On January 14, 2025, the Department of Transportation’s (“DOT”) Federal Highway Administration (“FHWA”) published a final rule ending its longstanding waiver of Buy America requirements for manufactured products (the “Manufactured Products Waiver”) and setting out new standards for the use of domestic content on FHWA-funded infrastructure projects.  As discussed in our previous post, FHWA proposed rescinding its decades-old waiver in March 2024 in accordance with the 2021 Infrastructure Investment and Jobs Act’s Build America, Buy America (“BABA”) focus on expanding Buy America coverage and discouraging the use of general applicability waivers.  The final rule is similar in substance to the proposed rule but adds a staggered implementation period, which will allow contractors additional time to come into compliance.

FHWA’s final rule ends the Manufactured Products Waiver and establishes requirements for manufactured products that align with the manufactured product requirements under BABA.  Manufactured products must be “produced in the United States,” meaning that they are both (1) manufactured in the United States, and (2) contain more than 55% of components by cost that are mined, produced, or manufactured in the United States. 

While the final rule is effective March 17, 2025, it sets out a staggered implementation of the domestic manufactured product requirement over the next year and a half.  Projects obligated on or after October 1, 2025 are only required to comply with the requirement for manufacturing the product in the United States, while projects obligated on or after October 1, 2026 must comply with both the U.S. manufacturing requirement and 55% domestic components requirement for manufactured products.

Precast concrete products that are classified as manufactured products are singled out for separate treatment under the final rule, requiring that components that are wholly or predominantly steel, iron, or both must satisfy FHWA’s existing requirement for domestic iron and steel at 23 C.F.R. § 635.410(b).  Similarly, intelligent transportation systems and other electronic hardware systems installed in the highway right of way are treated differently than other manufactured products.  For those systems, cabinets or other enclosures that are wholly or predominantly steel, iron, or both must satisfy the existing domestic iron and steel requirement.  In both cases, the iron or steel component costs count towards satisfying the overall 55% domestic component requirement.  Still, these changes appear intended to subject precast concrete products, intelligent transportation systems, and other electronic hardware systems to a more stringent standard than other manufactured products, as they would require the use of domestic iron and steel at the component level in FHWA projects.

The final rule did not otherwise materially change FHWA’s existing requirement for the use of domestic iron and steel, except to change the nomenclature to consistently refer to “iron or steel products.”  The final rule also adopts the proposed rule’s category of “excluded materials,” (cement and cementitious materials; aggregates such as stone, sand, or gravel; or aggregate binding agents or additives), that standing alone are not manufactured products, but when combined with other materials, may become a component of a manufactured product.

Finally, while the final rule rescinds the Manufactured Products Waiver, the rule’s commentary is clear that other more specific waivers remain in place, including FHWA’s Electric Vehicle Charger Waiver (see 88 Fed. Reg. 10619 (February 21, 2023)) and DOT’s De Minimis Costs and Small Grants Waiver (see 88 Fed. Reg. 55817 (Aug. 16, 2023)).  The final rule notes that FHWA’s de minimis provision for iron or steel products under 23 C.F.R. § 635.410(b)(4) will continue to apply to iron or steel products.  Contractors will also continue to have the ability to seek project-specific waivers.  Notably, the final rule’s revisions to 23 C.F.R. § 635.410(c) remove the existing regulations addressing waivers, but the final rule states that FHWA did not intend to remove the ability to request Buy America waivers, which is based in the relevant statute, 23 U.S.C. 313(b), and cannot be altered by amending the regulations.

The final rule and the end of the Manufactured Products Waiver is a major policy change for FHWA, but brings the agency closer in line with the BABA requirements imposed by other agencies funding infrastructure projects.  We will continue to monitor for and report on other changes in the domestic content space.

Photo of Michael Wagner Michael Wagner

Mike Wagner represents companies and individuals in complex compliance and enforcement matters arising in the public procurement context. Combining deep regulatory expertise and extensive investigations experience, Mike helps government contractors navigate detailed procurement rules and achieve the efficient resolution of government investigations and…

Mike Wagner represents companies and individuals in complex compliance and enforcement matters arising in the public procurement context. Combining deep regulatory expertise and extensive investigations experience, Mike helps government contractors navigate detailed procurement rules and achieve the efficient resolution of government investigations and enforcement actions.

Mike regularly represents contractors in federal and state compliance and enforcement matters relating to a range of procurement laws and regulations. He has particular experience handling investigations and litigation brought under the civil False Claims Act, and he routinely counsels government contractors on mandatory and voluntary disclosure considerations under the FAR, DFARS, and related regulatory regimes. He also represents contractors in high-stakes suspension and debarment matters at the federal and state levels, and he has served as Co-Chair of the ABA Suspension & Debarment Committee and is principal editor of the American Bar Association’s Practitioner’s Guide to Suspension & Debarment (4th ed.) (2018).

Mike also has extensive experience representing companies pursuing and negotiating grants, cooperative agreements, and Other Transaction Authority agreements (OTAs). In this regard, he has particular familiarity with the semiconductor and clean energy industries, and he has devoted substantial time in recent years to advising clients on strategic considerations for pursuing opportunities under the CHIPS Act, Inflation Reduction Act, and Bipartisan Infrastructure Law.

In his counseling practice, Mike regularly advises government contractors and suppliers on best practices for managing the rapidly-evolving array of cybersecurity and supply chain security rules and requirements. In particular, he helps companies assess and navigate domestic preference and country-of-origin requirements under the Buy American Act (BAA), Trade Agreements Act (TAA), Berry Amendment, and DOD Specialty Metals regulation. He also assists clients in managing product and information security considerations related to overseas manufacture and development of Information and Communication Technologies & Services (ICTS).

Mike serves on Covington’s Hiring Committee and is Co-Chair of the firm’s Summer Associate Program. He is a frequent writer and speaker on issues relating to procurement fraud and contractor responsibility, and he has served as an adjunct professor at the George Washington University Law School.

Photo of Jennifer Bentley Jennifer Bentley

Jennifer Bentley is an associate in the Government Contracts Practice Group. Her practice is focused on litigation, investigations, and regulatory counseling across a range of government contracts matters. She has particular expertise in domestic sourcing issues, including the Buy American Act, Trade Agreements…

Jennifer Bentley is an associate in the Government Contracts Practice Group. Her practice is focused on litigation, investigations, and regulatory counseling across a range of government contracts matters. She has particular expertise in domestic sourcing issues, including the Buy American Act, Trade Agreements Act, and Build America, Buy America. She also maintains an active pro bono practice.