BABA for BEAD

Utah Broadband Center

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BABA: The Build America, Buy America Act

• Part of the Infrastructure Investment and Jobs Act (IIJA)
• “The Build America Buy America Act (BABA), part of the Infrastructure Investment and Jobs Act, says that when the government provides money for building infrastructure, the materials used to build them should be made in the United States. This means things like iron, steel, products made in factories, and materials for construction need to come from the U.S.”
• https://www.ntia.gov/programs-and-initiatives/build-america-buy-america

BABA Statutory Language

1. What materials are included?
1. All iron and steel used in the project are produced in the United States;
2. The manufactured products used in the project are produced in the United States;
3. The construction materials used in the project are produced in the United States.

BABA Statutory Language

• What does “produced in the United States” mean?
• In the case of iron or steel products, that all manufacturing processes, from the initial melting stage through the application of coatings, occurred in the United States;
• In the case of manufactured products, that–
1. the manufactured product was manufactured in the United States; and
2. the cost of the components of the manufactured product that are mined, produced, or manufactured in the United States is greater than 55 percent of the total cost of all components of the manufactured product, unless another standard for determining the minimum amount of domestic content of the manufactured product has been established under applicable law or regulation; and
• In the case of construction materials, that all manufacturing processes for the construction material occurred in the United States.

BABA Statutory Language

• Can these requirements be waived?
• The head of a Federal agency that applies a domestic content procurement preference under this section may waive the application of that preference in any case in which the head of the Federal agency finds that:
• Applying the domestic content procurement preference would be inconsistent with the public interest
• Types of iron, steel, manufactured products, or construction materials are not produced in the United States in sufficient and reasonably available quantities or of a satisfactory quality; or
• The inclusion of iron, steel, manufactured products, or construction materials produced in the United States will increase the cost of the overall project by more than 25 percent.

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Limited General Applicability Nonavailability Waiver of the Buy America Domestic Content Procurement Preference as Applied to Recipients of Broadband Equity, Access, and Deployment Program

(i.e. NTIA has released a limited waiver for certain materials used by BEAD-funded projects)

Waiver overview

• Effective dates: Entire period of performance for BEAD awards that are obligated between February 22, 2024 and February 22, 2029
• Waiver will be reviewed annually by NTIA

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Waiver overview

• Covered Communications Equipment: Independent of BABA, the IIJA prohibits expending BEAD funds to purchase or support any covered communications equipment or service (Section 9 of the Secure and Trusted Communications Networks Act of 2019) or to purchase or support fiber optic cable and optical transmission equipment manufactured in the People’s Republic of China.

Materials Included in Waiver

Construction Materials

• Non-optic-glass inputs to the optical fiber pre-form process
• However: All optic glass must have “all manufacturing processes, from initial batching and melting of raw materials through annealing, cooling, and cutting, occu[r] in the United States.”
• Fiber optic cable connectors
• Note: the de minimus waiver may not be applied to purchases of optical fiber and fiber optic cable

Manufactured Products

• BABA preference requirements waived for all electronics with the exception of:
• Optical line terminals and remote optical line terminals (OLTs/rOLTs)
• OLT line cards
• Optic pluggables
• Standalone optical network terminals and optical network units (ONTs/ONUs)
• For these four categories, the 55% cost of components requirement is waived
• Note: the de minimus waiver may not be applied to purchases of these four categories of electronics

Manufacturing Processes Conducted in United States

Manufacturing Processes Conducted in United States

Manufactured Products: Enclosures

• Enclosures include the following four categories:
• Cabinets
• Vaults and other below ground housings
• Pedestals and other above ground housings
• Closures and terminals
• The 55% cost of components requirement remains in force for enclosures and the de minimis waiver may not be applied to purchases of enclosures
• Manufacturing processes that must be conducted in US:
• Integrate subassemblies
• Install internal components, hardware, and wiring
• Seal and waterproof
• Test, label, and document
• Manufacturing of molded outer shell

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Manufactured Products: Passive Optical Equipment

• The Buy America preference is waived for passive optical equipment (e.g. splitters, multiplexers, demultiplexers, taps, directional couplers, connectors, optical filters, attenuators, wave division multiplexers that require no power for operation).
• The waiver does not apply to other network equipment that is not electronics. To the extent there are classes or categories of other network equipment that are not domestically available, it is expected that the de minimis waiver will be sufficient for most projects.

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Iron or Steel Products

• The Buy America preference is not waived for any other iron or steel products, including radio towers.
• To the extent there are products or categories of iron or steel products that are not domestically available, it is expected that the de minimis waiver will be sufficient for most projects.

Department-wide Public Interest Waivers for De Minimis Infrastructure Project Purchases, Small Grants, and Minor Components within Iron and Steel Products

De Minimis Waiver Overview

• Effective dates: Upon issuance (signed May 2023)
• Application: “These waivers will be effective upon issuance for all Department [of Commerce] recipients of Federal financial assistance for infrastructure.”
• Waiver review: annually for the first five years of issuance; five years thereafter

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Targeted and Limited Waivers

• Waiver for otherwise covered infrastructure project purchases, totaling up to 5% of the total material costs subject to the Buy America preference, up to a maximum of $1,000,000
• Once the 5% or $1,000,000 threshold is reached (whichever is lower), all other applicable project purchases must comply with the Buy America preference
• “DOC believes that the value of such [minor hardware] items will not exceed de minimis thresholds under its existing waiver. BEAD Program recipients and subrecipients are expected to make a good faith effort to measure the quantity and value of minor hardware items utilized in the project and report accordingly.”

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Targeted and Limited Waivers

• Small Grants waiver: will apply to Federal financial assistance awards equal to or less than the 2 CFR 200.1 Simplified Acquisition Threshold ($250,000). If the total Federal assistance for a single project is higher than this threshold, the waiver shall not apply.
• Miscellaneous minor components within iron and steel products: Recipients may use non-domestically produced miscellaneous minor components comprising no more than 5% of the total material cost of an otherwise domestically produced iron and steel product to be used.

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Compliance and Reporting

Self-Certification List

• Manufacturers may self-certify, subject to penalties, that they are compliant with BABA.
• The self-certification list is published and maintained by NTIA.
• Manufacturers on the list must include a list of their BABA-compliant products on their websites.

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Compliance

1. Determine whether a product is subject to BABA
2. Ensure that all contractors, subcontractors and vendors comply with BABA
3. Include BABA requirements in all solicitations, requests for proposals, agreements, subagreements, etc.
4. Require contractors and vendors to verify BABA compliance
5. Ensure that products delivered to the project site properly document BABA compliance
6. Ensure that BABA compliance documentation is available upon request (e.g. for purposes of audits, desk reviews, etc.)

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Compliance Documentation

• Manufacturer’s BABA Certification Letter
• Required to demonstrate BABA compliance for the project
• Letter must certify that the equipment meets BABA requirements
• Letters must be maintained and produced upon request to UBC or NTIA
• Key elements of the certification letter include:
• BABA domestic manufacturing requirement reference
• Equipment information
• Product name
• Product description
• Quantity
• Location of manufacturing
• Signature of authorized company representative

Compliance Documentation

• Waiver reporting
• Compile a reporting tracker on the finished waived electronics used in the project and share with UBC
• A tracker template will be provided
• The tracker will include:
• Name of manufacturer
• Category of electronic product
• 10-digit HS code
• Product identifier (e.g. SKU, Product ID, Part No., etc.)
• Common language description of the product’s function
• Country of origin
• Quantity
• Tracker must be submitted with quarterly reports

Penalties for Non-compliance

Corrective action may entail:

• Removing and replacing improperly purchased foreign-manufactured goods
• Reducing the amount of an award
• Withholding future funds
• Terminating award
• In cases of fraud, criminal investigation and prosecution

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