As a result of litigation in the United States District Court for the District of Columbia, the Federal Highway Administration (“FHWA”) has cancelled its December 21, 2012 memorandum regarding the application of FHWA’s Buy America requirements to manufactured products. The memorandum had provided a clear standard for determining when manufactured products are subject to Buy America. With the cancellation of the memorandum, contractors are once again facing subjective standards in determining the application of the Buy America requirements to predominantly iron and steel manufactured products.
Under FHWA’s Buy America requirements, contractors must supply only domestic iron and steel unless a waiver applies or the foreign iron or steel is encompassed by the minimal use exception. In order to be considered domestic, all of the iron and steel manufacturing processes, including coatings, must be performed in the United States. FHWA considers manufacturing to be any process that modifies the chemical content, the physical shape, size, or the final finish of the product. Manufacturing starts with smelting and ends with coating. It includes rolling, extruding, machining, bending, grinding, drilling, and coating. If any manufacturing process on domestic iron or steel is performed outside the United States, the entire product, not just the work done or the components added, is considered to be foreign material.
As a result of confusion regarding to whether FHWA’s Buy America requirements applied to manufactured products, on December 22, 1997, FHWA issued a memorandum on Buy America Policy Response. In the memorandum, FHWA clarified that it considers a manufactured product to be any item that must undergo one or more manufacturing processes before it can be used in the project. A manufactured product can be usable as a stand-alone product (such as rebar and structural steel) or a component within a more complex manufactured product (such as steel wire mesh or steel reinforcing components of a precast reinforced concrete pipe).