'' in general. Some
commenters suggested that providing examples of composite building
materials would also be useful. One commenter noted that these terms do
not have standard industry meanings and vary between manufacturers and
States. Several commenters recommended that OMB treat composite
building materials as a subset of plastic and polymer-based products
rather than defining it separately and providing a separate
manufacturing standard. If treated as its own stand-alone category,
commenters feared that the term could inadvertently incorporate a wider
range of products than what was intended by law.
Other commenters supported the definition of composite building
materials, as provided in the proposed guidance. These commenters
believed that the production process for such products includes the
combination of raw material inputs and the molding of the composite
product, which is analogous to the ``all manufacturing processes''
origin standard applied to iron and steel under certain existing Buy
America laws.
OMB Response: OMB has deleted the standard for composite building
materials from the revised guidance. As recommended by numerous
commenters, plastic or polymer-based composite building materials are
instead treated as a subset of plastic or polymer-based products. OMB
recognizes that without further guidance it may have been difficult to
distinguish between these items. Thus, the standard in Sec. 184.6 for
plastic or polymer-based products applies to plastic or polymer-based
composite building materials under the revised guidance.
Section 184.6(a)(3)--Standard for Glass
In general, most commenters did not suggest any revisions to OMB's
proposed definition of ``produced in the United States'' for glass.
However, one commenter warned that it believed that domestic industry
for glass beads could not currently meet the proposed definition of
``produced in the United States'' for glass. In particular, that
commenter focused on the fact that the process, as proposed, would
include ``the batching and melting of raw materials.'' This commenter
noted that existing firms cannot quickly move their entire
manufacturing process to the U.S. Because the production process
involves proprietary and unique manufacturing processes--which no
domestic firm currently conducts in the U.S.--this commenter warned
that the proposed standards would hamper the production process for
certain glass products. Another commenter noted that all glass
ceramics, which it considered to be a superior material compared to
tempered glass for certain types of products like fire exits, doors,
and windows, are processed and produced internationally.
OMB Response: OMB notes that it has not made any revisions to Sec.
184.6 for ``glass.'' The definition of ``produced in the United
States'' for glass is: ``All manufacturing processes, from initial
batching and melting of raw materials through annealing, cooling, and
cutting, occurred in the United States.'' OMB believes that these
standards accurately reflect the discrete manufacturing processes used
in the production of glass.
One commenter expressed a concern that a lack of existing domestic
capacity would make it difficult to produce certain types of glass
products, such as glass beads, in the U.S. In reaching its final list
of construction materials for the revised guidance, OMB used the list
provided by Congress in its Findings in section 70911(5) of BABA for
guidance. More detailed discussion on that approach is provided above.
Glass is included on that list and OMB includes that term in the
revised guidance without modification. However, OMB also notes that
Congress also provided an established waiver process to address any
concerns, including those related to supply chain availability.
Specifically, in the event that a Federal agency believes that (i)
applying the domestic content procurement preference would be
inconsistent with the public interest, (ii) construction materials are
not produced in the U.S. in sufficient and reasonably available
quantities or of a satisfactory quality, or (iii) the inclusion of
construction materials produced in the U.S. will increase the cost of
the overall project by more than 25 percent, OMB notes that the head of
that agency, under section 70914, can waive the BABA preference
requirements.
Section 184.6(a)(4) and (5)--Construction Material Standards--Fiber
Optic Cable and Optical Fiber
Commenters requested OMB to clarify the proposed standards for
determining whether optical fiber and fiber optic cable are ``produced
in the United States.'' In particular, commenters suggested that the
standards should more accurately reflect industry standards and
terminology. Other commenters noted that the OMB's ultimate standards
must meet the statutory directives pertaining to the ``all
manufacturing processes'' requirement, including that OMB provide
``clear and consistent market
[[Page 57780]]
requirements.'' Commenters thought it was important for OMB to
eliminate ambiguity, where possible, so OMB could communicate clear
signals to the market and to grantees in a way that supports investment
in U.S. jobs and effective implementation of broadband infrastructure
programs.
To better facilitate that process, several commenters detailed
their understanding of the various steps of the production process for
optical fiber and fiber optic cable that reflect industry standards and
terminology. For the optical fiber, these steps include: (1) the making
of the ``core'' or core rods, (2) the preform to provide various
optical properties, and (3) the draw where the preform is heated,
cooled, and then pulled through a draw tower to create a single strand
of optical fiber. For fiber optic cable, these steps include: (1) the
application of the buffer tube, (2) the stranding to reinforce and
protect the cable, and (3) the jacketing to encase the stranded buffer
tubes with a protective sheath or jacketing material.
Some commenters requested that OMB provide specific definitions of
each step in the process to the extent that OMB updated its definitions
in Sec. 184.6 to reflect them.
Several commenters discussed in detail which steps of the
manufactured process they thought should be included in Sec. 184.6. In
general, all commenters who proposed amendments to Sec. 184.6 agreed
that the manufacturing process for optical fiber should be through the
``completion of the draw,'' rather than ``stranding,'' which is a
process that occurs later in the creation of the fiber optic cable. One
commenter additionally suggested that OMB clarify that the drawing
process involved soaking the fiber ``in deuterium gas.'' Separately,
another commenter suggested defining the preform fabrication stage as
fiber preform to reduce confusion and assist with the category
determination of the construction material. While commenters were thus
in general agreement about the manufacturing steps for optical fiber,
commenters expressed different views on the appropriate manufacturing
process for fiber optic cable.
At least two commenters generally agreed with OMB's proposed
standards for fiber optic cable but recommended also including the
making of the ``core.'' Other commenters noted that all the
manufacturing processes for both optical fiber and fiber optic cable
are currently performed in the U.S. Consequently, they argued that OMB
must define ``all manufacturing processes'' to include each step
because any narrower definition would deviate from the clear statutory
requirement of BABA. Another commenter expressed a similar perspective,
stating that the use of the word ``all'' to establish a 100 percent
domestic content requirement at the outset of statutory implementation
removes any discretion except through the waiver process.
In contrast, another commenter suggested that OMB revise the
definition to include ``from and between the buffer tube extrusion to
outer jacketing.'' This commenter noted that the manufacturing of
optical preform, optical fiber (e.g., draw), and optical cable are
distinct, separate, and generally unrelated manufacturing processes.
Each process generally occurs at different facilities and at different
times. As such, optical preform and optical fiber manufacturing are
each an input to the optical cable manufacturing process.
In addition, this commenter noted that--it believes--the industry
as a whole would be unable to meet the Buy America preference and
provide fiber optical cable to federally funded infrastructure projects
based on the standards proposed in the preliminary guidance.
Two commenters suggested that OMB revise the definition for fiber
optic cable to be based on the drawing of the optical fiber from the
preform through jacketing. With this adjustment, the 2 CFR definition
would specify that the manufacturing process, in which the polymer-
based jacket is combined with binder yarns and other materials to form
the cabled core, occur in the U.S., but the production of the polymers
or yarns would not. In addition, the manufacturing process for the
outer jacketing would occur in the U.S., but the production of other
inputs, such as the aramid yarns, polymer-based tapes, and ripcords,
would not.
Another commenter emphasized that no domestic manufacturer will be
able to manufacture all the inputs at the more granular levels
domestically based on OMB's proposed guidance. In addition, this
commenter thought that competent and experienced broadband providers
would be less likely to participate in Federal funding programs under
the preliminary guidance, which will lead to more expensive builds with
infrastructure that may be less capable and reliable. Another commenter
also expressed concern that no manufacturer would likely invest the
significant amount of capital over the course of several years to build
complete preform making facilities because they would not produce fiber
in time to supply fiber optic cable meeting the proposed guidance.
Another commenter that manufactures fused silica cylinders (or
tubes) for fiber optic cables noted that it provides glass core rods to
fabricate fiber optic ``preforms'' in the U.S. This commenter noted
that the manufacture of fused silica cylinders, which is an input into
optical fiber, should not be considered part of the ``manufacturing
process'' under Sec. 184.6.
Related to the above suggestions about existing domestic capacity,
several commenters raised potential antitrust issues--which they argued
would undermine Congress' goals of expansive broadband connectivity and
job growth. One commenter stated that only a few companies can produce
optical fibers and preforms in the U.S. and only a single manufacturer
currently vertically integrates the cable production with complete
preform fabrication in the U.S. that produces the type of optical fiber
used in broadband and other infrastructure projects. According to this
commenter, this would lead to increased prices due to this firm's
market power and create a single point of failure--where disruptions
could impede broadband installations.
Several commenters also asked for clarification on how the various
manufacturing processes for construction materials interacted with each
other.
A State department of transportation suggested that the
manufacturing processes for optical fiber should reflect the reference
to ``optic glass'' in section 70911(5). This commenter noted that only
one set of manufacturing standards should apply to a particular
product. For instance, standards applied to fiber optic cable and
optical fiber should be separate from the standards applied to plastic
and polymer-based products.
Another commenter stated that there is a fundamental disconnect
between the rigid qualifying product definitions applying to ``glass,''
``fiber optic cable,'' and ``optical fiber'' and the current realities
of the marketplace for these critical broadband infrastructure inputs.
Another State department of transportation suggested that Sec.
184.3 be revised to remove optical fiber as a separate construction
material because the standards that OMB proposed for fiber optic cables
in Sec. 184.6 contained all the standards that OMB proposed for
optical fiber in Sec. 184.6.
Another commenter requested that OMB revise Sec. 184.6 to clarify
that the reference to ``all manufacturing processes'' in each
construction material standard is intended to encompass only the
manufacturing and assembly
[[Page 57781]]
processes to produce the relevant construction material and not any
processes related to the production of, for example, constituent inputs
or raw materials that may be used in the manufacturing and assembly of
that construction material.
Another commenter expressed concern that BABA compliance could be
prohibitively difficult and expensive to implement because some
construction materials, such as fiber optic cable, may be comprised of
multiple sub-components, each with its own distinct manufacturing and
production processes, which could entail multiple supply chain layers.
A municipality suggested that the ``manufacturing processes''
standards should be consistent across polymer-based and glass
components to avoid increased compliance costs and potential confusion.
This commenter suggested that compliance will be easier if all ``fiber
optic cabling'' is covered by a single rule.
Several commenters noted that the standards in Sec. 184.6 for
``all manufacturing processes'' should not include simple assembly
operations performed after the jacketing stage, including the process
of cutting U.S.-made fiber optic cable to length and attaching de
minimis parts such as connectors, which do not add significant value.
One commenter pointed out that not including such operations would be
consistent with customs rulings regarding fiber optic cable, which
recognize that U.S.-made optical fibers are the ``essence'' of a fiber
optic cable, and that ``simple assembly'' operations such as cutting
fibers to length and adding connectors does not result in the
substantial transformation of U.S.-made fiber optic cables.
OMB Response: After reviewing the record, OMB has refined the
standards by which optical fiber and fiber optic cable will be
considered ``produced in the United States'' under Sec. 184.6. OMB has
updated the definitions for both items. The definition of ``produced in
the United States'' for fiber optic cable (including drop cable) is:
``All manufacturing processes, from the ribboning (if applicable),
through buffering, fiber stranding and jacketing, occurred in the U.S.
All manufacturing processes also include the standards for glass and
optical fiber, but not for non-ferrous metals, plastic and polymer-
based products, or any others.'' The definition of ``produced in the
United States'' for optical fiber is: ``All manufacturing processes,
from the initial preform fabrication stage through the completion of
the draw, occurred in the U.S.''
Based on careful consideration of comments, OMB believes that the
revised standards more accurately reflect the discrete manufacturing
processes used in the production of (a) optical fiber and (b) fiber
optic cable, which uses finished optical fiber as an input. OMB has
also defined fiber optic cable in a manner that avoids repeating the
same steps involved in optical fiber, changing the beginning of the
process from ``the initial preform fabrication stage'' to ``ribboning
(if applicable).'' By modifying the standards to be consistent with
current industry practice, OMB seeks to reduce confusion for
stakeholders moving forward. For ``fiber optic cable'' in Sec.
184.6(a)(4), OMB has not substantively modified the standard from the
preliminary guidance. The text of the standard, however, now
incorporates ``the standards for glass and optical fiber'' instead of
trying to fit each individual standard into ``fiber optic cable.''
Based on industry feedback, OMB believes that the range of processes
listed in the preliminary guidance is consistent with industry
practice. However, for ``optical fiber'' in Sec. 184.6(a)(5), OMB has
replaced ``fiber stranding'' with ``the completion of the draw'' in the
revised guidance to conform with industry understanding of the relevant
manufacturing processes.
In terms of offering specific definitions for each specific step
within Sec. 184.6(a)(4) and (5), OMB defers to the awarding Federal
agency if it believes that additional clarification is more
appropriate. However, based on public comments that OMB received, OMB
believes that there is a consistent, straightforward understanding
among the industry of the definitions of the relevant terms that does
not require further clarification by OMB.
OMB notes that the statutory text of section 70912(6)(C) states
that ``in the case of construction materials, that all manufacturing
processes for the construction material occurred in the United States''
(emphasis added). While OMB recognizes that several commenters had
noted separate stages of the process where the ``manufacturing
process'' could begin or end, OMB believes it does not have flexibility
to set these terms. Given the explicit statutory requirement that all
manufacturing processes occur in the U.S. and rough industry consensus
from several of the largest domestic manufacturers on what those
processes are, OMB believes that it must include all processes that
industry has recognized, from the manufacturing process for ``glass''
and ``initial preform'' through ``stranding and jacketing.''
Where relevant, OMB notes that a Federal agency also has the waiver
process to address concerns, including with respect to product
availability.
To provide further guidance on which standards in Sec. 184.6 apply
to a particular material, OMB has added the following language as
paragraph (b), which is discussed further below: ``Except as
specifically provided, only a single standard under paragraph (a) of
this section should be applied to a single construction material.'' OMB
notes that, in its articulation of ``all manufacturing processes'' for
fiber optic cable that it has also included ``the standards for glass
and optical fiber, but not for non-ferrous metals, plastic and polymer-
based products, or any others.'' OMB believes that the additional
language provides the level of clarity requested by the relevant
commenters.
In terms of minor additions, OMB notes that it has amended the
definition of ``construction material'' in Sec. 184.3 to read: ``Minor
additions of articles, materials, supplies, or binding agents to a
construction material do not change the categorization of the
construction material.'' OMB discusses this provision in the preamble
above. Federal agencies may also provide further guidance on this
topic. This may afford Federal agencies the opportunity to address at
least some of the specific concerns raised above, such as regarding
simple assembly operations that may be seen as being outside of the
``manufacturing process'' because they are considered minor additions.
Section 184.6(a)(6)--Standard for Lumber
One commenter noted that the lumber referenced in part 184 should
include dimensional lumber only and not a combination of materials. The
commenter requested additional clarification on this topic and to
better define the originally-proposed construction material groupings.
Similarly, another commenter suggested that instead of creating a
separate category for engineered wood products, OMB may consider
defining within the lumber definition or standard what materials are
intended to be included.
Other commenters requested additional clarity on what is meant by
``lumber.'' For example, one commenter noted that lumber is a narrowly
defined construction material and does not generally include engineered
wood products, such as plywood, glulam, trusses, composite beams, and
other engineered products, which some could interpret to be
``manufactured products,'' and not construction materials. Other
commenters noted that
[[Page 57782]]
lumber should include ``dimensional lumber only'' and not a combination
of materials.
OMB Response: OMB notes that it has not made revisions to the
standard in Sec. 184.6 for ``lumber.'' The definition of ``produced in
the United States'' for lumber is: ``All manufacturing processes, from
initial debarking through treatment and planing, occurred in the United
States.'' Based on review of comments received, OMB continues to
believe that this standard accurately reflects the discrete
manufacturing processes used in the production of lumber. OMB notes
that lumber is narrowly interpreted and does not generally include
engineered wood products, such as plywood, glulam, trusses, or
composite beams.
The statute requires ``all manufacturing processes'' to occur in
the U.S. and directs OMB to define all manufacturing processes. OMB
requested comment on the definition in its proposed guidance, which
aimed to ensure all manufacturing processes were captured in a manner
consistent with the statute and that would be administrable and well
understood by manufacturers and industry participants. Based on review
of comments, OMB believes the standard laid out in the final guidance
follows this statutory requirement.
The approach taken is similar to the standard applied to the
``melted and poured'' manufacturing standard applied to iron or steel
products. The standard recognizes the distinction between the original
raw material input--such as ore or logs, which may be mined, grown or
extracted elsewhere--and the beginning of a manufacturing process,
which initiates the beginning of the process where constituent
components are combined to produce the lumber brought to the work site
and used on the infrastructure product.
Section 184.6(a)(7)--Standard for Drywall
One commenter expressed concerns about including lumber and drywall
on the list of construction materials due to existing supply
constraints for each of these materials. This commenter observed that
drywall is a key component in residential construction. The commenter
indicated that including drywall on the list could have deleterious
effects on builders, contractors, housing providers, and others. The
commenter suggested that the unintended consequences of adding products
like drywall to the list were not well thought out. The commenter
suggested that the implications could be far-reaching and negatively
affect the housing industry. The commenter suggested that OMB should
strongly encourage Federal agencies to propose BABA waivers for
drywall.
Another commenter noted that drywall combines multiple materials
into a final product, and thus could be considered a manufactured
product.
OMB Response: OMB notes that it has not made revisions to the
standard in Sec. 184.6 for ``drywall.'' The definition of ``produced
in the United States'' for drywall is: ``All manufacturing processes,
from initial blending of mined or synthetic gypsum plaster and
additives through cutting and drying of sandwiched panels, occurred in
the United States.''
BABA requires ``all manufacturing processes'' to occur in the U.S.
and directs OMB to define all manufacturing processes. OMB requested
comment on the definition in its proposed guidance, which aimed to
ensure all manufacturing processes were captured in a manner consistent
with the statute and that would be administrable and well understood by
manufacturers and industry participants. Based on review of comments,
OMB believes the standard laid out in the final guidance follows this
statutory requirement.
Section 184.6(a)(8)--Standard for Engineered Wood
Several commenters, including several State and municipal entities
agreed with OMB's proposed guidance that the standard for ``engineered
wood products'' should be defined as: ``All manufacturing processes,
from initial debarking through pressing, trimming, and sanding of glued
sheets or boards, occurred in the United States.'' These commenters
thought that no additional changes were needed.
However, two manufacturers in the industry sought more specific
definitions for the manufacturing process of this category. To clarify
this point, one of these commenters provided a summary description of
the manufacturing of various engineered wood products including: (1)
plywood, which is manufactured from sheets of cross-laminated veneer
and bonded under heat and pressure with durable, moisture-resistant
adhesives; (2) Oriented Strand Board, or OSB, which is manufactured
from rectangular-shaped strands of wood that are oriented lengthwise
and then arranged in layers at right angles to one another, laid up
into mats, and bonded together with moisture-resistant, heat-cured
adhesives; (3) I-joists, which is manufactured using sawn (wood that
has been produced either by sawing lengthways or by a profile chipping
process) or structural composite lumber flanges (laminated veneer
lumber) and OSB webs, bonded together with exterior-type adhesives; (4)
glued laminated timber, or glulam, which is composed of individual wood
laminations, specifically selected and positioned in the timber based
on performance characteristics and bonded together with durable,
moisture-resistant adhesives; (5) cross-laminated timber, which is a
panel consisting of several layers of lumber or structural composite
lumber stacked in alternating directions, bonded with structural
adhesives, and pressed to form a solid, straight, rectangular panel and
may be sanded or prefinished before shipping; and (6) structural
composite lumber, which is created by bonding layers of dried and
graded wood veneers or strands with moisture-resistant adhesive into
blocks of material known as billets that are cured in a heated press
and comes in many varieties.
Based on these descriptions, they argued that the proposed standard
does not adequately address the manufacturing processes specific to
structural engineered wood. These two commenters suggested that
standard could instead be: ``All manufacturing processes that take
place in facilities designated as SIC 2436 (Softwood Veneer and
Plywood), SIC 2439 (Structural Wood Members, Not Elsewhere Classified),
and/or SIC 2493 (Reconstituted Wood Products), from the initial
combination of constituent materials until the wood product is in a
form in which it is delivered to the work site and incorporated into
the project, occurred in the United States.''
These commenters thought that the established Standard Industrial
Classification (SIC) codes for these distinct subcategories of
construction materials would ensure uniformity and consistency in the
implementation of the Buy America preference. Additionally, one of the
commenters thought that this definition would allow relevant
combinatory processes for engineered wood including structural
engineered wood to occur domestically, while also acknowledging that
constituent materials such as fillers, adhesives, foil, laminates, web,
and glues could be sourced, as needed, from outside the U.S.
OMB Response: OMB notes that it has added a new standard in Sec.
184.6 for ``engineered wood.'' It has modified the standard based on
provided feedback to address some of concerns raised by commenters. In
the preamble of the proposed guidance, OMB proposed to define
``produced in the United States''
[[Page 57783]]
for engineered wood products as: ``All manufacturing processes, from
initial debarking through pressing, trimming, and sanding of glued
sheets or boards, occurred in the United States.'' In the revised
guidance in Sec. 184.6, OMB offers a new, and now modified, definition
of ``produced in the United States'' for engineered wood to be: ``All
manufacturing processes from the initial combination of constituent
materials until the wood product is in its final form, occurred in the
United States.''
OMB believes that this revised standard accurately reflects the
discrete manufacturing processes used in the production of engineered
wood. This definition was adjusted based on industry feedback, provided
in public comments, and is derived from industry definitions (from SIC
codes), which will help eliminate confusion and create consistency for
stakeholders. However, OMB emphasizes that, because OMB added
engineered wood as a logical extension of lumber, it only applies the
construction material classification--and the requirement for the
associated manufacturing processes to occur in the U.S.--on products
that have lumber as an input. OMB also did not want to tie the
definition to external metrics, such as SIC codes, which may change
over time and require updated guidance from OMB.
Further, the revised standard is consistent with the statute, which
requires ``all manufacturing processes be conducted in the United
States'' and directs OMB to define all manufacturing processes. The
final definition will ensure all manufacturing processes are captured
in a manner consistent with the statute as well as in a manner that
would be administrable and well understood by manufacturers and
industry participants. The approach taken is similar to the ``melted
and poured'' manufacturing standard applied to iron or steel products.
The standard recognizes the distinction between the original raw
material input--such as ore or logs, which may be mined, grown or
extracted elsewhere--and the beginning of a manufacturing process,
which initiates the beginning of the process where constituent
components are combined to produce the end product brought to the work
site and used on the infrastructure product.
Section 184.6(b)--Application of Standards by Listed Material
Some commenters raised concerns that BABA compliance could be
prohibitively difficult and expensive to implement as some construction
materials may comprise multiple sub-components, each with its own
distinct manufacturing and production processes, which could entail
multiple supply chain layers. These commenters suggested revising Sec.
184.6 to clarify that the reference to ``all manufacturing processes''
in each construction material standard is intended to encompass only
the manufacturing and/or assembly processes to produce the relevant
construction material and not any processes related to the production
of, for example, constituent inputs or raw materials that may be used
in the manufacturing and/or assembly of that construction material.
OMB Response: In the revised guidance, Sec. 184.6(b) explains
that, except ``as specifically provided, only a single standard under
paragraph (a) of this section should be applied to a single
construction material.'' Without this language it could be unclear in
some cases what standard, or how many standards, could apply to a
single item.
To provide clarity and reduce burden for stakeholders, OMB believed
it was important to explain through this paragraph specifically which
of the eight standards listed in paragraph (a), or how many standards,
may apply to a single construction material. The answer provided by
this paragraph is that only one standard should apply, which best fits
the item under consideration.
By adding this paragraph, OMB sought to avoid a situation in which
it would be unclear which standards, or how many standards, apply to a
single item with multiple construction materials as inputs. Composite
items on the list--with inputs of other items--include at least fiber
optic cable, optical fiber, engineered wood, and drywall. A logical way
was needed to identify what standard applies to a single item. For
cases in which more than one standard may apply to a single
construction material, only the standard from the list in paragraph (a)
that best fits the relevant article, material, or supply should be
applied.
For example, in the case of fiber optic cable, the standards for
non-ferrous metals, plastic and polymer-based products, glass, fiber
optic cable, and optical fiber could all apply to a single item.
Instead, under this approach, OMB now clarifies that, in the case of
fiber optic cable, the standards for glass and optical fiber also
apply, but not the standards for non-ferrous metals, plastic and
polymer-based products, or any others. Fiber optic cable is the only
standard that incorporates other standards.
Engineered wood is another example. Without this paragraph, the
standards for plastic and polymer-based products, lumber, and
engineered wood could all simultaneously apply to a single item.
Paragraph (b) clarifies that only the single standard for engineered
wood applies to a product falling in that category.
Section 184.7: Federal Awarding Agency's Issuance of a Buy America
Preference Waiver--Waiver Process in General
Many commenters advocated for changes that would reduce the burden
on industry to comply with BABA requirements, particularly for small
and medium sized businesses. For example, some commenters noted that
OMB should avoid creating new or different definitions that might
create confusion, project delays, and increase project costs. Some
commenters urged OMB to provide clarity in the guidance to ensure
consistency among agencies in applying rules and implementing the
guidance, particularly with regard to certifying the origin of certain
products as well as the waiver process--including, for example
streamlining and expediting the waiver process. Other commenters had
more specific suggestions in this area, such as creating a website or
database of BABA approved materials or manufacturers, as well as the
granting of broad waivers for certain types of projects (for example,
water projects), programs (for example, the BEAD program), or products
(for example, COTS items).
Alternatively, several responses stated that the best way to reduce
the burden on the industry is to preserve the existing body of
regulations, interpretations, and determinations as much as possible,
such as by using definitions already in use under the FAR or existing
standards under Buy America.
OMB Response: OMB made some editorial changes, but has not
otherwise made material changes to Sec. 184.7. In Sec. 184.7(d)(3),
OMB notes that it revised the legal authorities it references to only
include E.O. 14005 and section 70923(b) of BABA, which OMB considered
sufficient for the purposes of this provision. OMB provides additional
guidance on the waiver process in Memorandum M-22-11. OMB may consider
offering additional guidance on this topic in the future. OMB also
notes that Federal agencies have direct statutory authority to propose
and issue waivers under section 70914(b) of BABA. Federal agencies may
also offer further guidance on this topic in the future for their
specific programs. Section 184.7(b) continues to instruct Federal
agencies to provide waiver request submission instructions and
[[Page 57784]]
guidance on the format, contents, and supporting materials required for
waiver requests from recipients.
Section 184.7(e)--Waivers of General Applicability
With regard to general applicability public interest waivers, one
commenter supported the language in the guidance that provides the
flexibility for agencies, such as NTIA, to waive BABA restrictions for
projects of less than $250,000.
Other commenters raised concerns about the breadth and frequency of
public interest waivers issued by various agencies since BABA took
effect, noting that these waivers are unnecessary and inconsistent with
the objectives of Congress and the Administration for BABA
implementation. These commenters noted that these types of waivers
should only be issued sparingly.
OMB Response: OMB agrees that, under certain circumstances, general
applicability waivers may be found by Federal agencies to be in the
public interest. For example, they may create efficiencies or ease
burdens for recipients. The purpose of this paragraph of part 184 is to
recognize the longer comment period set forth at section 70914(d) for
review of waivers of general applicability. OMB has not made any
changes to this section of the guidance, which continues to remind
Federal agencies of the need to provide a comment period of not less
than 30 days on a proposal to modify or renew a waiver of general
applicability.
Section 184.8: Exemptions to the Buy America Preference
Some commenters suggested including an exemption in Sec. 184.8 for
commercially available off-the-shelf (COTS) products. One commenter
suggested that the exemption could cover COTS items costing in the
aggregate up to 5 percent of total project costs used under the Federal
award.
Another commenter suggested that Sec. 184.5 or Sec. 184.8 should
include an exemption for materials, tools, or other items that are not
permanently incorporated into the infrastructure project.
Other commenters suggested adding a new paragraph to Sec. 184.8
stating that section 70917(c) materials, and any combination of these
materials, such as concrete or asphalt mix, are excluded from BABA
coverage.
Another commenter urged OMB to include a new paragraph in Sec.
184.8 stating that the Buy America Preference does not apply to for-
profit organizations as defined in 2 CFR 25.425.
OMB Response: OMB has retained the proposed language in Sec.
184.8.
Regarding the comment requesting a COTS exemption, OMB notes that
the waiver process, not part 184, would be the appropriate mechanism to
address concerns on this topic. OMB observes that Federal agencies have
not previously found such a waiver to be in the public interest, but
COTS items may potentially fall under other public interest waivers
that agencies have issued, such as de minimis or minor component
waivers as described in Memorandum M-22-11.
Regarding the distinction between temporary use and permanent
incorporation, OMB has addressed that topic in other sections of the
preamble. OMB's existing guidance on that topic is available in
Memorandum M-22-11. OMB also addresses the topic of the application of
BABA to for-profit entities above in this preamble.
Section 200.322: Domestic Preferences for Procurements
One commenter indicated that 2 CFR 200.322 should be updated to
reflect uniform language across the government referring to all efforts
as Buy America or Buy American. The commenter suggested that even the
terms Buy American or Buy America should be uniform. The commenter
preferred the term Buy America because of its use in BABA. Therefore,
the commenter stated that 2 CFR 200.322 should be retitled as ``Buy
America Preference.''
Another commenter stated that the Federal Register document dated
March 9, 2023 (88 FR 14514), correcting the ACTION line or caption of
the proposed guidance to clarify its nature as ``guidance,'' calls into
question the validity of the proposed addition of 2 CFR 200.322(c). The
commenter observed that use of the term ``must'' as part of a 2 CFR
part 200 indicates this is a rule, particularly in light of the fact
that 2 CFR part 200 has been adopted as a rule by the individual
Federal agencies. The commenter noted that U.S. DOT has adopted 2 CFR
part 200 in 2 CFR part 1201. On the theory that this is a rule, the
commenter stated that the revision of 2 CFR 200.322(c) failed to meet
procedural requirements for notice and comment before adoption.
OMB Response: OMB has explained the distinction between the BAA and
BABA in this document above. OMB does not believe that additional
revisions to 2 CFR 200.322 are needed on this topic.
Regardless of the label provided in the ACTION line by the Office
of the Federal Register, the OMB guidance ``published in subtitle A [of
2 CFR],'' which OMB modifies here, ``is guidance and not regulation.''
2 CFR 1.105(b). ``Publication of the OMB guidance in the CFR does not
change its nature--it is guidance and not regulation.'' Id. This is
consistent in this instance with the text of BABA, which instructs OMB
to issue guidance and standards, which may include amending ``subtitle
A of title 2, Code of Federal Regulations (or successor regulations).''
BABA 70915(a)(2). In addition, OMB notes that the rulemaking
requirements at 5 U.S.C. 553 do not apply to guidance on grants. See 5
U.S.C. 553(a)(2). In all events, OMB has followed notice and comment
procedures with respect to this guidance that are consistent with the
procedures that would be required were this a rule subject to 5 U.S.C.
553.
OMB notes that the revised text in 2 CFR 200.322 includes a
revision from the proposed version. Instead of stating that ``Federal
agencies providing Federal financial assistance for infrastructure
projects must comply with the Buy America preferences set forth in 2
CFR part 184,'' the revised text now states that Federal agencies must
``implement'' such provisions.
Other Comments--Waivers or Exemptions for International Trade
Obligations
Several commenters asked how the implementation of BABA would
interact with the various trade obligations of the U.S. through the
Trade Agreements Act (TAA), such as the World Trade Organization
Agreement on Government Procurement (WTO-GPA). One commenter noted that
BABA implementation should consider the international obligations of
the U.S. and trade agreements and not undermine U.S. competitiveness in
global markets. Several commenters noted the benefits of these
international and trade obligations, including the governments of Korea
and British Columbia. Several commenters raised concerns that the
proposed guidance, as written, could lead to confusion and barriers to
trade that would lead to delays and product shortages for American
importers, including the United Kingdom of Great Britain and Northern
Ireland (UK). These commenters also feared that any failure to comply
with free trade agreements could initiate dispute settlement
proceedings or other corresponding action to limit U.S. access to
foreign government procurement. Several commenters inquired whether the
proposed guidance differs from specific parts of the FAR, such as FAR
52.225-11, in
[[Page 57785]]
terms of requiring a cost component test, because the proposed guidance
does not have comprehensive exemptions and flexibility. One commenter
noted that agricultural products are subject to unique trade
requirements.
Several commenters noted that certain components critical to
infrastructure projects are still not produced in the U.S., but are
available from suppliers in TAA countries. In particular, commenters
noted that insufficient domestic labor supply may make it difficult to
fill manufacturing jobs without relying on TAA countries.
Several commenters, including from the European Union (EU), UK, and
the Government of Quebec, requested that the guidance explicitly state
that BABA preferences will be ``applied in a manner consistent with
United States obligations under international agreements,'' repeating
the language found in section 70925 of BABA and Memorandum M-22-11. The
Governments of the UK and Quebec, for example, suggested that lack of
clarity may discourage foreign suppliers from bidding for opportunities
in the U.S. without explicit reassurances.
These commenters noted several other areas where the U.S. has
previously iterated its intentions to comply with international
agreements. One commenter stated that, because Memorandum M-22-11 had
reiterated this statutory directive, the proposed rules should do the
same. The EU and UK Governments noted that the ARRA provision included
similar language, citing 2 CFR 176.70 and 176.90 (``[ARRA] shall not be
applied where the iron, steel, or manufactured goods used in the
project are from a Party to an international agreement'').
Another commenter stated that the Office of the U.S. Trade
Representative had, with respect to government procurement, waived Buy
America requirements for eligible products from numerous designated
countries where it would serve the interests of the U.S., including
those from parties to the WTO-GPA, parties to most U.S. free trade
agreements, certain least-developed countries, and certain Caribbean
Basin countries. A separate commenter noted that the U.S. Department of
Commerce's and the U.S. Department of Homeland Security's ``Assessment
of the Critical Supply Chains Supporting the U.S. Information and
Communications Technology Industry'' recommended that all Buy America
programs be ``consistent with U.S. international trade obligations''
and include ``tolerances for assembly in allied or partner nations.''
Commenters from the broadband industry specifically cited that the
Rural Utilities Service (RUS) ReConnect Program and other existing
programs have included exceptions for U.S. global partners and allies.
One commenter noted that its experience with prior Buy America clauses
and preferences had also not been straightforward.
While some commenters wanted OMB to just add the ``applied in a
manner consistent with U.S. obligations under international
agreements'' language explicitly in BABA and M-22-11, other commenters
thought that would be insufficient and wanted OMB to add additional
language to address these concerns. Several commenters asked OMB to
clarify that ``designated countries'' under the TAA are deemed to
satisfy the BABA requirements and products manufactured in those
countries would be treated as if they are manufactured in the U.S. The
National Electrical Manufacturers Association (NEMA) suggested that
this list include USMCA countries, EU member states, the UK, and Indo-
Pacific Economic Framework partners. Alternative proposals included
that OMB either (1) apply the existing USMCA Rules of Origin criteria
for assessing qualification for domestic preference procurement or (2)
treat Canada as a domestic source, similar to the Defense Production
Act.
Other commenters alternatively advocated for granting waivers for
components produced in such TAA countries. For instance, the Conseil de
l'industrie foresti[egrave]re du Qu[eacute]bec (CIFQ) and the Ontario
Forest Industries Association (OFIA)--trade associations representing
Canadian lumber mills in the provinces of Quebec and Ontario,
respectively--argued that Canadian lumber should be subject to a
``public interest'' waiver because of several trade agreements between
the U.S. and Canada, history, economic necessity for the availability
of construction materials, and the broad public interest. The EU
suggested that the final guidance clarify that BABA requirements do not
apply to government procurement covered by the obligations of the U.S.
under international agreements.
Several commenters noted that many states are members of the WTO-
GPA and, as a result, have independent trade obligations, which may
prohibit those states from discriminating against manufactured products
and components from designated countries in conducting their own
procurements. Some of these commenters suggested that OMB should
require provision of a waiver for products from countries that have
signed an international trade agreement with the U.S. Others noted that
the waiver process is too onerous and requested that OMB should instead
clarify in its final guidance that a recipient of Federal financial
assistance can comply with domestic content requirements if they
incorporate such products in an infrastructure project in accordance
with the BABA without the need for a waiver.
Separately, some commenters noted that OMB has generated confusion
because of the varying terms, acronyms, and common names that have been
implemented across the Federal agencies and within funding agencies.
For example, it listed that there is the ``Build America, Buy America
Act'' (BABA), ``Buy America Act'' (BAA), ``Buy America Act with Trade
Agreements Act (BAA/TAA), ``American Iron and Steel'' (AIS), and ``Buy
America Requirements'' (BAR).
OMB Response: Several commenters expressed concern that OMB did not
explicitly include in its part 184 guidance that the Buy America
preference ``shall be applied in a manner consistent with United States
obligations under international agreements.'' OMB notes that BABA
provisions will be applied in a manner consistent with U.S. obligations
under international agreements, as provided in section 70914(e) of
BABA. OMB has not modified its existing guidance on this topic.
As explained above--and to avoid confusion and remove ambiguity on
this topic--OMB reiterates that it is not rescinding its initial
guidance to Federal agencies under Memorandum M-22-11. The provisions
in OMB's initial guidance on this topic remain in effect. OMB explains
in Memorandum M-22-11 that, pursuant ``to section 70914(e) of [BABA],
[OMB's] guidance [on BABA] must be applied in a manner consistent with
the obligations of the United States under international agreements.''
Memorandum M-22-11 also explains that if ``a recipient is a State that
has assumed procurement obligations pursuant to the Government
Procurement Agreement or any other trade agreement, a waiver of a Made
in America condition to ensure compliance with such obligations may be
in the public interest.'' Memorandum M-22-11 also explains that all
proposed waivers citing the public interest as the statutory basis must
include a detailed written statement, which shall address all
appropriate factors, ``such as potential obligations under
international agreements.''
By not including those provisions in part 184, OMB did not rescind
its initial guidance to Federal agencies on this
[[Page 57786]]
topic. The language in Memorandum M-22-11 remains effective guidance
from OMB to Federal agencies. The language does not conflict with the
text of part 184, but supplements it, providing further context on
waivers that Federal agencies may propose.
OMB intends to include similar language on this topic in the next
iteration of Memorandum M-22-11, which will be issued to update other
areas that directly conflict with part 184. Part 184 does not conflict
with language in Memorandum M-22-11 on international agreements. As OMB
also explains above, its guidance to Federal agencies in part 184 is
not intended as comprehensive guidance on all topics, but high-level
coordinating guidance to be used by Federal agencies in their own
direct implementation of BABA. At this time, OMB has not included that
language directly in part 184, but has not modified its initial policy.
The Made in America Office also issued a separate fact sheet within
the last year that discusses how the TAA applies to both direct Federal
procurement under the FAR and domestic content preferences for Federal
financial assistance. See ``Fact Sheet on Buy American (BAA) or Buy
America,'' Made in America Office (2022) (Fact Sheet).\1\ The Fact
Sheet recognizes that the ``BABA provisions apply in a manner
consistent with United States obligations under international
agreements.'' It further explains, however, that ``Federal financial
assistance awards are generally not subject to international trade
agreements because these international obligations only apply to direct
federal procurement activities by signatories to such agreements''
(emphasis added). The FAR addresses how international trade agreements
implemented by the TAA apply to direct Federal procurement activities
of the U.S. at FAR subpart 25.4. See also FAR 25.1101, 25.1103, and
52.225-5. The Fact Sheet also provides general information on how the
TAA applies to direct Federal procurement activities.
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In the case of Federal financial assistance, the Fact Sheet also
recognizes that ``a number of [U.S.] States have opted to obligate
their procurement activities to the terms of one or more international
trade agreements, and as such, are included in schedules to the
international trade agreements.'' The Made in America Office explains
in the Fact Sheet that Federal ``agencies may propose waivers in the
public interest to allow State entities to comply with their
international trade obligations.'' For additional information, the Fact
Sheet also suggests consulting with ``the State in question or the
[Federal] agency providing the funds.''
For States with international trade obligations, which are the
recipients of Federal funds, OMB notes that the head of a Federal
agency that applies a BABA preference to Federal awards may propose to
waive BABA requirements by following the procedures in Sec. 184.7 of
the revised guidance in part 184. See also BABA 70914(b) (authorizing
``the head of a Federal agency that applies a domestic content
procurement preference'' to issues waivers). The initial guidance in
Memorandum M-22-11 provides additional information on this topic.
Waivers may also be proposed in other circumstances, such as if items
critical to infrastructure projects are not produced in the U.S. in
sufficient and reasonably available quantities or of a satisfactory
quality.
The IIJA recognizes that public interest waivers are an appropriate
mechanism to allow Federal financial assistance recipients to meet
obligations under international agreements. Section 70937(c)(2)(C) of
IIJA recognizes that public interest waivers may be justified to allow
recipients to satisfy ``potential obligations under international
agreements.'' That section applies to ``a request to waive a Buy
American law,'' which is defined broadly at section 70932(1) of IIJA to
include ``any law . . . relating to Federal contracts, grants, or
financial assistance that requires or provides a preference for the
purchase or use of goods, products, or materials mined, produced, or
manufactured in the United States,'' which includes the BABA
preference.
OMB also observes that, in the case of Federal financial assistance
under BABA, only Federal agencies that directly apply the BABA
preference to Federal awards are authorized to issue waivers--not OMB
directly on behalf of those agencies. BABA 70914(b). This waiver
authority differs from the waiver authority under the TAA, which
authorizes the ``President [to] waive, in whole or in part, . . . the
application of any law, regulation, procedure, or practice regarding
Government procurement.'' 19 U.S.C. 2511(a). The FAR explains that the
President has delegated this waiver authority for direct Federal
procurement activities to the U.S. Trade Representative, which has
waived the BAA statute for eligible products. See FAR 25.402. By
contrast, in the context of Federal financial assistance under BABA, it
is the responsibility of the head of a Federal agency that directly
applies the BABA preference to Federal awards to provide waivers. BABA
70914(b).
OMB may consider issuing further guidance on this topic in the
future, but for now believes that the waiver process remains an
appropriate mechanism--which is consistent with congressional intent in
BABA and related sections of the IIJA--to allow recipients to satisfy
international trade obligations, where applicable.
Executive Order 12866 (Regulatory Planning and Review), Executive Order
13563 (Improving Regulation and Regulatory Review), and Executive Order
14094 (Modernizing Regulatory Review)
Executive Orders (E.O.s) 12866, 13563, and 14094 direct agencies to
assess all costs and benefits of available regulatory alternatives,
and, if regulation is necessary, to select regulatory approaches that
maximize net benefits (including potential economic, environmental,
public health and safety effects, distributive impacts, and equity).
The OMB Guidance for Grants and Agreements published in subtitle A of 2
CFR is guidance to Federal agencies and not regulation. 2 CFR 1.100(b).
OMB has thus determined that the revision of 2 CFR is not a significant
regulatory action under E.O. 12866, as amended.
Regulatory Flexibility Act
This revised guidance has been reviewed with regard to the
requirements of the Regulatory Flexibility Act (Pub. L. 96-354, 5
U.S.C. 601-612) (RFA). The RFA only applies to a final rule promulgated
under 5 U.S.C. 553, after being required by that section or any other
law to publish a general notice of proposed rulemaking. The rulemaking
requirements at 5 U.S.C. 553 do not apply to guidance on grants.
Even if this guidance were subject to the RFA, courts have
explained that the requirement under the RFA to analyze effects on
small entities only applies to direct effects. Small entities that may
be impacted indirectly, but not directly, are not subject to analysis
under the RFA. See Nat'l Women, Infants, & Child. Grocers Ass'n v. Food
& Nutrition Serv., 416 F. Supp. 2d 92, 109-10 (D.D.C. 2006). The
revised guidance does not, in and of itself, directly impact small
entities. Rather, as explained throughout this document, the new part
184 is directed toward Federal agencies, providing them with
coordinating guidance on implementing BABA when obligating Federal
awards for
[[Page 57787]]
infrastructure. Under BABA, individual Federal agencies are directly
responsible for implementing the statutory Buy America preference. See
BABA 70914(a). Individual Federal agencies are also authorized to
issues waivers of the Buy America preference. See BABA 70914(b). OMB
does not have direct authority to do either under BABA. In this case,
small entities that could be impacted by OMB's revised guidance will
only be impacted indirectly by agency-specific implementation of the
requirement under BABA 70914(a). Federal agencies retain considerable
flexibility regarding the manner of implementing BABA section 70914(a),
including the authority to issue public interest waivers under section
70914(b). Therefore, although this guidance is exempt from the
requirements of the RFA, OMB certifies that it will not have a
significant economic impact on a substantial number of small entities.
Unfunded Mandates Reform Act of 1995
This revised guidance would not impose unfunded mandates as defined
by the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 109 Stat.
48). This revised guidance would not result in the expenditure by
State, local, and Tribal governments, in the aggregate, or by the
private sector, of $168 million or more in any one year (2 U.S.C.
1532). In addition, the definition of ``Federal Mandate'' in the
Unfunded Mandates Reform Act excludes financial assistance of the type
in which State, local, or Tribal governments have authority to adjust
their participation in the program in accordance with changes made in
the program by the Federal Government. Federal financial assistance
programs for infrastructure generally permit this type of flexibility.
Executive Order 13132 (Federalism Assessment)
This revised guidance has been analyzed in accordance with the
principles and criteria contained in E.O. 13132, ``Federalism,'' 64 FR
43255 (Aug. 10, 1999). OMB has determined that this revised guidance
would not have sufficient federalism implications to warrant the
preparation of a federalism assessment. The Buy America preference
established in BABA is inherently national in scope and significance.
Regardless, in accordance with section 4(d) of E.O. 13132, OMB, through
the Made in America Office, has, to the extent practicable, consulted
with appropriate State and local officials that may be affected by
Federal agencies' implementation of OMB's revised guidance. OMB weighed
those interests carefully in finalizing its revisions to the guidance,
which balance the State interests with the need to provide Federal
agencies with consistent, uniform, efficient, and transparent guidance
on the Buy America preference in BABA.
Paperwork Reduction Act of 1995
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501, et
seq.), Federal agencies must obtain approval from OMB for each
collection of information they conduct, sponsor, or require through
regulations. This guidance does not contain a requirement for
information collection and thus the Paperwork Reduction Act does not
apply.
Executive Order 13175 (Tribal Consultation)
OMB has analyzed this revised guidance in accordance with the
principles and criteria contained in E.O. 13175, ``Consultation and
Coordination with Indian Tribal Governments,'' 65 FR 67249 (Nov. 9,
2000). The new part 184 provides revised guidance to Federal agencies
on applying the Buy America preference required under section 70914 of
BABA to Federal awards for infrastructure. Through Memorandum M-22-11,
OMB explained that, before applying a Buy America preference to a
covered program that will affect Tribal communities, Federal agencies
should follow the consultation policies established through E.O. 13175,
and consistent with policies set forth in the Presidential Memorandum
of January 26, 2021, on Tribal Consultation and Strengthening Nation-
Nation Relationships. Several agencies have also proposed and issued
Tribal adjustment period waivers to ease transition for Tribal
communities to the new rules and processes under BABA when receiving
Federal awards. To the extent that the Buy America preference
established under section 70914 of BABA is determined to preempt Tribal
law, the statutory preemption issue should have been a subject of the
consultations required under Memorandum M-22-11. To the extent that any
such consultations have not yet occurred, Federal agencies should
commence consultations without delay. Federal agencies may again
consider proposing brief, time limited waivers to allow Tribal
communities to transition to the revised guidance reflected in the new
part 184 provisions.
Congressional Notification
OMB has concluded that the final guidance is not a ``rule'' within
the meaning of 5 U.S.C. 804(3). Nevertheless, out of an abundance of
caution, OMB is submitting it to each House of the Congress and to the
Comptroller General consistent with the procedures set forth in 5
U.S.C. 801(a).
List of Subjects in 2 CFR Parts 184 and 200
Administration of Federal financial assistance, Administrative
practice and procedure, Federal financial assistance programs.
For the reasons stated in the preamble, the Office of Management
and Budget amends 2 CFR subtitle A as follows:
0
1. Add part 184, consisting of Sec. Sec. 184.1 through 184.8, to read
as follows:
PART 184--BUY AMERICA PREFERENCES FOR INFRASTRUCTURE PROJECTS
Sec.
184.1 Purpose and policy.
184.2 Applicability, effective date, and severability.
184.3 Definitions.
184.4 Applying the Buy America Preference to a Federal award.
184.5 Determining the cost of components for manufactured products.
184.6 Construction material standards.
184.7 Federal awarding agency's issuance of a Buy America Preference
waiver.
184.8 Exemptions to the Buy America Preference.
Authority: Pub. L. 117-58, 135 Stat. 429.
Sec. 184.1 Purpose and policy.
(a) Purpose. This part provides guidance to Federal awarding
agencies on the implementation of the Buy America Preference applicable
to Federal financial assistance set forth in part I of subtitle A, Buy
America Sourcing Preferences, of the Build America, Buy America Act
included in the Infrastructure Investment and Jobs Act (Pub. L. 117-58)
at division G, title IX, subtitle A, part I, sections 70911 through
70917.
(b) Policy. The head of each Federal agency must ensure that none
of the funds made available for a Federal award for an infrastructure
project may be obligated unless all of the iron, steel, manufactured
products, and construction materials incorporated into the project are
produced in the United States. See section 70914(a) of the Build
America Buy America Act.
Sec. 184.2 Applicability, effective date, and severability.
(a) Non-applicability of this part to existing Buy America
Preferences. This part does not apply to a Buy America Preference
meeting or exceeding the requirements of section 70914 of the
[[Page 57788]]
Build America, Buy America Act applied by a Federal Awarding Agency to
Federal awards for infrastructure projects before November 15, 2021.
(b) Effective date of this part. The effective date of this part is
October 23, 2023. Except as provided in paragraph (c) of this section,
this part applies to Federal awards obligated on or after its effective
date. Awards obligated on or after May 14, 2022, the effective date of
the Build America, Buy America Act, and before the effective date of
this part, are instead subject to OMB Memorandum M-22-11.
(c) Modified effective date of this part for certain infrastructure
projects. If an infrastructure project that has previously received a
Federal award obligated on or after May 14, 2022, but before the
effective date of this part receives an additional Federal award
obligated within one year of the effective date of this part, the
additional Federal award is subject to OMB Memorandum M-22-11. However,
if significant design or planning changes are made to the
infrastructure project, the Federal awarding agency may apply this part
to the additional Federal award. Federal awards for an infrastructure
project obligated after one year from the effective date of this part
are subject to this part, regardless of whether this part applied to
previous awards for the project.
(d) Severability. The provisions of this part are separate and
severable from one another. OMB intends that if a provision of this
part is held to be invalid or unenforceable as applied to a particular
person or circumstance, the provision should be construed so as to
continue to give the maximum effect permitted by law as applied to
other persons not similarly situated or to dissimilar circumstances. If
any provision is determined to be wholly invalid and unenforceable, it
should be severed from the remaining provisions of this part, which
should remain in effect.
Sec. 184.3 Definitions.
Acronyms used in this part have the same meaning as provided in 2
CFR 200.0. Terms not defined in this part have the same meaning as
provided in 2 CFR 200.1. As used in this part:
Build America, Buy America Act means division G, title IX, subtitle
A, parts I-II, sections 70901 through 70927 of the Infrastructure
Investment and Jobs Act (Pub. L. 117-58).
Buy America Preference means the ``domestic content procurement
preference'' set forth in section 70914 of the Build America, Buy
America Act, which requires the head of each Federal agency to ensure
that none of the funds made available for a Federal award for an
infrastructure project may be obligated unless all of the iron, steel,
manufactured products, and construction materials incorporated into the
project are produced in the United States.
Component means an article, material, or supply, whether
manufactured or unmanufactured, incorporated directly into: a
manufactured product; or, where applicable, an iron or steel product.
Construction materials means articles, materials, or supplies that
consist of only one of the items listed in paragraph (1) of this
definition, except as provided in paragraph (2) of this definition. To
the extent one of the items listed in paragraph (1) contains as inputs
other items listed in paragraph (1), it is nonetheless a construction
material.
(1) The listed items are:
(i) Non-ferrous metals;
(ii) Plastic and polymer-based products (including
polyvinylchloride, composite building materials, and polymers used in
fiber optic cables);
(iii) Glass (including optic glass);
(iv) Fiber optic cable (including drop cable);
(v) Optical fiber;
(vi) Lumber;
(vii) Engineered wood; and
(viii) Drywall.
(2) Minor additions of articles, materials, supplies, or binding
agents to a construction material do not change the categorization of
the construction material.
Infrastructure project means any activity related to the
construction, alteration, maintenance, or repair of infrastructure in
the United States regardless of whether infrastructure is the primary
purpose of the project. See also paragraphs (c) and (d) of Sec. 184.4.
Iron or steel products means articles, materials, or supplies that
consist wholly or predominantly of iron or steel or a combination of
both.
Manufactured products means:
(1) Articles, materials, or supplies that have been:
(i) Processed into a specific form and shape; or
(ii) Combined with other articles, materials, or supplies to create
a product with different properties than the individual articles,
materials, or supplies.
(2) If an item is classified as an iron or steel product, a
construction material, or a section 70917(c) material under Sec.
184.4(e) and the definitions set forth in this section, then it is not
a manufactured product. However, an article, material, or supply
classified as a manufactured product under Sec. 184.4(e) and paragraph
(1) of this definition may include components that are construction
materials, iron or steel products, or section 70917(c) materials.
Manufacturer means the entity that performs the final manufacturing
process that produces a manufactured product.
Predominantly of iron or steel or a combination of both means that
the cost of the iron and steel content exceeds 50 percent of the total
cost of all its components. The cost of iron and steel is the cost of
the iron or steel mill products (such as bar, billet, slab, wire,
plate, or sheet), castings, or forgings utilized in the manufacture of
the product and a good faith estimate of the cost of iron or steel
components.
Produced in the United States means:
(1) In the case of iron or steel products, all manufacturing
processes, from the initial melting stage through the application of
coatings, occurred in the United States.
(2) In the case of manufactured products:
(i) The product was manufactured in the United States; and
(ii) The cost of the components of the manufactured product that
are mined, produced, or manufactured in the United States is greater
than 55 percent of the total cost of all components of the manufactured
product, unless another standard that meets or exceeds this standard
has been established under applicable law or regulation for determining
the minimum amount of domestic content of the manufactured product. See
Sec. 184.2(a). The costs of components of a manufactured product are
determined according to Sec. 184.5.
(3) In the case of construction materials, all manufacturing
processes for the construction material occurred in the United States.
See Sec. 184.6 for more information on the meaning of ``all
manufacturing processes'' for specific construction materials.
Section 70917(c) materials means cement and cementitious materials;
aggregates such as stone, sand, or gravel; or aggregate binding agents
or additives. See section 70917(c) of the Build America, Buy America
Act.
Sec. 184.4 Applying the Buy America Preference to a Federal award.
(a) Applicability of Buy America Preference to infrastructure
projects. The Buy America Preference applies to Federal awards where
funds are appropriated or otherwise made available for infrastructure
projects in the United States, regardless of whether infrastructure is
the primary purpose of the Federal award.
[[Page 57789]]
(b) Including the Buy America Preference in Federal awards. All
Federal awards with infrastructure projects must include the Buy
America Preference in the terms and conditions. The Buy America
Preference must be included in all subawards, contracts, and purchase
orders for the work performed, or products supplied under the Federal
award. The terms and conditions of a Federal award flow down to
subawards to subrecipients unless a particular section of the terms and
conditions of the Federal award specifically indicate otherwise.
(c) Infrastructure in general. Infrastructure encompasses public
infrastructure projects in the United States, which includes, at a
minimum, the structures, facilities, and equipment for roads, highways,
and bridges; public transportation; dams, ports, harbors, and other
maritime facilities; intercity passenger and freight railroads; freight
and intermodal facilities; airports; water systems, including drinking
water and wastewater systems; electrical transmission facilities and
systems; utilities; broadband infrastructure; and buildings and real
property; and structures, facilities, and equipment that generate,
transport, and distribute energy including electric vehicle (EV)
charging.
(d) Interpretation of infrastructure. The Federal awarding agency
should interpret the term ``infrastructure'' broadly and consider the
description provided in paragraph (c) of this section as illustrative
and not exhaustive. When determining if a particular project of a type
not listed in the description in paragraph (c) constitutes
``infrastructure,'' the Federal awarding agency should consider whether
the project will serve a public function, including whether the project
is publicly owned and operated, privately operated on behalf of the
public, or is a place of public accommodation, as opposed to a project
that is privately owned and not open to the public.
(e) Categorization of articles, materials, and supplies. (1) An
article, material, or supply should only be classified into one of the
following categories:
(i) Iron or steel products;
(ii) Manufactured products;
(iii) Construction materials; or
(iv) Section 70917(c) materials.
(2) An article, material, or supply should not be considered to
fall into multiple categories. In some cases, an article, material, or
supply may not fall under any of the categories listed in paragraph
(e)(1) of this section. The classification of an article, material, or
supply as falling into one of the categories listed in paragraph (e)(1)
must be made based on its status at the time it is brought to the work
site for incorporation into an infrastructure project. In general, the
work site is the location of the infrastructure project at which the
iron, steel, manufactured products, and construction materials will be
incorporated.
(f) Application of the Buy America Preference by category. An
article, material, or supply incorporated into an infrastructure
project must meet the Buy America Preference for only the single
category in which it is classified.
Sec. 184.5 Determining the cost of components for manufactured
products.
In determining whether the cost of components for manufactured
products is greater than 55 percent of the total cost of all
components, use the following instructions:
(a) For components purchased by the manufacturer, the acquisition
cost, including transportation costs to the place of incorporation into
the manufactured product (whether or not such costs are paid to a
domestic firm), and any applicable duty (whether or not a duty-free
entry certificate is issued); or
(b) For components manufactured by the manufacturer, all costs
associated with the manufacture of the component, including
transportation costs as described in paragraph (a) of this section,
plus allocable overhead costs, but excluding profit. Cost of components
does not include any costs associated with the manufacture of the
manufactured product.
Sec. 184.6 Construction material standards.
(a) The Buy America Preference applies to the following
construction materials incorporated into infrastructure projects. Each
construction material is followed by a standard for the material to be
considered ``produced in the United States.''
(1) Non-ferrous metals. All manufacturing processes, from initial
smelting or melting through final shaping, coating, and assembly,
occurred in the United States.
(2) Plastic and polymer-based products. All manufacturing
processes, from initial combination of constituent plastic or polymer-
based inputs, or, where applicable, constituent composite materials,
until the item is in its final form, occurred in the United States.
(3) Glass. All manufacturing processes, from initial batching and
melting of raw materials through annealing, cooling, and cutting,
occurred in the United States.
(4) Fiber optic cable (including drop cable). All manufacturing
processes, from the initial ribboning (if applicable), through
buffering, fiber stranding and jacketing, occurred in the United
States. All manufacturing processes also include the standards for
glass and optical fiber, but not for non-ferrous metals, plastic and
polymer-based products, or any others.
(5) Optical fiber. All manufacturing processes, from the initial
preform fabrication stage through the completion of the draw, occurred
in the United States.
(6) Lumber. All manufacturing processes, from initial debarking
through treatment and planing, occurred in the United States.
(7) Drywall. All manufacturing processes, from initial blending of
mined or synthetic gypsum plaster and additives through cutting and
drying of sandwiched panels, occurred in the United States.
(8) Engineered wood. All manufacturing processes from the initial
combination of constituent materials until the wood product is in its
final form, occurred in the United States.
(b) Except as specifically provided, only a single standard under
paragraph (a) of this section should be applied to a single
construction material.
Sec. 184.7 Federal awarding agency's issuance of a Buy America
Preference waiver.
(a) Justification of waivers. A Federal awarding agency may waive
the application of the Buy America Preference in any case in which it
finds that:
(1) Applying the Buy America Preference would be inconsistent with
the public interest (a ``public interest waiver'');
(2) Types of iron, steel, manufactured products, or construction
materials are not produced in the United States in sufficient and
reasonably available quantities or of a satisfactory quality (a
``nonavailability waiver''); or
(3) The inclusion of iron, steel, manufactured products, or
construction materials produced in the United States will increase the
cost of the overall infrastructure project by more than 25 percent (an
``unreasonable cost waiver'').
(b) Requesting a waiver. Recipients may request waivers from a
Federal awarding agency if the recipient reasonably believes a waiver
is justified under paragraph (a) of this section. A request from a
recipient to waive the application of the Buy America Preference must
be provided to the Federal awarding agency in writing. Federal awarding
agencies must provide waiver request submission instructions
[[Page 57790]]
and guidance on the format, contents, and supporting materials required
for waiver requests from recipients.
(c) Before issuing a proposed waiver. Before issuing a proposed
waiver, the Federal awarding agency must prepare a detailed written
explanation for the proposed determination to issue the waiver based on
a justification listed under paragraph (a) of this section, including
for waivers requested by a recipient.
(d) Before issuing a final waiver. Before issuing a final waiver,
the Federal awarding agency must:
(1) Make the proposed waiver and the detailed written explanation
publicly available in an easily accessible location on a website
designated by the Federal awarding agency and the Office of Management
and Budget;
(2) Except as provided in paragraph (e) of this section, provide a
period of not less than 15 calendar days for public comment on the
proposed waiver; and
(3) Unless the Director of OMB provides otherwise, submit the
waiver determination to the Made in America Office in OMB for final
review pursuant to Executive Order 14005 and section 70923(b) of the
Build America, Buy America Act.
(e) Waivers of general applicability. Waivers of general
applicability mean waivers that apply generally across multiple Federal
awards. A Federal agency must provide a period of not less than 30 days
for public comment on a proposal to modify or renew a waiver of general
applicability.
Sec. 184.8 Exemptions to the Buy America Preference.
(a) The Buy America Preference does not apply to expenditures for
assistance authorized under section 402, 403, 404, 406, 408, or 502 of
the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42
U.S.C. 5170a, 5170b, 16 5170c, 5172, 5174, or 5192) relating to a major
disaster or emergency declared by the President under section 401 or
501, respectively, of such Act (42 U.S.C. 5170, 5191) or pre and post
disaster or emergency response expenditures.
(b) ``Pre and post disaster or emergency response expenditures''
consist of expenditures for financial assistance that are:
(1) Authorized by statutes other than the Stafford Act, 42 U.S.C.
5121 et seq.; and
(2) Made in anticipation of or response to an event or events that
qualify as an ``emergency'' or ``major disaster'' within the meaning of
the Stafford Act, 42 U.S.C. 5122(1), (2).
PART 200--UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND
AUDIT REQUIREMENTS FOR FEDERAL AWARDS
0
2. The authority citation for part 200 continues to read as follows:
Authority: 31 U.S.C. 503.
0
3. Amend Sec. 200.322 by adding paragraph (c) to read as follows:
Sec. 200.322 Domestic preferences for procurements.
* * * * *
(c) Federal agencies providing Federal financial assistance for
infrastructure projects must implement the Buy America preferences set
forth in 2 CFR part 184.
Deidre A. Harrison,
Deputy Controller, performing the delegated duties of the Controller
Office of Federal Financial Management.
[FR Doc. 2023-17724 Filed 8-22-23; 8:45 am]
BILLING CODE 3110-01-P
