The Build America, Buy America Act (BABA) was enacted in 2021 as part of the Infrastructure Investment and Jobs Act (IIJA). It establishes a domestic content procurement preference for all federal financial assistance (FFA) used to finance infrastructure projects, including real estate. This requirement is referred to as the Buy America Preference (BAP) and is being implemented by federal agencies financing infrastructure projects. Materials that are required to comply with BABA standards include iron, steel, manufactured products and construction materials, all of which must be produced in the United States.
Important note: Federal Housing Administration (FHA) mortgages, the Low-Income Housing Tax Credit (LIHTC) and FHA Multifamily Mortgage Insurance are not considered federal financial assistance (FFA) and are not subject to the requirements of BABA. However, if HOME, Community Development Block Grants (CDBG) or other covered funding is used, BABA may apply to that project.
General Federal Guidance
The Office of Management and Budget (OMB) Memorandum M-24-02 provides current overarching guidance to all federal agencies on definitions and processes for the implementation of BAP. There are a limited number of waivers that recipients or subrecipients of FFA can apply if there is a lack of available manufacturers for a certain product within the United States or if BAP will raise the total project costs by more than 25%. These waivers are available at BuyAmerican.gov.
Key Frequently Asked Questions:
(Source: FAQ on Department of Housing and Urban Development website)
- My HUD program is impacted by HUD’s Phased Implementation waiver. Does BABA apply to me and, if so, when?
It depends. The effective date for BABA is May 14, 2022; however, HUD has specific effective dates for the application of all or parts of the BAP to HUD programs through FY2025, depending on the program and the product. View HUD’s Phased Implementation Schedule.
- If I am a subrecipient of Federal Financial Assistance funding for infrastructure, does BABA apply?
Possibly. Recipients (the entities that receive FFA directly from HUD) that are subject to the BAP are required to notify and flow through BAP requirements to their subrecipients, unless HUD has issued an applicable waiver. Recipients must include the BAP in all subawards, contracts and purchase orders for the work performed, or products supplied under the federal award.
The BAP flows down to subawards to subrecipients unless a particular section of the terms and conditions of the federal award specifically indicate otherwise. Subrecipients should consult with the appropriate recipient and consult their specific agreements to determine whether their funding is subject to the BAP.
- What is the definition of construction materials (with examples)?
The Made in America Office of OMB defined “construction materials” in 2 CFR 184.6. “Construction materials” are defined as articles, materials or supplies that consistent of only one of the following items: non-ferrous metals, plastic and polymer-based products (including polyvinylchloride, composite building materials and polymers used in fiber optic cables), glass (including optic glass), fiber optic cable (including drop cable), optical fiber, lumber, engineered wood and drywall.
Minor additions of articles, materials, supplies or binding agents to a construction material do not change the categorization of the construction material.
For additional information and the latest resources, check the Made in America Office website.
- What are manufactured products?
“Manufactured products” is defined in 2 CFR 184.3. “Manufactured products” are articles, materials or supplies that have been processed into a specific form and shape or combined with other articles, materials or supplies to create a product with different properties than the individual articles, materials or supplies.
Unless another law or standard applies to you, “manufactured products” that are compliant with BABA meet the following criteria:
- Manufactured in the United States; and,
- The cost of the components of the manufactured product that are mined, produced or manufactured in the United States is greater than 55% of the total cost of all components of the manufactured product.
Check the Made in America Office website for updates.
Recipients receiving FFA covered by BABA are responsible for making sure their subrecipients follow BABA unless the application of BABA has been waived by HUD.
There are additional training resources on HUD Exchange, where you can find program-specific information. HUD has also created BABA Quick Guides for the following programs:
- CPD: Community Planning and Development Overview
- CDBG: Community Development Block Grant
- RHP: Recovery Housing Program
- CoC: Continuum of Care Program
- ESG: Emergency Solutions Grants Program
- CPF: Community Project Funding
BABA requirements will apply to most HUD FFA dispersing funds by August 2024; however, the following programs will remain exempt from the requirements:
- Community Development Block Grant – Disaster Recovery Funds (CDBG-DR)
- Community Development Block Grant – Mitigation (CDBG-MIT)
- Community Development Block Grant – National Disaster Resilience Competition (CDBG-NDR)
- Community Development Block Grant CARES Act (CDBG-CV)
- Housing Opportunities for Persons With AIDS CARES Act (HOPWA-CV)
- Emergency Solutions Grants CARES Act (ESG-CV)
Additional guidance can be found in HUD Notice CPD-2023-12, which details the requirements for the agency. If you have specific questions about BABA and its applicability to your project, and for the latest policy updates, please refer to HUD’s online resources, contact the project grantee, or ask your local HUD Field Office.
The U.S. Department of Agriculture (USDA) has provided a BABA resource page with FAQs, waivers and detailed program information relevant to USDA Rural Development FFA. View additional guidance on USDA’s implementation of the Build America, Buy America Act.
Disclaimer: The information provided on this webpage does not, and is not intended to, constitute legal advice; instead, all information, content, and materials are for general informational purposes only. Readers should contact their attorney to obtain advice with respect to any particular legal matter and should refrain from acting on the basis of information on this resource page without first seeking legal advice from counsel in the relevant jurisdiction. The National Association of Home Builders of the United States (NAHB) specifically disclaims any liability, loss or risk, personal or otherwise, which may be incurred as a consequence, directly or indirectly, in the use or application of any of the materials and information contained or presented on this webpage.