Three different domestic-sourcing regimes can land on the same fabricated sheet-metal part, and they do not say the same thing. The Buy American Act governs what a federal agency buys directly. The Buy America requirements govern what gets built with federal grant money for transit, highways, rail, airports, and water systems. The Build America, Buy America Act (BABA), passed in 2021, extended a domestic-content preference to essentially all federally funded infrastructure and changed the math on manufactured products. A part that satisfies one of these can fail another, because the thresholds, the covered items, and the way “domestic” is defined are all different.
This is a decoder for buyers and engineers who quote, source, and certify fabricated parts headed into government work. It lays out which rule applies, the actual domestic-content percentages and how they step up over time, the iron-and-steel rules that hit sheet-metal work hardest, and where the waivers are. Every figure below is cited to the governing statute, the Federal Acquisition Regulation (FAR), or the funding agency.
Which domestic-sourcing rule applies to your part?
Answer two or three questions. The trigger is the money, not the part.
Question 1
Where does the money come from?
The three regimes at a glance: the Buy American Act (FAR Part 25) governs direct federal purchases; Buy America rules attach to DOT and EPA grant programs; BABA (2021) extends a domestic preference to all federally funded infrastructure. Iron and steel get the strictest treatment under every regime.
An interactive decoder that maps a part’s funding source and classification to the governing regime and its domestic-content test, per the sections below.
Three Rules, One Part: Buy American vs. Buy America vs. BABA
The first job on any government-adjacent quote is identifying which regime governs. The trigger is the money, not the part. A direct purchase by a federal agency runs under the Buy American Act. A project funded through a federal grant program runs under that program's Buy America rules, now harmonized under BABA. The table below is the decision tree.
| Regime | What triggers it | Legal basis | Core domestic standard |
|---|---|---|---|
| Buy American Act (BAA) | A U.S. federal agency buys supplies or construction materials directly, above the micro-purchase threshold | 41 U.S.C. ch. 83; FAR Part 25 | Manufactured in the U.S. AND domestic component cost over the threshold (60% now, rising to 75%); foreign iron and steel under 5% for iron/steel-predominant items |
| Buy America (program-specific) | A project is built with federal grant funds from DOT modes (FHWA, FTA, FRA, FAA) or EPA water programs | e.g. 49 U.S.C. 5323(j) (transit); program regs | Iron and steel 100% domestic; manufactured-product and rolling-stock thresholds set per program |
| Build America, Buy America (BABA) | Any federal financial assistance for infrastructure, unless a program already had stricter rules | IIJA, Pub. L. 117-58, Title IX; 2 CFR Part 184 | Three categories: iron/steel (all manufacturing in U.S.), manufactured products (made in U.S. + over 55% domestic component cost), construction materials (all manufacturing in U.S.) |
The Buy American Act: The Two-Part Test and the Threshold That Keeps Rising
The Buy American Act dates to 1933 and is implemented in FAR Part 25. It applies to direct federal purchases of supplies and to construction materials used on federal projects, once the contract exceeds the micro-purchase threshold (FAR 25.100). For a manufactured end product to count as domestic, FAR applies a two-part test (FAR 25.101): the article must be manufactured in the United States, and the cost of its domestic components must exceed the applicable percentage of total component cost.
That percentage is not fixed. A 2022 FAR final rule set a phased schedule that raises the domestic-content floor across the decade. Buyers quoting multi-year deliveries need to certify against the threshold in effect for the delivery year, not the award year.
| Delivery period | Required domestic component cost (general manufactured items) |
|---|---|
| Through 2023 | Greater than 55% |
| Calendar years 2024 through 2028 | Greater than 65% |
| Calendar year 2029 and beyond | Greater than 75% |
The component-percentage test has a major carve-out that matters directly to sheet-metal work. For an end product or construction material that consists wholly or predominantly of iron or steel, or a combination of both, FAR does not use the component-percentage test. Instead, the cost of foreign iron and steel must be under 5% of the cost of all components (FAR 25.101(a)(2)(ii)). A fabricated steel enclosure, bracket, or weldment is the iron-and-steel case, so the practical bar is near-total domestic steel content, not 65%.
One more wrinkle: the domestic-content test of the Buy American Act is waived for commercially available off-the-shelf (COTS) items under 41 U.S.C. 1907 (FAR 25.101(a)). A COTS item still has to be manufactured in the U.S., but the percentage test does not apply, except that the iron-and-steel rule above still bites for COTS items predominantly made of iron or steel.
Price Evaluation Preference, Not an Outright Ban
The Buy American Act does not flatly prohibit foreign products on most supply buys. It applies a price penalty to non-domestic offers when evaluating bids. Under FAR 25.106, the contracting officer adds an evaluation factor to a foreign low offer for comparison: 20% if the lowest domestic offer is from a large business, and 30% if it is from a small business. A domestic part priced up to that margin above a foreign competitor can still win. This is the mechanism that gives a U.S. fabricator real headroom on price.
Buy America: Program-Specific Rules for Federally Funded Infrastructure
Separate from the Buy American Act, "Buy America" refers to the domestic-preference rules attached to specific federal grant programs, mostly at the U.S. Department of Transportation and the EPA. These apply to the materials built into a funded project, and for iron and steel the standard is uniformly strict: 100% domestic, meaning all manufacturing processes from melting through coating occur in the United States. The table below summarizes the long-standing program thresholds. As of 2026 these are read together with BABA, which set a government-wide floor where a program had none.
| Program | Contract-value threshold | Covered goods | Domestic requirement |
|---|---|---|---|
| Federal Transit Administration (FTA) – transit / rolling stock | US$150,000 small-purchase threshold | Rolling stock (buses, railcars, locomotives, ferries per 49 CFR 661.3); iron, steel, and other manufactured goods | Rolling stock: over 70% domestic content (FY2020 and beyond) with final assembly in the U.S. Iron, steel, and other manufactured goods: 100% domestic |
| Federal Highway Administration (FHWA) – highways | Greater of US$2,500 or 0.1% of contract value | Iron, steel, and manufactured products made predominantly of iron or steel (not raw ore, pig iron, or scrap) | 100% domestic; all manufacturing in the U.S. (coatings included) |
| Federal Railroad Administration (FRA) – rail | US$100,000 | Iron, steel, and manufactured goods | 100% domestic |
| Amtrak (National Railroad Passenger Corp.) | US$1 million | All manufactured and unmanufactured goods | Over 50% domestic; final assembly in the U.S. |
| Federal Aviation Administration (FAA) – airports (AIP) | No threshold | Steel and manufactured goods | Over 60% domestic component cost; final assembly in the U.S. |
| EPA – Clean Water / Drinking Water SRF (AIS) | No threshold | Iron and steel products funded by SRF and related water programs | 100% of iron and steel produced in the U.S. |
BABA: The 2021 Act That Changed the Manufactured-Products Math
The Build America, Buy America Act was enacted as part of the Infrastructure Investment and Jobs Act (IIJA, Pub. L. 117-58, signed November 15, 2021). It applies a domestic-content preference to all federal financial assistance for infrastructure, closing the gaps where programs previously had no domestic-sourcing rule. The implementing guidance from OMB (Memorandum M-22-11) and the government-wide regulation at 2 CFR Part 184 sort every covered item into one of three categories, each with its own test.
| BABA category | Domestic test | Typical sheet-metal example |
|---|---|---|
| Iron and steel products | All manufacturing processes, from initial melting through final coating, occur in the U.S. | A welded steel cabinet, frame, or bracket |
| Manufactured products | Manufactured in the U.S. AND cost of U.S.-made components is greater than 55% of total component cost | An assembled enclosure combining steel, hardware, gaskets, and electronics |
| Construction materials | All manufacturing processes occur in the U.S. (per the material-specific definitions in 2 CFR 184) | Non-structural metal panels and certain coated products |
The category that catches people is "manufactured products." The 55% domestic-component threshold under BABA is lower than the Buy American Act's current 65% floor, but it is applied differently and to a different universe of projects. The classification step is where disputes happen: a product that is predominantly iron or steel is tested under the stricter iron-and-steel rule, not the 55% rule. Getting the classification right before you certify is the single highest-leverage step in BABA compliance.
Exceptions and Waivers
All three regimes allow waivers, and they share the same three grounds. A buyer hitting a sourcing wall should know which waiver category a request would fall under before assuming a part is disqualified.
- Public interest. The agency determines that applying the domestic preference is inconsistent with the public interest (FAR 25.103; BABA waivers published at MadeInAmerica.gov).
- Nonavailability. The item is not produced in the U.S. in sufficient and reasonably available commercial quantities of satisfactory quality (FAR 25.103(b)).
- Unreasonable cost. The cost of the domestic item is unreasonable. Under the Buy American Act this is operationalized through the price evaluation preference (the 20% / 30% factors in FAR 25.106) rather than an open-ended judgment.
Under BABA, waivers are proposed by the funding agency, opened for public comment, and posted publicly. The Made in America Office at OMB reviews them. That transparency means a fabricator can monitor pending waivers in its product space rather than guessing.
State-Level and Trade-Agreement Layers
Federal rules are not the whole picture. Many states attach their own domestic-preference provisions to state-funded procurement, and these vary widely in covered goods and thresholds. A fabricator quoting across state lines should confirm the specific state statute on any state-funded job rather than assuming the federal framework controls.
In the other direction, U.S. obligations under the WTO Agreement on Government Procurement can override the Buy American Act on covered acquisitions above the agreement's thresholds, where products from designated countries get national treatment. Notably, the Buy America infrastructure rules and BABA generally sit outside those trade-agreement obligations, which is part of why their domestic requirements run stricter.
What This Means When You Quote
For a sheet-metal fabricator and the buyers who source from one, the practical sequence is short. Identify the funding mechanism, which sets the regime. Classify the part, because an iron/steel-predominant weldment faces a near-total domestic-steel rule under every regime, while a mixed assembly may qualify under a component-percentage test. Then certify against the threshold in effect for the delivery year, and document the supply chain so the certification holds up.
Atlas Manufacturing fabricates in Minneapolis, Minnesota and Eau Claire / Chippewa Falls, Wisconsin, with domestic steel sourcing and all manufacturing processes (laser cutting, punching, forming, welding, and finishing) performed in-house in the United States. That footprint is what lets a part clear the iron-and-steel rule that governs most fabricated government work, and the Minneapolis facility is ISO 9001:2015 certified for buyers who also carry a quality-system requirement. Contact our team to talk through the domestic-content requirements on a specific project.
This article is general information, not legal advice. Domestic-content rules change and are project-specific. Confirm current requirements against the governing statute, the FAR, and the funding agency before certifying compliance.
What is the difference between the Buy American Act and Buy America?
The Buy American Act (41 U.S.C. ch. 83, FAR Part 25) governs direct purchases of supplies and construction materials by federal agencies. Buy America refers to domestic-preference rules tied to specific federal grant programs, mainly at DOT (FHWA, FTA, FRA, FAA) and EPA, that apply to materials built into federally funded infrastructure. They use different thresholds and different definitions of domestic, and a single part can be subject to one on one contract and the other on another.
What is the Build America, Buy America Act (BABA)?
BABA was enacted in the 2021 Infrastructure Investment and Jobs Act (Pub. L. 117-58). It applies a domestic-content preference to all federal financial assistance for infrastructure and sorts items into three categories: iron and steel products (all manufacturing in the U.S.), manufactured products (made in the U.S. with over 55% domestic component cost), and construction materials (all manufacturing in the U.S.), implemented at 2 CFR Part 184.
What is the current Buy American Act domestic-content threshold?
Under the 2022 FAR final rule, the domestic component-cost threshold for general manufactured end products rose to over 65% for items delivered in calendar years 2024 through 2028, and rises to over 75% starting in 2029. For products that are wholly or predominantly iron or steel, the test instead requires foreign iron and steel to be under 5% of total component cost.
How are steel parts treated under domestic-sourcing rules?
Iron and steel get the strictest treatment. Under the Buy American Act, foreign iron and steel must be under 5% of component cost for iron/steel-predominant items. Under FHWA and EPA Buy America and under BABA, iron and steel products must be 100% domestic, meaning all manufacturing processes from melting through coating occur in the United States.
Can domestic-content requirements be waived?
Yes. All three regimes allow waivers on three grounds: public interest, nonavailability of the item in sufficient U.S. quantities of satisfactory quality, and unreasonable cost. Under the Buy American Act, unreasonable cost is handled through a price evaluation preference (a 20% factor for large businesses or 30% for small businesses under FAR 25.106). BABA waivers are proposed by the funding agency, opened for public comment, and posted at MadeInAmerica.gov.
