Q&As for the Waiver of Buy America Requirements for De Minimis Costs and Small Grants
May 22, 2024
The United States Department of Transportation (USDOT) Waiver of Buy America Requirements for De Minimis Costs and Small Grants can be found here: https://www.federalregister.gov/documents/2023/08/16/2023-17602/waiver-of-buy-america-requirements-for-de-minimis-costs-and-small-grants.
Except for any statutes and regulations cited, the contents of this document do not have the force and effect of law and are not meant to bind States or the public in any way. This document is intended only to provide clarity regarding existing requirements under the law or agency policies.
1. Does the Department-wide De Minimis Costs and Small Grants Waiver apply to FHWA-funded projects?
The De Minimis Costs portion waives the application of the requirements of the Build America, Buy America Act (BABA) for construction materials under a single financial assistance award when the total value of the non-compliant products is no more than the lesser of $1,000,000 or 5% of total applicable costs for the project. This portion of the waiver does not waive FHWA’s Buy America requirements for steel or iron, and FHWA continues to apply its Buy America requirements to projects that would otherwise be covered by the de minimis portion of the waiver. It is important to note, however, that FHWA’s de minimis standard for iron and steel under 23 CFR 635.410(b)(4) continues to apply.
The small grants portion waives the application of FHWA’s Buy America requirements for steel or iron and BABA’s requirements for construction materials under a single financial assistance award when the total amount of Federal financial assistance applied to the project, through awards or subawards, is less than $500,000.
The De Minimis Costs and Small Grants Waiver is applicable only to awards that are obligated or subawards that are made on or after August 16, 2023.
2. For the De Minimis Costs portion, what is the “total value of the non-compliant product”?
The total value of non-compliant products is the value of all construction materials that are not BABA-compliant that are permanently incorporated into an FHWA-funded project.
3. For the De Minimis Costs portion, what are the “total applicable project costs”?
The total applicable project costs include the costs of all steel, iron, manufactured products, and construction materials used in the FHWA-funded project.
Cement and cementitious materials; aggregates such as stone, sand, or gravel; and binding agents or additives (known as Section 70917(c) materials in 2 CFR 184.3), standing alone, should not be included in the determination of total applicable project costs. These Section 70917(c) materials, however, may be included as components of manufactured products, in which case the cost of the manufactured product, including the cost of the Section 70917(c) components, should be included in the determination of total applicable project costs.
4. How do I calculate the de minimis threshold under the De Minimis portion? How do change orders affect the calculation?
For a single financial award, the threshold amount is the lesser of $1,000,000 or 5% of total applicable costs for the project. The 5% threshold is based on the following formula: (total value of non-compliant construction materials used in the project) / (total applicable project costs (steel, iron, manufactured products, and construction materials). This threshold is based on the actual cost of the steel, iron, manufactured products, and construction materials, not just the anticipated cost of those materials. Therefore, administering agencies should track the 5% threshold amount to ensure that the threshold is not exceeded. If the threshold amount increases more than the lesser of 5% or $1,000,000 because of a change order, the administering agency must request and receive a waiver for all non-compliant construction materials incorporated into the project to be in compliance with Buy America and BABA.
5. How do I apply the $500,000 small grants threshold? Do I use the engineer’s estimate amount, contract award amount, or final project amount which may include change orders?
The $500,000 small grants threshold applies to the total amount of Federal financial assistance provided for the project through awards or subawards, not just the total amount of a single award, project contract award amount, or engineer’s estimate. For example, if the total amount of the Federal financial assistance is 90% of the project costs, then, 90% of the total cost of the project must be below $500,000 for the waiver to apply.
6. How do you apply the $500,000 small grants threshold on multiple Federal financial assistance awards?
The small grant threshold applies to the total amount of Federal financial assistance provided for a project, not just the total amount of a single award.
If the project is completed in phases using multiple awards, the value of the awards must be aggregated to determine whether the small grants portion of the waiver would apply.
7. How does the small grants waiver affect programs like the Recreational Trails Program, Transportation Enhancement activities, Congestion Mitigation and Air Quality Improvement projects, Bicycle programs, etc. where there are awards and subawards?
The total dollar amount of Federal financial assistance for the grant awards or subawards must be below $500,000 for the small grants portion of the waiver to apply. It is important to note that the de minimis and small grants waivers are only applicable to subawards if the subawards are made by a pass-through entity for a specific project.
8. Should States now keep track of iron and steel separately from construction materials for the de minimis portion of waiver because FHWA’s de minimis provision for foreign iron and steel (0.1% of the total contract cost or $2,500, whichever is greater) applies to iron and steel and the 5% de minimis provision of the Department-wide waiver applies only to construction materials?
Yes.