The Build America, Buy America (BABA) provisions, enacted as part of the Infrastructure Investment and Jobs Act (IIJA) in November 2021, represent a significant shift in federal procurement requirements for infrastructure projects. These provisions strengthen domestic preference requirements across all federally funded infrastructure initiatives, aiming to revitalize American manufacturing and ensure critical supply chain resilience. As these regulations are implemented, stakeholders across the infrastructure development spectrum must adjust their procurement strategies. They must align with these strict domestic content mandates.
Core Components of BABA Requirements
BABA expands domestic preference requirements across three critical categories of infrastructure materials:
All manufacturing processes for iron and steel products must occur in the United States, from initial melting through coating. This expands upon previous requirements, which often permitted certain finishing processes to occur abroad. According to the Office of Management and Budget's implementation guidance, "all manufacturing processes, from the initial melting stage through the application of coatings, must occur in the United States" for a product to qualify as domestically produced iron or steel.
Manufactured products must contain at least 55% domestically produced components by cost. This threshold represents a substantial increase from previous requirements and affects a wide range of goods incorporated into infrastructure projects, from electrical components to LED lighting fixtures and controls to mechanical systems.
The Federal Transit Administration clarifies that the cost of components of the manufactured product that are mined, produced, or manufactured in the United States is greater than 55 percent of the total cost of all components of the manufactured product.
BABA introduces new requirements for construction materials, mandating that all manufacturing processes occur in the United States. This category includes non-ferrous metals, plastic and polymer-based products, glass, lumber, and drywall—materials previously exempt from domestic content requirements.
The Environmental Protection Agency states that all manufacturing processes for construction materials must occur in the United States and defines manufacturing processes as the final manufacturing process and the immediately preceding manufacturing stage for the construction material.
Sector-Specific Implications
BABA’s Impact on the Lighting Industry
Government-funded infrastructure projects must source BABA-compliant lighting, leading to greater demand for American-manufactured LED fixtures, streetlights, and industrial lighting systems.
While LED fixtures can be assembled in the U.S., key components like LED drivers, chips, and optics have historically been sourced internationally. Manufacturers must expand domestic production or secure approved waivers where necessary.
Infrastructure projects now emphasize energy efficiency and smart city applications. BABA compliance encourages the development of locally produced smart lighting controls and advanced energy-efficient fixtures.
With stricter domestic content rules, lighting manufacturers must adjust supply chains, potentially leading to higher initial costs. However, long-term benefits include supply chain resilience, reduced import dependence, and job creation.
Companies that already manufacture in the U.S. (like Bright Future USA) are at an advantage, as BABA compliance creates barriers for foreign-made lighting products. This shift incentivizes local investment in advanced lighting technology.
BABA’s Impact on Other Sectors
Transportation projects receiving federal funding must now comply with expanded domestic content requirements across all components. The Federal Highway Administration (FHWA) requires certification of compliance with BABA provisions before disbursing funds for highway and bridge projects.
According to the American Association of State Highway and Transportation Officials (AASHTO), state DOTs now face expanded compliance verification requirements for materials such as non-ferrous metals, plastic pipes, and precast concrete elements.
Water and wastewater infrastructure projects must navigate complex compliance requirements for previously exempt materials such as pipes, fittings, and treatment equipment. The EPA has issued guidance specifically addressing BABA implementation for water infrastructure projects funded through the State Revolving Funds.
The Water Infrastructure Finance and Innovation Act (WIFIA—March 2023) program guidance notes that loan recipients must ensure that all iron and steel, manufactured products, and construction materials used in covered projects are produced in the United States.
Energy infrastructure projects, including grid modernization and renewable energy initiatives, face expanded domestic content requirements for components such as transmission equipment, solar panels, BABA-compliant high-efficiency LED lighting, and battery storage systems.
The Department of Energy's implementation guidance emphasizes that BABA requirements apply to all federally funded infrastructure projects, including renewable energy installations, grid enhancement projects, and energy efficiency retrofits.
Economic Impact Analysis
BABA regulations are projected to generate substantial economic benefits through increased domestic manufacturing activity. The Economic Policy Institute estimates that full implementation could create approximately 460,000 manufacturing jobs over the next decade. A significant portion of this growth is expected in sectors like advanced lighting manufacturing, where U.S.-made LED components, smart lighting systems, and industrial luminaires will be in higher demand.
Supply chain resilience improvements are another significant benefit, reducing dependence on foreign suppliers for critical infrastructure components. The Alliance for American Manufacturing notes that strengthened domestic content requirements mitigate supply chain disruptions. It further ensures quality control for essential infrastructure components.
Cost implications remain a concern for agencies and contractors, with potential increases in material costs estimated between 10-30% for certain projects. However, the U.S. Department of Transportation's economic impact assessment suggests that initial cost premiums may be offset by reduced supply chain disruptions, quality improvements, and economic multiplier effects of domestic manufacturing.
Implementation Challenges and Solutions
Domestic capacity constraints present ongoing challenges for certain specialized materials and components. While domestic steel production capacity is sufficient for most infrastructure needs, BABA-compliant lighting manufacturers face hurdles in sourcing key components such as LED drivers, chips, and optics, which have traditionally been imported. To address this, companies like Bright Future USA are strengthening partnerships with U.S.-based suppliers to build a stable, BABA-compliant lighting supply chain, ensuring uninterrupted project execution.
Administrative burden for contractors includes enhanced documentation requirements and supply chain verification processes. Implementing digital compliance tracking systems and establishing clear subcontractor certification protocols will streamline documentation efforts.
Federal agencies have responded with phased implementation approaches and technical assistance resources. The Build America Bureau has established a BABA Technical Assistance Center providing guidance documents, webinars, and direct support for agencies and contractors navigating compliance requirements.
Future Outlook and Strategic Recommendations
Regulatory refinements are anticipated as implementation proceeds, with potential clarifications regarding material classifications, manufacturing process definitions, and certification standards. The Federal Register continues to publish updated guidance and waiver determinations, requiring stakeholders to monitor regulatory developments closely.
Industry stakeholders should develop comprehensive compliance strategies, including:
Leading infrastructure developers have already begun establishing domestic supplier networks and implementing compliance verification systems.
Final Thoughts: Bright Future USA’s Role
With years of experience in domestic lighting manufacturing, we’ve come a long way! Now, with Bright Future USA, we’re ready to lead the way in BABA-compliant lighting solutions. By staying ahead of regulatory changes, expanding local supply chains, and delivering high-efficiency lighting products, we ensure that federally funded projects receive reliable, high-quality, and fully compliant lighting systems.
