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February 13, 2023 - Federal Procurement

OMB Proposes New Domestic Preference Requirements for Federally Funded Infrastructure Projects

GAO Finds CIO-SP4 Solicitation Is Unduly Restrictive of Competition

On February 9, 2023, the Office of Management and Budget (OMB) issued a proposed rule that would subject all federally funded infrastructure projects to domestic preference requirements that are materially similar to the Buy American Act requirements applicable to many federal procurements. For purposes of this rulemaking, “infrastructure project” is “any activity related to the construction, alteration, maintenance, or repair of infrastructure in the United States regardless of whether infrastructure is the primary purpose of the project.”

The proposed rule would largely apply the Federal Acquisition Regulation (FAR) “cost of components” definition to Federal Financial Assistance programs, thereby establishing a common framework to determine the cost of components in manufactured products.  The proposed rule adds a new Part 184 to OMB Guidance on Grants and Agreements (2 CFR Chapter I) and revises existing guidance on Domestic Preferences for Federal Awards (2 CFR Chapter II).  The new part defines the terms “Manufactured products,” “Produced in the United States,” and “Construction materials”; incorporates the FAR component test for manufactured products (subject to a 55% domestic content requirement); and provides “preliminary” standards unique to construction materials for assessing whether the materials were produced in the United States. The revision to the existing guidance on federal awards directs federal agencies to look to the new Part 184 for guidance on all awards that include infrastructure projects. 

This is the latest in a series of actions by the Trump and Biden administrations to tie federal spending to increased domestic preferences. Previously, we commented on the existing FAR and DFARS rules, and the Buy American Act generally. Comments on this proposed rulemaking are due by March 13, 2023.