Buy America Provisions and the IIJA: What Civil Firms Must Know About Domestic Material Requirements
If your firm works on federally funded infrastructure projects, you're already operating under domestic material requirements that are more stringent than anything that existed before 2022. The Build America, Buy America Act (BABA), embedded in the Infrastructure Investment and Jobs Act, fundamentally reshaped what it means to source materials on a federally assisted infrastructure project. And the requirements have been expanding every year since the law took effect.
Many engineering firms and contractors got through the first few years of BABA implementation by relying on the transitional waivers that agencies issued while they figured out how to apply the law. Those waivers are largely gone now. FHWA's long-standing general waiver for manufactured products on highway projects, which had been in place for decades, was formally rescinded by final rule on January 14, 2025. Construction material requirements that were transitionally waived are now in full effect. The October 2026 deadline brings the 55 percent domestic content test for manufactured products into full force. The compliance environment has hardened significantly, and firms that haven't built BABA into their project execution and procurement practices are running real contract risk.
This post covers what BABA actually requires, how it differs from traditional Buy America requirements, the three product categories and what 'produced in the United States' means for each, the manufactured products waiver rescission and its phased implementation timeline, how waivers work when domestic materials genuinely aren't available or would make a project financially unworkable, who bears the compliance responsibility, and what good documentation practice looks like. This is practical material for civil engineers who want to understand the rules before a project audit finds out they didn't.
1. BABA and Traditional Buy America: What Changed
The term 'Buy America' has been in the transportation engineering vocabulary for decades. It's been a feature of federal-aid highway contracting since the Surface Transportation Assistance Act of 1978. But what BABA did was different in scale and scope from what came before, and the distinction matters.
Traditional Buy America requirements under 23 U.S.C. 313 applied specifically to iron, steel, and manufactured products on FHWA-funded highway projects. That coverage was significant but had a major carve-out that practitioners relied on for years: FHWA maintained a general applicability waiver for manufactured products, meaning that equipment like traffic signals, guardrail hardware, drainage structures, and most mechanical components could be sourced internationally without triggering a compliance issue. Only iron and steel products were subject to the full domestic sourcing requirement in practice.
BABA changed two things. First, it added construction materials as an entirely new product category subject to domestic preference requirements, covering materials that had never previously been subject to Buy America at all: aggregates, cement and cementitious materials, plastic and polymer-based products, glass, lumber, and more. Second, it required every federal agency to review its existing waivers and either justify them or rescind them. FHWA's manufactured products waiver, which existed precisely because domestic manufacturing of every category of highway hardware simply wasn't realistic, became required to either be justified on public interest grounds or terminated.
The law also extended Buy America preference coverage beyond FHWA's traditional domain. BABA applies to all federal financial assistance programs for infrastructure, not just transportation. That means EPA-funded water projects, HUD community development projects, DOE energy infrastructure grants, NTIA broadband programs, and every other federal assistance program for infrastructure is now subject to BABA unless the agency has obtained a specific waiver. The reach of the requirement extends to grants, loans, cooperative agreements, and other forms of federal financial assistance, not just contracts.
The Scope of BABA
BABA applies to every infrastructure project receiving federal financial assistance, across all federal agencies and programs. The definition of 'infrastructure project' is broad: any activity related to the construction, alteration, maintenance, or repair of structures, facilities, or equipment that serve a public function. Roads, bridges, water systems, wastewater systems, broadband networks, energy infrastructure, public buildings, and parks all fall within scope when they receive federal financial assistance. This is not a transportation-specific requirement.
2. The Three Product Categories: What Each Requires
BABA organizes all materials used in federally assisted infrastructure projects into three distinct product categories. Each category has a different standard for what it means to be 'produced in the United States.' The categorization is exclusive: each item must be assigned to exactly one category, and that assignment is made based on the item's status at the time it arrives at the work site for incorporation into the project.
Category 1: Iron and Steel Products
Iron and steel products face the strictest standard. A product qualifies as an iron or steel product if its iron and steel content exceeds 50 percent of the total cost of all components. For all iron and steel products, 'produced in the United States' means that all manufacturing processes, from the initial melting stage through the application of coatings, occurred in the United States.
That's not a loose standard. If a structural steel section was cast from imported billets or ingots that were then reheated and rolled in the United States, it doesn't qualify. The entire manufacturing chain, from the scrap or iron ore feed going into the furnace through the final surface treatment or coating, has to occur domestically. Pipe, structural shapes, reinforcing bar, sheet piling, anchor bolts, steel hardware for drainage structures: all are covered under this standard.
USDA and EPA each maintain a Minor Ferrous Components Waiver that allows up to 5 percent of the total material cost of an iron or steel product to consist of miscellaneous minor iron or steel components of non-domestic or unknown origin. This provides a practical margin for incidental fasteners, fittings, and hardware that would otherwise be nearly impossible to trace through the supply chain, but it's narrow and specific.
Category 2: Construction Materials
Construction materials are items that consist of only one of a defined list of base material types, potentially with minor additions that don't change the category. 'All manufacturing processes' for construction materials must occur in the United States. The defined material types include:
• Non-ferrous metals (copper, aluminum, and their alloys)
• Plastic and polymer-based products: PVC pipe, composite building materials, geosynthetics (most geosynthetics on state DOT-approved lists fall here), polymers used in fiber optic cables
• Glass, including optic glass
• Fiber optic cable
• Lumber and engineered wood products
• Drywall
• Cement and cementitious materials
• Aggregates: stone, sand, and gravel
• Bricks and masonry
• Insulation materials
• Optical fiber
• Broadband cables
For civil engineers, several of these categories deserve specific attention. PVC pipe, the lowest-failure-rate pipe material in water distribution systems, is a construction material, and all manufacturing processes must occur in the United States. Geosynthetics used in pavement, drainage, slope stabilization, and landfill liner systems are polymer-based products and fall here as well; FHWA confirmed in September 2024 correspondence with the Geosynthetics Materials Association that most geosynthetics on state DOT approved-product lists classify as construction materials under BABA. Aggregates seem straightforward but require that extraction, processing, and any sizing or treatment all occur domestically. Cement is covered; this affects projects using blended cements or supplementary cementitious materials where sourcing documentation may be more complex.
Category 3: Manufactured Products
Manufactured products are items that don't fall into the iron and steel or construction material categories. They're the assembled, fabricated, or processed products that incorporate multiple materials and components: traffic signals, pump stations, electrical switchgear, HVAC equipment, precast drainage structures, and similar items. Until October 1, 2025, a long-standing FHWA general waiver exempted virtually all manufactured products on highway projects from Buy America requirements.
That waiver is now gone. FHWA's January 14, 2025 final rule terminated it. The rescission is being implemented in two phases, and firms need to know exactly where they are on that timeline.
The Two-Phase Manufactured Products Rescission Timeline
Phase 1 (projects obligated on or after October 1, 2025): Manufactured products must be manufactured in the United States (the final assembly requirement). The 55 percent domestic component cost test does not yet apply. Phase 2 (projects obligated on or after October 1, 2026): Both the U.S. manufacturing requirement AND the 55 percent domestic components cost test apply. After October 2026, a manufactured product is considered produced in the United States only if it is manufactured here AND has more than 55 percent of its component costs, by value, coming from materials mined, produced, or manufactured in the United States.
3. The Manufactured Products Rescission: What It Means in Practice
For engineering firms and contractors working on FHWA-funded projects, the rescission of the manufactured products waiver is the most consequential recent BABA development. For the first 40-plus years of federal highway Buy America requirements, manufactured products were essentially exempt. Starting October 2026, they won't be.
What counts as a manufactured product on a highway project
Traffic control equipment including traffic signals, dynamic message signs, and highway lighting. Drainage structures that don't qualify as iron or steel products. Pump station equipment. Erosion control devices assembled from multiple material types. Most electrical and electronic hardware. Precast concrete products (with a note: components that are predominantly iron or steel in precast concrete must meet the iron and steel standard separately, in addition to the overall manufactured products standard). Intelligent transportation systems hardware, including controller cabinets and communications equipment, though the enclosures or housings for ITS equipment that are predominantly iron or steel must meet the iron and steel standard for those components.
The 55 percent domestic component test
When the full two-part standard takes effect in October 2026, a manufactured product must pass two tests. First, final assembly must occur in the United States. Second, the cost of its components that are mined, produced, or manufactured in the United States must exceed 55 percent of the total cost of all components. Component costs are calculated using the cost of the materials and parts that go into the product, not including direct labor, overhead, or profit.
In practice, this requires firms to trace their supply chains for manufactured products to a level of detail that hasn't previously been required on highway projects. A pump manufacturer supplying equipment to a federal-aid project needs to be able to document that the combined domestic content of its castings, impellers, shaft seals, motors, and other components crosses the 55 percent threshold. Firms that have relied on imported components for cost reasons will either need to find domestic alternatives, demonstrate compliance at the specified threshold, or navigate the waiver process.
Why this matters for project procurement and scheduling
The compliance clock starts at obligation, not at construction. A project obligated after October 1, 2026 is subject to the full two-part manufactured products standard even if construction doesn't start until months later. Engineering firms need to flag this in their project scheduling and procurement guidance to clients. Material delivery schedules, especially for long-lead manufactured items like pumps, signals, and specialized electrical gear, need to account for the additional verification time required to confirm domestic content compliance before procurement commences.
A DOT inspector general audit published in July 2025 flagged that FHWA doesn't provide sufficiently detailed guidance on materials certifications, creating risk that recipients won't collect adequate documentation. The audit found compliance issues in previous FHWA Division Office reviews, including unacceptable levels of non-compliance in Texas in 2019 and 2020 CAP reviews. Non-compliance results in funding clawbacks, project delays, and audit findings. The administrative burden of getting it right falls on the grantee, which means it flows to the engineer of record and the project team.
4. The Waiver Process: When Domestic Materials Aren't Available or Practical
BABA recognizes that there are circumstances where strict domestic content requirements would make a project infeasible, unreasonably expensive, or otherwise contrary to the public interest. The waiver process exists to address those circumstances. But it's a formal process with real procedural requirements, not a casual checkbox, and firms that assume they can obtain a waiver after construction has started are in a difficult position.
The three types of waivers
BABA provides for three categories of waiver, each with different standards for approval.
• Nonavailability waiver: Granted when the required domestic article, material, or supply is not produced in the United States in sufficient and reasonably available commercial quantities, or is not of a satisfactory quality. This is the most commonly sought waiver for specialized materials or products where domestic manufacturing capacity simply doesn't exist.
• Unreasonable cost waiver: Granted when using domestic materials would increase the cost of the overall project by more than 25 percent. This is a high threshold. Cost increases below 25 percent are not sufficient grounds for a cost waiver on their own. The requesting party must demonstrate both the additional cost and that no domestic alternative is available within the project budget.
• Public interest waiver: Granted when the federal agency head determines, based on the totality of the circumstances, that applying the domestic preference would be inconsistent with the public interest. This is the most flexible category but also the most uncertain, as it relies on agency judgment. OMB Memorandum M-24-02 cautions that agencies should not use broad public interest waivers in ways that undermine the market signals the domestic preference is designed to create.
How the waiver process actually works
The process follows a specific sequence that takes time, and that time needs to be built into project schedules. Here's how it flows:
• Step 1: The award recipient (grantee) submits a waiver request in writing to the applicable federal agency. The request must include: the waiver type, a description of the project and the specific material for which the waiver is sought, the estimated dollar amount of the waiver, and documentation supporting the grounds for the request.
• Step 2: The agency notifies the OMB Made in America Office (MIAO) and posts the draft waiver publicly for a minimum 15-day comment period.
• Step 3: The agency evaluates public comments and submits the final waiver request to MIAO for review. MIAO can approve, reject, or request modifications.
• Step 4: The agency grants or denies the waiver. Only after approval can the non-domestic material be procured and incorporated into the project.
Any waiver request that isn't submitted well before procurement begins creates schedule risk. For projects where waiver requests are necessary, the procurement timeline for the affected materials shouldn't commence until the waiver is approved or explicitly denied. Starting procurement before waiver approval and then encountering a denial creates a difficult situation for both the grantee and the contractor.
Key Practical Note on Waivers
Waivers are project-specific and product-specific. A waiver granted for a particular material on a previous project doesn't automatically apply to a new project, even with the same material from the same supplier. General applicability waivers, which apply across all projects under a program, still exist for some agencies and some materials, but FHWA's manufactured products general applicability waiver is gone. Firms relying on any waiver should verify its current status and scope through the relevant agency's waiver list before procurement.
5. Who Is Responsible and What Documentation Looks Like
Understanding who bears BABA compliance responsibility is important, because it isn't the contractor or the engineering firm as the primary responsible party. It's the federal award recipient, which in most cases is the state DOT, municipal agency, or other governmental grantee receiving the federal financial assistance. That grantee is ultimately responsible for ensuring that BABA requirements are met across the entire project, including by all contractors, subcontractors, and material suppliers working on their behalf.
In practice, that responsibility flows downward through contract provisions. The grantee requires the prime contractor to certify compliance and collect certifications from subcontractors and suppliers. The prime contractor requires manufacturers to provide product-specific, project-specific certification letters. Those certifications flow up through the supply chain to the grantee's project file. The grantee must keep the documentation for at least five years after project closeout and produce it on request from the agency, auditors, or the Office of Inspector General.
What a compliant project file looks like
A properly documented BABA compliance file for a federally funded project should contain:
• A materials list identifying every iron or steel product, construction material, and manufactured product used on the project, categorized correctly under the three BABA categories
• Manufacturer self-certification letters for each covered material. Each letter must be product-specific and project-specific: it should identify the project by name, location, and project number; identify the specific products supplied; attest to the product category (iron and steel, construction material, or manufactured product); and state the location of manufacturing with sufficient detail to support the applicable compliance standard
• Documentation supporting any applicable waivers, including the approved waiver from the relevant agency, and records of why specific waivers were sought
• Any step certifications for iron and steel products, documenting the domestic manufacturing chain
• Records of any materials that were excluded from BABA requirements under applicable de minimis or other exemptions, with documentation of the basis for exclusion
The documentation burden is real and it compounds across a project with dozens of material types. The firms that handle this well are the ones that build compliance tracking into their project management systems from the start, not the ones that scramble to reconstruct certifications when an audit request arrives. Engineering firms advising public agency clients on procurement and contract administration have a role to play in making sure their clients' projects are documented correctly from day one.
The prime contractor's practical role
Even though the grantee is the legally responsible party, contractors are the ones with supply chain relationships and day-to-day procurement authority. Contractors who work on federally funded projects need to have established compliance procedures, including standard BABA certification language in their supplier agreements, a process for verifying that materials arriving at the job site are covered by a current, project-specific certification, and a clear escalation path for addressing materials that arrive without proper documentation. The Texas DOT non-compliance findings in the 2019-2020 CAP reviews illustrate what happens when supply chain documentation isn't managed systematically: compliance issues don't become visible until a review occurs, at which point the remedy requires disruption to project execution.
6. The Reference Table: Product Categories and Their BABA Standards
The table below summarizes the three BABA product categories, the domestic production standards that apply, and common civil engineering examples in each category.
| Category | Produced in the U.S. Means: | Common Civil Engineering Examples |
|---|---|---|
| Iron and Steel Products | ALL manufacturing processes from initial melting through final coating occur in the U.S. (zero foreign processing at any stage) | Structural steel, reinforcing bar, steel pipe, sheet piling, anchor bolts, steel hardware, cast iron drainage frames and grates, steel guardrail |
| Construction Materials | ALL manufacturing processes occur in the U.S. (applies to the base material type listed in the BABA definition) | PVC and HDPE pipe, aggregates, cement and cementitious materials, geosynthetics, copper pipe and tubing, aluminum structures, glass, lumber, asphalt binder (check agency guidance), bricks, insulation |
| Manufactured Products (from Oct 1, 2025) | MANUFACTURED in the U.S. (final assembly requirement). From Oct 1, 2026: also 55% domestic components by cost. | Traffic signals and control equipment, pump stations, electrical switchgear, drainage structures (non-iron/steel types), precast concrete products, ITS hardware, highway lighting, HVAC, dynamic message signs |
7. Exceptions and Edge Cases Civil Engineers Encounter
The de minimis exception
BABA includes a de minimis exception for projects where the total cost of covered materials is below a threshold relative to the total project cost. The specific thresholds vary by agency and program. For FHWA projects, the threshold for what constitutes non-covered 'minor components' is narrow, particularly for iron and steel where a 5 percent minor components allowance applies. The de minimis exception is not a broad escape hatch. Firms that apply it to materials whose cost clearly exceeds the threshold create audit exposure.
Emergency relief projects
BABA does not apply when a project receives Emergency Relief funding based on a major disaster declaration issued by the President under the Stafford Act (42 U.S.C. 5121 et seq.). This is a meaningful exception for firms working on disaster recovery infrastructure. However, BABA does apply to Emergency Relief projects based solely on a Governor's emergency proclamation without a Stafford Act declaration. The distinction matters in cases where federal emergency relief work proceeds under state rather than federal disaster authority.
Subawards and pass-through funding
Unless the federal award specifically indicates otherwise, subawards must conform to the same BABA requirements as the prime award. State agencies receiving federal formula funding and passing it through to local governments, special districts, or other subrecipients must include BABA requirements in those subawards. Local agencies receiving pass-through federal funds don't get a compliance exemption because their direct relationship is with the state rather than the federal agency. This is a common point of confusion in multi-tier federal funding arrangements, and engineers advising local governments on federally funded projects need to make sure their clients understand it.
Buy America versus BABA: when both apply
For FHWA-funded highway projects, both the traditional Buy America requirements of 23 U.S.C. 313 and BABA's requirements apply. BABA provides that its domestic content preference applies only to the extent that a domestic content requirement doesn't already apply. So FHWA's traditional iron and steel requirements continue to govern iron and steel on highway projects, BABA governs construction materials (a category that didn't exist under traditional Buy America), and the rescinded manufactured products waiver brings manufactured products under a new BABA-aligned standard. Where traditional Buy America requirements are stricter than BABA's baseline, the stricter standard prevails.
Conclusion: BABA Compliance Is Now a Core Competency for Federal Project Work
The days of relying on manufactured products waivers and transitional exemptions on FHWA-funded projects are over. By October 2026, manufactured products incorporated into federal-aid highway projects must be manufactured domestically and have at least 55 percent domestic component content by cost. Construction materials have been fully subject to domestic manufacturing requirements since 2022. Iron and steel have been subject to the all-processes standard for decades. The full BABA framework, across all three product categories, is now in force with no general escape valve remaining for the largest category of items that had historically been exempt.
For civil engineering firms, this means that BABA compliance needs to be embedded in project practices from the earliest stages: in specifications development, in procurement language, in supplier qualification, in project file documentation systems, and in the advice firms give to public agency clients who may not fully understand their compliance obligations. A project file that can't produce manufacturer certifications at audit time is a project that didn't finish correctly, regardless of how well the engineering and construction work was done.
The regulatory framework here is genuinely complex. Categorizing a material correctly, understanding the applicable domestic content standard, knowing which waivers exist and whether they apply to your project, and building the documentation chain that survives a federal audit all require real knowledge of the rules. Firms that develop that knowledge and integrate it into their practice will be better partners for public agency clients, more competitive for federal program work, and less exposed to the compliance risks that have already caught other firms out.
