Cost Increases Anticipated from New “Buy America” Provisions

The Infrastructure Investment and Jobs Act will provide $550 billion in new infrastructure funding over the next five years, but it also brings new “Buy America” provisions that could significantly increase construction costs.

These provisions require that any iron, steel, manufactured products, and construction materials used in Federally funded projects must be procured in the United States. Additional details are expected, but the provisions could also potentially include non-ferrous metals, plastic- and polymer-based products, concrete, aggregates, glass, lumber, and drywall.

The new “Buy America” requirements will apply to all programs administered by Federal agencies including U.S. Department of Agriculture Rural Development, State Revolving Fund, Federal Emergency Management Agency, Bureau of Reclamation, and Army Corps of Engineers.

State agencies are awaiting more details from the Federal government, and the guidance will likely vary from State to State. AE2S Nexus is specifically awaiting guidance from Colorado, Montana, South Dakota, and Utah. In the meantime, here is some information about Minnesota and North Dakota.

  • The North Dakota Department of Environmental Quality (NDDEQ) says “Buy America” provisions will not yet apply to projects that have a binding commitment on loans prior to May 14. The binding commitment is considered the date that State and client attorneys agree that bond documents are final and ready for approval.
  • The Minnesota Public Facilities Authority (MPFA) says that “Buy America” provisions will not yet apply to projects that have awarded project bids prior to May 15.

For projects moving forward after the May 14 and 15 implementation dates, NDDEQ and MPFA recommend projects to be bid with and without the Buy American provisions. A waiver may be considered, if the provision requirements result in a cost increase of more than 25%.

If you have additional questions regarding the “Buy America” provisions or the Infrastructure Investment and Jobs Act, please reach out