Near the bottom of the Infrastructure Investment and Jobs Act, starting on page 2315, is a requirement that any infrastructure funded from federal funds must comply with the Build America, Buy America Act. This applies to the $42.5 billion in broadband infrastructure included in the IIJA, but also applies to all other infrastructure projects that includes federal funding. The IIJA says as of the date of enactment of this Act, domestic content procurement preference policies apply to all Federal Government procurement and to various Federal-aid infrastructure programs.
I think this clearly means that Buy American rules apply to federal infrastructure projects awarded after November 18, 2021, the date the IIJA was published in the Federal Register. This would include RDOF funding, ReConnect grants, the NTIA grants, and anything else awarded after that date. I’ll have to leave this up to the lawyers, but this also could apply to state and local grants awarded before that date but not yet constructed, such as CARES or ARPA projects.
The concept of buying American has been around since 1933, when the original Buy America Act was passed by Congress that applied specifically to federally-funded projects to build roads and railroads. That specific law was aimed at making sure that railroads used American-made iron and steel for rails, train engines, and railcars.
The Buy America concept was first applied to telecom in the 2009 ARRA stimulus grants. Those grants required that a substantial amount of the raw materials used to build broadband networks complied with the Buy America Act. At that time, it was nearly impossible to buy electronics that complied with the Buy America Act, and I recollect that the NTIA issued a blanket pardon from parts of the Buy America rules (but that’s subject to verification).
This new IIJA legislation puts a major emphasis on buying American. One of the intentions of the Act is to provide incentives for manufacturers to bring factories and jobs back to the U.S. Consider the following language from the IIJA:
United States taxpayer dollars invested in public infrastructure should not be used to reward companies that have moved their operations, investment dollars, and jobs to foreign countries or foreign factories, particularly those that do not share or openly flout the commitments of the United States to environmental, worker, and workplace safety protections; in procuring materials for public works projects, entities using taxpayer-financed Federal assistance should give a commonsense procurement preference for the materials and products produced by companies and workers in the United States in accordance with the high ideals embodied in the environmental, worker, workplace safety, and other regulatory requirements of the United States;
The Act lists specific materials and components that should be sourced to American companies, including steel, iron, manufactured products, non-ferrous metals, plastic and polymer-based products (including polyvinylchloride, composite building materials, and polymers used in fiber optic cables), glass (including optic glass), lumber, and drywall.
That list covers almost every component of building a fiber network. Fiber optic glass must be American-made, as must be the material used in fiber-optic sheaths. Conduit must be American-made. The definition of ‘manufactured items’ in the Act covers all electronics.
The IIJA goes on to define the specific rules for defining American-made. Construction materials like fiber optic cable and conduit must be 100% made in the U.S. At least 55% of the cost of the components for manufactured goods must be American-made. This last requirement is going to cause consternation for equipment vendors which are going to somehow disclose the source and what they pay for each component of electronics. In today’s complex supply chain this isn’t going to be easy. This gets even more complex for supply houses that buy and assemble various components into ready-to-use electronics assemblies. This will mean more paperwork for the industry – everybody that builds a project that uses federal funding must be ready to prove they comply with the law.
There are ways for federal agencies to get waivers from these rules – but the legislation makes it clear that waivers need to be exceptions and not routinely or easily granted. The intention of this law is to force vendors to change procurement practices and to buy raw materials and components from American sources. Since the law specifically called out the components of fiber optic networks, it’s not going to be easy to get waivers.
This is likely to cause disruptions in the short run as electronics manufacturers scramble to meet the 55% rule. It’s not hard to imagine that these rules might further disrupt the current supply chain problems as vendors scramble to meet these requirements. But in the long run, these rules are great. We need to buy from American companies, support American jobs, and move manufacturing back to the U.S.