Understanding the Complexities of Buy American vs Build America Buy America

Over the last year, there has been a significant increase in the number of federal broadband grant programs that require a domestic preference (“Buy America”) for the purchase of manufactured products. The problem, however, is that there are two different Buy America standards that apply across multiple federal agencies and there are 4 different waivers available for 6 different programs.

The patchwork of Buy America standards and waivers is creating significant confusion in our industry that has led to among other things, a persistent issuance of Request for Proposals (“RFPs”) with unintentional errors. For example, RFPs may ask for the wrong Buy America standard, incorrectly state that a standard applies when it does not, or provide contract language that is different from the standard identified in the RFP. For a manufacturer or a vendor who sells products in this space, this is a critical issue. For grant recipients, compliance is a threshold issue for expenditures.

The purpose of this article is to sort through some of the mess and provide a “cheat sheet” for the different standards and programs.

First – the origin of “Buy American” preferences in Rural Utility Service programs can be traced back to the Rural Electrification Act of 1936 and is codified in 7 CFR 1787 (2018). That law remains on the books and currently applies to recipients of broadband grant and loan programs administered by the United States Department of Agriculture (USDA) with some exceptions.

Second – the Build America Buy America Act or “BABA” is a new domestic preference standard that was passed into law as part of President Biden’s Infrastructure Bill in 2021. The guidance issued by the Office of Management and Budget on April 18, 2022 states that not only does BABA apply to programs created or funded by the Infrastructure Bill, but also to all federal funding assistance programs going forward. Below is a high-level overview of these two standards:
 

To further complicate matters, the federal agencies do not have a current plan to adopt an interagency approach for the application of BABA to broadband programs. This means that at least for now, there are no plans for other federal agencies to adopt the final waiver that is expected to be issued by NTIA in the coming weeks for the $42.5 billion dollar BEAD program. Thus, what may be exempted by NTIA under the BEAD waiver, may not be exempted under another federal broadband program.

This specifically impacts non-federal entities (local governments, tribes, nonprofits, etc.) and recipients of the 2023 Community Connect grants or ReConnect grants. In those cases, there is not a broad waiver available for the strict BABA standard and waivers must be applied for on a case-by-case basis. See Section H of the Community Connect FY 2023 NOFO for additional information.

Below is a high-level overview of the federal broadband grant programs and the legal standard or standards that apply for now. If a program is not listed, then it does not contain a federal domestic preference requirement.

Until this is sorted out at the federal level, the broadband industry needs to navigate this with a fine-tooth comb and not with the broad brush it is currently using.