By: Christopher W. Morog and Robert T. Ferguson, Jr.

In a recent Webinar, we discussed a broad range of compliance issues, from false claims, to DBE/MBE/WBE fraud, OSHA and other workplace matters, and environmental factors, to name a few. We also touched on domestic content laws, including the “Buy American Act” and various “Buy America” statutes.

From the outset of his Administration, the President has emphasized a focus on “Made in America” requirements. Beginning with an Executive Order that kick-started a review of policy and established a new “Made in America Office,” the Administration began to centralize the process for submission and processing of waivers of domestic content “Made in America” requirements. Last year’s Infrastructure Investment and Jobs Act (IIJA) also expanded Buy America coverage to additional projects funded by federal grants and broadened Buy America requirements to include certain construction materials. In March of 2022, the Administration announced new “Made in America Commitments,” increasing domestic content threshold requirements effective as early as the fall of 2022.

More recently, in April of 2022, the Executive Office of the President released a 17-page memorandum providing guidance to the heads of federal executive departments and agencies concerning new domestic content requirements applicable to infrastructure projects with federal funding. The memorandum advised that by mid-May of 2022, “the head of each covered Federal agency shall ensure that ‘none of the funds made available for a Federal financial assistance program for infrastructure, including each deficient program, 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.” The guidance also advised that the newly-created Made in America Office has authority to enforce compliance with Made in America laws.

This memorandum further underscores the importance of keeping abreast of recent developments, understanding the sources of funding for a given infrastructure project, and complying with applicable legal requirements. A misstep along the line could have unwanted impacts. But compliance is only one piece of the puzzle. Supply and demand is another. The increased focus on using material produced in the United States could result in an increased demand for domestic materials. This could further impact material pricing and availability in a climate in which contractors are already facing material escalation and supply chain challenges. In certain circumstances where applicable, it may become challenging for contractors to satisfy applicable domestic content requirements. While the White House’s recent guidance also addressed waivers of Buy America requirements, the availability of such waivers may be limited, such as where strict compliance with Made in America laws “would be inconsistent with the public interest” or would “increase the cost of the overall project by more than 25 percent.”

In these circumstances, advance planning and research is expected to play a critical role in the bidding and administration of construction contracts subject to domestic content requirements. To the extent that waivers may be in order, contractors should be sure to timely comply with the applicable processes and procedures to obtain such waivers. In addition to reviewing and understanding applicable contractual and legal requirements, contractors might also revisit their subcontracts and purchase order terms and conditions to secure compliance among the contracting parties and firm-up pricing and delivery timeframes.