Companion Guide to Video August 2012

www.fhwa.dot.gov/federal-aidessentials

As Americans, we often hear the terms “Made in 

America” or “Buy American.” But with regard to 

Federal-aid construction projects, the term “Buy 

America” means something different. As a local 

public agency, or LPA, when using Federal-aid 

funds for construction of a project, you must 

ensure that your contract complies with the Buy 

America provisions.

Before we go any further, there are two 

provisions of Federal law that have similar 

names and intent. However, each has distinctly 

separate requirements as applied to the use of 

American made products.

• One provision is the Buy American Act of 

1933. This act applies to procurement by a 

Federal agency administering and managing 

a project.

• The second provision is the Buy America

requirement of the Federal-aid 

program. This regulation requires domestic 

production of all steel and iron products 

permanently used in Federal-aid 

projects. Further, the Buy America 

requirement applies to both highway and 

non-highway projects.

Note that the Federal Transit Administration has 

a Buy America requirement that applies to 

transit projects. The Federal Highway 

Administration’s (FHWA) Buy America 

requirement for Federal-aid contracts is the 

subject of our discussion. The Buy America

provisions apply to all iron and steel material 

that is permanently incorporated into a Federalaid highway construction project. This means 

that all iron and steel product manufacturing and 

fabrication processes must be performed within 

the borders of the United States, or its territories. 

If any manufacturing or fabrication process of a 

domestic iron or steel product is performed 

outside the United States, the entire product, not 

just the work done or the components added, is 

considered foreign-source material.

Manufacturing is any process that modifies the 

chemical content, the physical shape, size, or 

the final finish of the product. Steel 

manufacturing starts with smelting and ends with 

coating. Fabrication is the cutting, bending and 

welding of steel plate material into a usable 

structural steel product.

Project Development

Contract Specifications

Buy America Contract Requirements

Domestically manufactured steel and iron products must be 

used in Federal-aid projects in accordance with Buy America 

requirements
Federal-aid Essentials for Local Public Agencies

Most State departments of transportation, State 

DOTs, have included the Buy America

requirements as either a general provision, or a 

material specification, in their standard 

specification books. Check to see if the State 

specifications can be incorporated into your 

project plans, or can be used as examples to 

develop your own unique Buy America contract 

specification.

Circumstances might arise when 

you may not be able to fully 

comply with the intent of the Buy 

America requirements. 

When these circumstances exist, the regulations 

provide allowances as a means to still conform 

to the Buy America requirements. The 

allowances to the regulations are minimum 

threshold, temporary use, and substantial 

increase to contract cost.

The contract minimum threshold section allows 

the use of a minimal quantity of non-domestic 

iron or steel in a Federal-aid project. The 

cumulative value of non-conforming material 

cannot exceed 0.1 percent of the total contract 

amount or $2,500, whichever is greater. If the 

cumulative value reaches this minimum 

threshold limit, then all additional installed 

material must be of domestic origin.

The second allowance in the regulations is the 

temporary use of steel or iron. This is when the 

contractor temporarily uses and removes steel 

or iron items that are used only as a construction 

aid. Steel or iron products used for temporary 

purposes such as sheet piling, drilled shaft 

linings, and formwork for casting concrete are 

not subject to the limit on manufacturing 

location. As a clarification, installation is 

permanent only when the contract documents 

require the product to be left in place.

The third allowance is a project waiver when the 

cost of using domestic iron or steel substantially 

increases the proposed contract cost. To 

implement this allowance, the bid specifications 

must allow contractors to submit alternate bids 

based on using domestic or foreign steel. This 

specification must clearly state that the contract 

award will be for the lowest overall bid using 

domestic steel, unless the lowest overall bid 

using foreign steel is lower than the overall bid 

using domestic steel by more than 25 percent. 

This is a cost savings feature in the law. The 

total contract bid value is used to calculate this 

percentage, not just the cost of the steel or iron 

products.

The law also provides a clarification for preassembled, manufactured products. The Buy 

America provisions require that iron and steel 

components in pre-assembled manufactured 

products must also conform to the regulation.

If you determine that your project meets any of 

these circumstances, first, consider redesigning 

your project to use domestic iron and steel, then, 

if that cannot be done, prepare the appropriate 

documentation to justify the use of nonconforming or foreign-produced material. 

Coordinate with your appropriate oversight 

agency to ensure that all of the support 

documentation is adequate and approvals are 

received. 

If you cannot use the allowances or redesign the 

project to incorporate domestic steel or iron 

products, there is another option. The law 

provides a waiver process for use of nondomestic steel or iron products.

To obtain a waiver, you must prepare and 

submit a formal request through your State DOT 

to FHWA to waive the Buy America 

requirements. A waiver may be granted upon 

finding that one of the following two 

circumstances are met:

• When it is shown that following the Buy 

America requirements is inconsistent with 

the public interest. Please note that a lower 

cost foreign product is not an acceptable 

public interest finding.
Federal-aid Essentials for Local Public Agencies

• When there aren’t enough domestic steel or 

iron products of satisfactory quality 

available, or the required products are not 

produced domestically.

The waiver approval process is a lengthy 

regulatory requirement. Waiver requests 

undergo a thorough review by FHWA, including 

a nationwide public involvement process via 

online commenting, as well as the publication of 

the agency’s finding in the Federal Register. 

In summary, your product specifications must 

require domestically produced steel and iron 

products with allowances noted for your Federalaid project. When selected products can’t meet 

this requirement, submit a request for approval 

of a project-specific waiver, but allow your 

agency sufficient time to work through the 

national public involvement process this 

requirement, submit a request for approval of a 

project-specific waiver, but allow your agency 

sufficient time to work through the national 

public involvement process.
Federal-aid Essentials for Local Public Agencies

The content of this 

document is not a 

substitute for 

information obtained 

from State departments 

of transportation, 

appropriate FHWA 

Division Offices, and 

applicable laws. 

Scenarios have been 

simplified for emphasis 

and do not necessarily 

reflect the actual range of 

requirements applicable 

to the scenario or this 

topic. This document

was created under 

contract number

DTFH63-12-F-00025 by 

the Federal Highway 

Administration, U.S. 

Department of 

Transportation, and is 

offered to the public to 

heighten and focus 

awareness of Federal-aid 

requirements within the 

local public agencies 

community and 

reinforces the 

importance of these 

necessary policies, 

procedures, and 

practices.

This companion resource 

is the script content for 

the video production of 

the same name. 

Web Resources

• FHWA guidance on Buy America regulations, includes links to materials on 

implementation

http://www.fhwa.dot.gov/construction/cqit/buyam.cfm

• Link to Buy America waiver request for steel and iron

http://www.fhwa.dot.gov/construction/contracts/waivers.cfm

• FHWA guidance on Buy America regulations in Q & A format

http://www.fhwa.dot.gov/construction/contracts/buyam_qa.cfm

• FHWA Contract Adminstration Manual guidance on Buy America found in 

Section B, subsection 1 

http://www.fhwa.dot.gov/programadmin/contracts/core02.cfm#s2B01

• Buy America regulations for steel and iron permanently incorporated into a 

Federal -aid project

http://www.ecfr.gov/cgi/t/text/textidx?c=ecfr&sid=a825bd455136916aaef4f47bd2d69e88&rgn=div5&view=text

&node=23:1.0.1.7.23&idno=23#23:1.0.1.7.23.4.1.6

• Overview of the various Buy American product requirements for all USDOT

http://www.dot.gov/highlights/buyamerica