Navigating domestic preference requirements like the Buy America(n) Act (BAA) and the Build America, Buy America Act (BABA) is essential for ensuring compliance on federally funded projects. These regulations have distinct rules, thresholds, and implications – and understanding them can help project teams avoid delays, penalties, and funding issues.
What is BAA?
The Buy America(n) Act (BAA), enacted in 1933, applies to direct federal procurements over $10,000. Its primary goal is to ensure that federal spending supports U.S. manufacturing. Under current rules, to be considered compliant, an end product must be manufactured in the U.S. and have at least 65% of the cost of its components sourced from the U.S. (increasing to 75% in 2029). It’s important to note that BAA applies only to federal agencies, not to state or local government procurements.
The concept of “manufacturing” isn’t explicitly defined, but it generally refers to the place where the final form of the product, as required by the government, is completed. The key question is whether the operation creates a new item or fundamentally changes its function.
What is TAA?
The Trade Agreements Act (TAA) allows for a partial waiver of BAA’s domestic content rules for products from qualifying countries with reciprocal procurement agreements. These include countries like Canada, Mexico, Japan, South Korea, and the U.K. TAA applies only to procurements under FAR/DFARS, not to federally funded grant projects.
For a product to qualify under TAA, it must be substantially transformed in a designated country. A simple assembly is typically not enough. Without substantial transformation, each component retains its original country of origin.
What is BABA?
The Build America, Buy America Act (BABA) was enacted in 2021 as part of the Infrastructure Investment and Jobs Act. It extends Buy America requirements to state and local infrastructure projects that receive federal funding.
BABA requires:
- 100% U.S.-made content for iron and steel.
- 100% U.S.-made content and production for construction materials like glass, lumber, and certain pipe types.
- A minimum 55% U.S. content for manufactured products.
- Final production must occur in the U.S.
Unlike BAA, there is no COTS (Commercial Off-the-Shelf) partial waiver under BABA. Waivers can be granted under specific conditions—such as non-availability or unreasonable cost—but must be justified with documentation and planned for well in advance.
Key Differences Between BAA and BABA
- BAA applies to federal procurements; BABA applies to federally funded state and local infrastructure projects.
- BAA allows a partial waiver for COTS items; BABA does not.
- BABAA has stricter requirements, including the 100% content rule for specific material categories.
- Foreign content thresholds: ≤35% under BAA, ≤45% under BABA for manufactured goods.
Why It Matters
Noncompliance with these acts can lead to:
- Civil penalties (up to $27,018 per claim or the value of the ineligible product),
- Criminal penalties (up to five years imprisonment and significant monetary fines),
- Delays or complete loss of project funding.
Acuity Brands helps mitigate these risks by gathering detailed cost breakdowns and country-of-origin documentation. This ensures that the products we identify as compliant truly meet the standards set by BAA, BABA, or TAA. All compliance documents are prepared based on this data and kept in a central repository.
Product Qualification and Support
Acuity Brands offers support in determining whether a product qualifies under the correct regime. We work directly with our customers to:
- Identify the applicable requirements (BAA, BABA, or TAA),
- Assemble the necessary documentation,
- Provide compliance certifications where required.
Note that while USMCA (U.S.–Mexico–Canada Agreement) products can qualify under BAA through TAA waiver mechanisms (if applicable and thresholds are met), they do not qualify under BABA.
Resources and Tools
To support partners and customers, Acuity Brands provides a BAA-BABA resource hub. This includes:
- Guidelines for determining which regulations apply,
- Checklists and tools for identifying compliant products,
- Product documentation and updates as regulations evolve.
BAA-BABA is now embedded in our standard product development and update process, and we continue to expand our offerings to meet demand. A TAA compliance icon is also in development to help customers quickly identify applicable products.
Understanding and complying with BAA and BABAA is crucial for success in federally funded projects. Acuity Brands is committed to helping customers navigate these requirements with confidence. For more information and access to tools and checklists, visit our BAA-BABA Compliance Resource Center.
