On May 16, 2024, the Internal Revenue Service (“IRS”) and Department of Treasury (“Treasury”) published Notice 2024-41 (the “2024 Guidance”), which provides new guidance for securing the domestic content bonus credit established by the Inflation Reduction Act (“IRA”). As described in more detail below, the 2024 Guidance builds on the existing framework contained in Notice 2023-38 (the “2023 Guidance”), which was released last May. Most notably, the 2024 Guidance expands the range of applicable projects subject to the safe harbor in the 2023 Guidance and adds a “New Elective Safe Harbor” to determine cost percentages for the domestic content calculation in solar, onshore wind, and battery storage projects.Continue Reading Treasury and IRS Release New Guidance on Inflation Reduction Act Domestic Content Bonus Credit
Federal Highway Administration Announces Proposed Rule Ending Longstanding Buy America Waiver for Manufactured Products
On March 7, 2024, the Department of Transportation’s (“DOT”) Federal Highway Administration (“FHWA”) announced a proposed rule to rescind a longstanding general waiver of Buy America requirements for manufactured products (the “Manufactured Products Waiver”). If finalized, this would be a major change for the agency, reversing a policy that has been in place for more than 40 years.
FHWA has imposed Buy America requirements for domestic iron and steel on its projects since 1978 (see 23 U.S.C. § 313; 23 CFR § 635.410), but in 1983, the agency determined that it was in the public interest to waive the requirement as to manufactured products based on the agency’s belief that manufactured products were not used in federal highway projects in sufficient quantities to have an effect on the overall cost of a project and therefore did not require Buy America protections. That general waiver has been in place ever since.
This change in policy comes in the wake of the 2021 Infrastructure Investment and Jobs Act’s Build America, Buy America (“BABA”) provisions, which expanded Buy America coverage broadly in federal financial assistance programs for infrastructure. BABA requires that all steel, iron, construction materials, and manufactured products used in such products be “produced in the United States.” BABA also discourages the use of general applicability waivers like FHWA’s Manufactured Products Waiver and required review of existing waivers.
FHWA sought comments on its longstanding manufactured products waiver in March 2023 and received over 9,400 comments from the public. Commenters included manufacturers, labor organizations, construction contractors, industry associations, State departments of transportation, and even members of Congress. Based on a consideration of this feedback and in recognition of other domestic content policies, including Executive Order 14005, “Ensuring the Future Is Made in All of America by All of America’s Workers,” FHWA is proposing to discontinue its Manufactured Products Waiver and modify its regulations to include domestic content requirements for manufactured products.Continue Reading Federal Highway Administration Announces Proposed Rule Ending Longstanding Buy America Waiver for Manufactured Products
Treasury Releases Long-Awaited Guidance for Domestic Content Bonus Credit Under Inflation Reduction Act
On May 12, 2023, the Department of Treasury issued long-awaited guidance addressing the so-called domestic content “bonus credit” available under the Inflation Reduction Act of 2022 (“IRA”). As we have discussed elsewhere in detail, the IRA incorporates extensions of the existing clean energy tax credits under IRC section 45 and section 48 and establishes new “technology neutral” versions of these credits (pursuant to sections 45Y and 48E) that will become available starting in 2025. At the same time, the IRA also establishes a new 10% domestic content bonus credit that may be claimed in combination with these tax credits provided that the taxpayer: (1) uses U.S.-made iron and steel during construction of the energy-generation facility; and (2) ensures that the cost of any domestic manufactured products that are components of the facility meets a specified domestic content threshold.
The IRA statutory provision left open several key questions regarding how these domestic content requirements would work in practice (including, for example, how the threshold percentage would be calculated). Last Friday, Treasury issued long-awaited guidance (Notice 2023-38 or the “Notice”) that, among other things, addresses: (1) the contours of the “iron and steel” requirement; and (2) the method by which the adjusted percentage is to be calculated. While the guidance is consistent with traditional Buy America principles in certain respects, it also introduces both new concepts and new terminology — particularly with regards to the domestic content percentage calculation — which we discuss in detail below. Continue Reading Treasury Releases Long-Awaited Guidance for Domestic Content Bonus Credit Under Inflation Reduction Act
Department of Transportation Issues Two Proposed Waiver Notices for Build America, Buy America
On November 4, 2022, the U.S. Department of Transportation (“DOT”) published two proposed waiver notices with request for comments related to the Bipartisan Infrastructure Law’s Build America, Buy America Act (“BABA”). Both notices stated that DOT’s existing temporary waiver for construction materials would not be extended past its expiration on November 10, 2022. One notice proposes a public interest waiver for certain narrow categories of contracts and solicitations to continue transitioning the construction materials standard. The other notice proposes a public interest waiver for de minimis costs, small grants, and minor components. Comments are due November 20, 2022 for both notices.Continue Reading Department of Transportation Issues Two Proposed Waiver Notices for Build America, Buy America
OMB and Safer Federal Workforce Task Force Preview Forthcoming Guidance on Federal Contractor Vaccine Mandate
UPDATED AS OF 10/26/2022:
Changing course after its August 31 announcement that it would not enforce the federal government contractor vaccination mandate absent further written notice, on October 14, 2022, OMB and the Task Force published an update stating that they plan to issue at least three new guidance documents with an eye toward potentially resuming enforcement of the mandate:
- First, OMB plans to notify Federal agencies about compliance with applicable injunctions and whether contract clauses implementing the mandate should be included in new solicitations and contracts.
- Second, the Task Force plans to update its November 2021 workplace safety protocols guidance related to the mandate. The updated guidance will provide a timeline for any implementation long enough to ensure that covered contractors can come into compliance as needed.
- Third, OMB will review the safety protocols guidance and make a determination on whether it promotes economy and efficiency in government contracting. If OMB makes such a determination, it will provide additional guidance to agencies on timing and considerations for providing written notice to contractors regarding enforcement, except as barred by any injunction.
DOT Seeks Additional Stakeholder Input on Build America, Buy America Implementation
On July 28, 2022, the United States Department of Transportation (“DOT”) published a Request for Information (“RFI”) on the implementation of the Infrastructure Investment and Jobs Act’s Build America, Buy America Act (“BABA”). As discussed in our previous post, BABA expanded Buy America preferences to cover all infrastructure projects and sets new domestic content standards for federal financial assistance programs. The RFI focuses specifically on implementing these domestic content standards for construction materials, which were not subject to the Buy America regime prior to BABA. Given the wide range of products that might conceivably constitute a “construction material,” industry participants would be wise to closely monitor both the RFI and DOT’s implementation progress and to take steps to ensure that policymakers understand their views on the subject.Continue Reading DOT Seeks Additional Stakeholder Input on Build America, Buy America Implementation
DOJ Settlement Underscores the Significance of Incorrect Small Business Representations
The Department of Justice (“DOJ”) recently announced a $5.2 million settlement with Numet Machining Techniques, LLC and affiliated entities (collectively, “Numet”) concerning alleged misrepresentations of size and ownership in connection with pursuing U.S. Government contracts. The Numet settlement is an important reminder to the contractor community that representations and certifications—particularly those concerning small business status—should be made with due caution and that the discovery of incorrect representations during M&A due diligence can be a significant finding. In this post, we explore the recent Numet settlement, examine the Small Business Administration (“SBA”) size and affiliation rules, and offer guidance to companies assessing the significance of incorrect representations.Continue Reading DOJ Settlement Underscores the Significance of Incorrect Small Business Representations
Infrastructure Update: OMB Issues New Buy America Guidance for Federal Infrastructure Projects
On April 18, 2022, the Office of Management and Budget (“OMB”) published a memorandum entitled “Initial Implementation Guidance on Application of Buy America Preference in Federal Financial Assistance Programs for Infrastructure” (“OMB Guidance”). OMB M-22-11. The OMB Guidance supplements the Build America, Buy America Act (“BABA”) provisions of the Infrastructure Investment and Jobs Act (“IIJA”), which was enacted in November 2021. In addition, OMB issued a Notice of Listening Sessions and Request for Information (“RFI”) on April 21, 2022 seeking public input on BABA implementation. Public comments are due by May 23, 2022.
Continue Reading Infrastructure Update: OMB Issues New Buy America Guidance for Federal Infrastructure Projects
New Trade Agreements Act Thresholds Take Effect January 1, 2022
On December 30, 2021, the FAR Council issued a final rule to update the trade agreements thresholds implemented under the Trade Agreements Act (“TAA”). The new thresholds take effect January 1, 2022.
The TAA thresholds are adjusted every two years and set the value a contract must meet or exceed in order for the World Trade Organization Government Procurement Agreement (“WTO GPA”) and free trade agreements (“FTAs”) to apply. For supply, service, and construction contracts that meet or exceed the stated thresholds, Buy American Act (“BAA”) requirements are waived in accordance with the TAA, and the Government is required to treat eligible products and services from designated countries on an equal basis as domestic products and services.
The updated thresholds, to be listed in FAR 25.402(b), are provided below.Continue Reading New Trade Agreements Act Thresholds Take Effect January 1, 2022
Task Force Releases Guidance on New COVID-19 Vaccine Mandate for Federal Contractors
On September 24, the Safer Federal Workforce Task Force released guidance on workplace safety protocols for federal contractors and subcontractors related to COVID-19 (“the Guidance”). The Guidance was issued pursuant to President Biden’s Executive Order on Ensuring Adequate COVID Safety Protocols for Federal Contractors.
As expected, the Guidance covers a broad range of contract types and contractors, and mandates COVID-19 vaccinations for covered contractor employees along with masking and social distancing measures to prevent the spread of the disease. But it also includes some unanticipated exceptions. The Guidance sets baseline requirements under the Executive Order that are expected to be updated over time and implemented through a contract clause that will be issued by the Federal Acquisition Regulatory (“FAR”) Council. Federal contractors should carefully examine the Guidance and ensure that they are prepared to timely comply as well as monitor for and adapt to any updates from the Task Force.
Our prior post on the Executive Order can be found here.Continue Reading Task Force Releases Guidance on New COVID-19 Vaccine Mandate for Federal Contractors