New rule phases in domestic manufacturing requirements for federally funded infrastructure projects, impacting procurement strategies and supply chains in the construction industry.
On January 14, 2025, the Federal Highway Administration (FHWA) issued a final rule rescinding the long-standing Buy America waiver for manufactured products used in federal-aid infrastructure projects.
The Buy America rule will be rolled out in the following two phases.
- For projects obligated on or after October 1, 2025, final assembly of all manufactured projects must occur in the United States.
- For projects obligated on or after October 1, 2026, in addition to the final assembly requirement, the cost of components of products that are mined, produced, or manufactured in the U.S. must be greater than 55 percent of the total cost of all components of the manufactured product.
The rule defines a "manufactured product" as any construction material that has been processed into a specific form or combined with other materials to create a distinct item. This encompasses a wide range of products, including pre-fabricated components and complex machinery. The U.S. Department of Transportation has clarified that all stages of manufacturing for these products—from initial processing to final assembly—must take place domestically to comply with Buy America standards.
For construction companies working on FHWA funded projects, this change necessitates a thorough review of supply chains to ensure compliance. Firms will need to verify that their manufactured products are produced within the U.S., potentially requiring adjustments in procurement strategies and collaboration with domestic manufacturers. Non-compliance could lead to project delays or loss of federal funding, making adherence to these requirements necessary for future infrastructure projects.
The U.S. DOT has indicated that these measures are part of a broader effort to strengthen the U.S. manufacturing sector and support American workers. Construction companies are advised to familiarize themselves with the specifics of the new rule and assess their current practices to ensure a smooth transition before the effective dates.
For more information, please contact Deniz Mustafa at [email protected].
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