What Is BABA and How Does It Apply to Wires and Cables?

The Build America, Buy America (BABA) policy aims to strengthen domestic manufacturing, promote the procurement of American-made products and grow the U.S. manufacturing industry. It states that federal funds can only be made available for a project if the iron, steel, construction materials and manufacturing products are produced in the United States. BABA forms part of President Biden's Infrastructure Investment and Jobs Act and has been in full effect since May 2022. 

As many federal infrastructure projects use taxpayer money, BABA aims to reinvest this money in American companies, creating jobs and boosting the economy. At its core, BABA strengthens the country by prioritizing domestic production and components to increase economic resilience and empower local businesses.

The term “infrastructure” includes roads, highways, airports, water systems, electrical transmission facilities, utilities, broadband and many other projects. Some of the many materials that BABA covers include:

• Fiber optic cable
• Optical fiber
• Non-ferrous metals
• Plastic and polymer-based materials
• Glass
• Lumber and engineered wood
• Drywall
• Iron and steel products

Meeting BABA requirements can be complex, and companies must balance this compliance with profitability to ensure favorable project outcomes. The basic rule is that iron, steel and other specific products must be manufactured in the U.S. to be eligible for federal funds. However, the intricacies of BABA compliance are more complex. For example, every process step must be BABA compliant, from sourcing raw materials to the end product. Manufacturers must know the origins of their materials and track usage for every product.

Some requirements for the relevant BABA categories include:

• Iron and steel: Manufacturing processes must happen in the U.S., from the initial melting to the application of coatings. 
• Manufactured products: The final product must be manufactured in the United States, and more than 55% of the product components must be of U.S. origin.
• Construction materials: All the manufacturing processes of construction materials must occur in the U.S.

In some cases, maintaining BABA compliance and boosting profitability is challenging, and several waivers exist to combat these challenges, including:

• Unavailability waiver: Manufacturers can apply for a waiver if the items covered under BABA are unavailable or of substandard quality. 
• Unreasonable cost waiver: If the inclusion of domestically produced materials increases product costs by more than 25%, it’s considered an unreasonable cost, and manufacturers can receive a waiver.
• Public interest waiver: Manufacturers can also receive a waiver if using U.S. goods conflicts with the public interest.

Although BABA has overarching goals that benefit the country’s economy, the adjustment can present challenges for businesses involved in federal infrastructure projects. To change various processes and stay compliant, business owners must consider the following:

• Cost management: Buying domestically manufactured goods is often more expensive than purchasing overseas. Businesses must budget for the additional costs to maintain profitability. Still, cheaper options made with low-cost labor don’t provide the same quality.
• Increased demand: BABA requirements have increased demand for domestically produced wires and cables. Over time, costs will come down as the market adjusts.
• Supplier certification: It's the business's responsibility to ensure it uses BABA-compliant components, which means doing additional work to keep track of suppliers and their materials. As BABA is relatively new, expecting changes is also part of the process. Businesses should prepare to act quickly if any part of the act is revised. 
• Job creation: Working within BABA parameters strengthens domestic industries and provides job opportunities within local communities. Despite the changes to budgets and processes, compliant organizations are investing in their people, creating livelihoods and changing lives.
• Economic resilience: Reducing dependence on foreign supply chains boosts the nation’s resilience and helps ensure telecommunications and energy networks remain stable in times of global crisis.
• Elevated competition: With the spotlight on local manufacturers, they can start competing on an equal footing for large contracts. This competition paves the way for innovation and technological advancements in wire and cable production. BABA empowers businesses of all sizes to contribute to countrywide digital growth.

In short, BABA will transform infrastructure implementation throughout the United States. While the adjustment period may present challenges, it promotes a sustainable and resilient wire and cable infrastructure. Reducing reliance on foreign manufacturers will strengthen our capabilities in the long term.