building canes

Many general discussions of the Buy American Act focus on supply contracts with the U.S. Government. But the BAA also applies to another large subset of the U.S. Government contracting universe: construction contracts.

In this post, we’ll provide an overview of the BAA’s mandates vis-à-vis construction materials incorporated into U.S. Government construction projects.

Applicability

In the construction context, the BAA has a far reach. It applies to all contracts for the construction, alteration, or repair of any public building or public work in the United States. That means many contracts will trigger BAA’s requirements, considering that the federal government owns about 270,000 buildings and constantly builds new ones.

Domestic Construction Materials

The BAA requires contractors to use only domestic construction materials in all construction contracts, unless an exception applies. Construction materials include all articles, materials, or supplies that a contractor or subcontractor (yep, the BAA applies to all subcontractors too) brings to the construction site and incorporates into the building or work.

So, how does one determine whether an item is domestic construction material? There are two tests: one for construction materials not predominantly made of iron/steel and one for construction materials that are made predominantly of iron/steel (i.e., the cost of the iron/steel content exceeds 50% of the cost of all the material’s components).

Test for construction material not made predominantly of iron/steel:

  • unmanufactured construction material that is mined or produced in the Unites States OR
  • construction material manufactured in the United States, if

Test for construction material made predominantly of iron/steel:

  • construction material manufactured in the United States if the cost of foreign iron or steel constitutes less than 5% percent of the costs of all components (excluding COTS fasteners).

Exceptions

The BAA relieves a contractor from using domestic construction materials in a few situations:

  • Impractical or inconsistent with the public interest–requires a determination from the head of the procuring agency.
  • Nonavailability–the construction material is not mined, produced, or manufactured in the U.S. in sufficient and reasonably available quantities. Procuring agencies can issue a class determination for construction materials or the head of a contracting activity can issue an individual determination for a specific procurement.
  • Unreasonable cost–the cost of domestic construction material is unreasonable if it exceeds the costs of foreign construction material by at least 20%.

Unreasonable cost is probably the most frequently exploited exception. To justify this exception, a contractor must provide the agency with supporting market information and a price comparison table. If the agency agrees a domestic construction material satisfies the unreasonable cost exception, the contract must specifically identify the permissible foreign construction material.

Contractors should pursue an unreasonable cost exception before submitting proposals, if possible. If the CO does not make a decision before proposals are due, offerors can submit alternate bids (i.e., one consisting of domestic materials and another consisting of foreign construction materials that the offeror believes satisfy the unreasonable cost exception).

Penalties

Take the BAA’s mandates seriously; otherwise, you face the prospect of serious consequences. For example, an agency could require that a contractor remove foreign construction material after it’s been incorporated into the project. Or it could terminate the contract for default. In addition, an agency could refer a contractor for suspension or debarment proceedings or even criminal investigation.

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If you have any questions about these provisions or other domestic preference statutes, give us a call at 913-354-2230.

The Buy American Act and Construction Materials was last modified: February 16th, 2024 by John Mattox