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BABA Will Apply for Some Purchases after February 22, 2024; Will Be Fully Applicable on/after August 23, 2024

 

HUD released implementation guidance on the Build America, Buy America (BABA) provisions for all PHAs. This notice contains important information for BABA’s impact on all PIH programs, important definitions, waivers that HUD has issued, requirements for submitting waivers, steps for ensuring compliance, minimum due diligence search requirements and safe harbor strategies, and other issues that PHAs should consider when preparing for BABA’s implementation.

 

Key Dates:

BABA will apply after February 22, 2024, for iron and steel purchases using newly obligated funds from Choice Neighborhoods, Public Housing Operating Funds, and Capital Funds. Starting with obligation of funds on or after August 23, 2024, BABA will be fully applicable. For full details on the Phased Implementation schedule, see HUD’s webpage or the Phased Implementation Waiver.

 

Applicability of BABA

Federal Financial Assistance (FFA) Programs subject to BABA include grants, cooperative agreements, non-cash contributions or donations, direct appropriations, food commodities, and other financial assistance. Programs that will be subject to BABA include the Public Housing program Operating Funds and Capital Funds, Choice Neighborhoods Implementation, Healthy Homes, Recovery Housing Program, CDBG Formula Grants, HOME, Housing Trust Fund, and others. The Housing Choice Voucher program is generally exempt from BABA.

Materials covered by BABA include practically anything that would be affixed to infrastructure. The three categories of covered materials are iron and steel products, manufactured products, and construction materials (excluding aggregates like cement, stone, sand, gravel).

 

Scope of Infrastructure Project

HUD Grantees/Funding Recipients must identify and assess the scope of Infrastructure Projects to apply the Buy America Preference (BAP) where it is required. The requirement to apply the BAP will vary depending on the nature of and the scope of an Infrastructure Project. This notice outlines how the size and scope of an Infrastructure Project will be determined.

The scope of an Infrastructure Project can include funding from multiple grants, funding from non-Federal sources of funding and funding from multiple agencies. The scope of an Infrastructure Project can change during the course of implementing the project, which can in turn impact the application of BABA to the Infrastructure Project. For complex scenarios that may impact the applicability of BABA, PHAs should send an inquiry to [email protected] describing the situation.

 

Implementation Guidance:

BABA requirements will apply at different points in time depending on the program and when waivers delaying or otherwise impacting implementation of the BAP for HUD programs expire. These dates were laid out in the Public Interest Phased Implementation waiver. HUD will include language in future notices of funding opportunities (“NOFOs”) indicating that the BAP will potentially apply to grant awards made pursuant to those NOFOs.

HUD Grantees/Funding Recipients must ensure that all procurements, subgrants, cooperative agreements, and inter-agency agreements they enter into incorporate requirements to ensure application of the BAP (unless the BAP has been waived). The BAP requirements must be communicated to subgrantees, contractors and other entities prior to their purchasing products with grant funds subject to the BAP, and the record-keeping requirements must be specified to the spender of the FFA. HUD Grantees/Funding Recipients of FFA cannot intentionally split an Infrastructure Project to avoid application of the BAP to the project.

The spender of funding subject to BABA must comply with BABA or seek waiver authorization prior to purchasing products that do not comply with BABA requirements (unless such product purchases are already covered by a pre-existing waiver). This notice contains sample language that can be used to ensure compliance with this requirement.

 

Waivers:

There are three categories of general waivers under which the BAP does not apply: Exigent Circumstances, Small Grants, and a De Minimis portion of a project. HUD may grant PHAs’ waivers of the BAP to avoid unnecessary disruption of HUD’s programs in the future. A complete list of BAP waivers will be published on the Waivers page of the BABA website.

• Exigent Circumstances Waiver: waives the BAP when there is an urgent need by a grantee to immediately complete an infrastructure project because of a “exigent circumstances,” or a threat to life, safety, or property of residents and the community.
• Small Grants Waiver: exempts the BAP requirement for projects whose total cost (including HUD funding and funding from any other source) is an amount equal to or less than $250,000.
• De Minimis Waiver: exempts from the BAP a De Minimis portion of a project, meaning a cumulative total of no more than 5% of the total cost of the iron, steel, manufactured products, and construction materials used in and incorporated into the infrastructure project, up to a maximum of $1 million. 

 

Requesting waivers:

If the covered program doesn’t qualify for an Exigent Circumstances Waiver, the De Minimis Waiver, or the Small Grants Waiver, and the PHA is unable to find BABA compliant products after complying with the search requirements, this notice details how the PHA can submit a waiver request.

PHAs can request a waiver when the BAP is inconsistent with the public interest, when adequate materials are unavailable, or when complying with BABA would result in a total cost increase of more than 25%. All waiver requests must be submitted in accordance with the instructions published on HUD’s BABA webpage. 

 

Documentation of Compliance with BAP

PHAs must maintain adequate records to demonstrate that they complied with BABA requirements in purchasing products with funds subject to BABA. At a minimum, the records must:

1. track product purchases in sufficient detail to identify the source of the funding for the purchase;
2. demonstrate compliance with BABA:
   1. for products purchased in compliance with the BAP, documentation that the product complied with BAP requirements; and
   2. for products purchased pursuant to a waiver or other exemption from the BAP, adequate information to validate that the purchase was covered by a waiver or other exemption.

Many product purchases will be made by contractors procured by PHAs or other entities covered by a subgrant, cooperative agreement or inter-agency agreement. PHAs are advised to include provisions in procurement solicitations to ensure that contractors engaged by PHAs provide sufficient product purchase information to PHAs to enable them to comply with the minimum BABA documentation requirements.

In cases where PHAs are required to maintain a record of BABA compliance in product purchases, PHAs should maintain records covering all product purchases related to in-progress projects and all completed projects until 3 years after infrastructure project completion.

For products purchased with funding from a grant or infrastructure project that is not subject to BABA, PHAs do not have to maintain product purchase records to comply with BABA.

 

Minimum Due Diligence Search Requirements and Safe Harbor Procurement Strategies

If a product purchaser is unable to find an available BABA compliant product using standard methods, further searching is required prior to seeking a waiver of the BABA requirements. Grantees, Funding Recipients, and other entities purchasing products with BABA-subject funds can only seek a waiver for nonavailability after actively searching for BABA compliant products by conducting a due diligence search as outlined in this notice. This notice also provides safe harbor procurement strategies for PHAs to consider following.

 

PIH Notice 2024-01