End of the Road: FHWA Rescinds Longstanding Buy America Waiver for Manufactured Products

On January 14, 2025, the U.S. Federal Highway Administration (FHWA) published a Final Rule terminating a longstanding manufactured products waiver as part of the agency’s continued implementation of the 2021 Infrastructure Act’s Build America, Buy America (BABA) provisions.  The waiver, originally established in 1983, limited application of the FHWA’s Buy America requirements to only iron and steel products, while permitting recipients of FHWA financial assistance to turn to foreign sources for more complex products.  However, in accordance with the BABA’s express direction for agencies to review and reconsider waivers of general applicability such as the manufactured products waiver, the FHWA determined that its original rationale for the waiver was no longer applicable, and it proposed revised regulations to harmonize its Buy America program with the requirements of BABA (previously discussed here).

Under the Final Rule, FHWA adopts a phased approach to expanding its Buy America requirements to manufactured products, beginning on October 1, 2025.  For projects obligated on or after that date, final assembly for all manufactured products incorporated into the project must take place in the United States.  One year later, for projects obligated on or after October 1, 2026, FHWA will then add a domestic content test, requiring that 55% of the cost of components of any manufactured product be attributable to domestic components.  After that date, the FHWA’s rules for manufactured products will be effectively identical to those prescribed by the BABA implementing guidance, with one important exception—for precast concrete products and cabinets or other enclosures of intelligent transportation systems that incorporate steel or iron components, those components will continue to be separately subjected to the FHWA’s Buy America requirements for iron and steel, requiring that all manufacturing processes for the iron and steel occur in the U.S. (iron and steel components of other manufactured products are not subject to this requirement).

The FHWA’s recission of its forty-year-old manufactured products waiver represents the latest rollback of well-established exceptions to federal Buy America policy.  As the new administration continues to seek ways to promote domestic manufacturing, contractors should be prepared for additional changes in the coming months and years.