BABA Act's emphasis on using domestically produced steel is crucial for ensuring the quality, safety, and sustainability of infrastructure projects.
The Build America Buy America (BABA) Act, part of the Infrastructure Investment and Jobs Act, requires the use of American-made materials in federally funded infrastructure projects. Among these materials, steel holds a particularly significant place due to its widespread use and critical role in ensuring the integrity and durability of these infrastructures, including bridges, highways, and buildings.
Under BABA, all manufacturing processes for steel, from the initial melting stage through the application of coatings, must occur within the United States. 1 2 This requirement ensures that the steel used in infrastructure projects is of the highest quality, enhancing the safety and longevity of these structures. For example, BABA applies to the Broadband Equity, Access, and Deployment program, which aims to expand high-speed internet access across the United States and is currently funded at $42.45 billion.
The BEAD program, under BABA, requires that all steel used in the broadband infrastructure, such as messenger strand deployments, be both made and melted in the United States. By requiring that all steel used in BEAD goes through each manufacturing step in the United States, this ensures that the steel supporting vital fiber optic cables and other broadband infrastructure is quality controlled.3
Compliance with BABA is also vital to the American steel industry, which faces increased global competition. By requiring the use of domestically produced steel, BABA supports the American steel industry, which has faced significant challenges from global competition. The BABA regulations help to sustain jobs within the industry and stimulate economic growth by increasing demand for American steel.3 The ripple effect of this demand extends to related sectors, such as mining and transportation, further bolstering the economy.
The reliance on domestically produced steel also enhances national security. In times of geopolitical tensions or global supply chain disruptions, having a robust domestic steel industry ensures that the country can maintain and build critical infrastructure without depending on foreign suppliers. This self-sufficiency is vital for national resilience and preparedness.
In the legal context, government contractors and subcontractors working on BABA-funded projects must remain vigilantly aware of their manufacturing requirements under the new regime.
Failure to comply with manufacturing and content requirements has severe consequences ranging from civil to criminal penalties under the False Claims Act to contract termination to suspension and debarment from future contracts with the federal government. Under the current administration, it is highly likely government contractors will see an uptick in BABA enforcement efforts and, thus, must be sure to understand their compliance requirements.
The legal importance of adhering to the American-made requirements of BABA is highlighted by the penalties imposed on companies that have failed to comply with such regulations or related regulations, under the False Claims Act. For example, in a 2016 case that remains relevant today, Novum Structures LLC, when facing criminal culpability, agreed to a settlement pursuant to which it was debarred and forced to pay $2.5 million in civil penalties and $500,000 in criminal penalties.
In that instance, Novum, an architectural firm that produces and constructs glass space frames for roofs and atriums, allegedly repackaged materials and falsified documents during its contract performance to disguise its use of materials from China, Germany, and Italy. These actions violated the applicable Buy American Act requirements in its publics works contracts, putting Novum in violation of its domestic preference contractual obligations, similar to those set forth under BABA.4
In conclusion, the BABA Act's emphasis on using domestically produced steel is crucial for ensuring the quality, safety, and sustainability of infrastructure projects. It supports American steel manufacturing and use industries and produces other domestic advantages. Not only is compliance with BABA and regulations similar to BABA essential for the long-term fortification of American infrastructure, but it is also required of government contractors working in BABA covered industries and with BABA covered materials such as steel.
By adhering to the BABA Act's steel requirements, companies can contribute to the growth and stability of the American economy while avoiding the severe consequences of non-compliance. The case of Novum serves as a cautionary tale, highlighting the importance of following these regulations to uphold consumer trust and market integrity.
Read more on Broadband Breakfast.
1 Build America Buy America | U.S. Department of Commerce
2 Build America, Buy America (BABA) Overview | US EPA
3 BABA Compliance and Self Certification | BroadbandUSA
4 Contractor to Pay $3 Million for Alleged Use of Noncompliant Materials
