105.10 Domestic Materials

105.10 Domestic Materials

GENERAL DESCRIPTION

The Michigan Department of Transportation (MDOT) and the Federal Highway Administration (FHWA) continue to partner to address compliance with Buy America requirements on all state and local projects that include federal-aid funding.

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Code of Federal Regulation (CFR) / FHWA Regulations

Buy America Requirements can be found in 23 CFR Section 635.410 and Build America, Buy America Act requirements can be found in 2 CFR Part 184. Work items and materials specifically shown in the project plans, specifications, and contract documents that are permanently incorporated into the project, regardless if they are defined as temporary or not, must meet the requirements in the Special Provision for Domestic Materials 20SP-105C-02 or the Special Provision for Domestic Materials, Multiple Contracts under National Environmental Policy Act Decision

Both the Buy America (BA) and Build America, Buy America (BABA) requirements apply to materials required to be permanently incorporated into the project. Items used on a temporary basis for construction (e.g., scaffolding, temporary sheet piling) that are removed before completion are not subject to these requirements. However, if an item originally defined as temporary is left in place and permanently incorporated into the final project, it must meet all domestic preference requirements.

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Small Grant Waivers

US DOT waives domestic material requirements for small grants under very certain circumstances. FHWA's Q&As for the Waiver of Buy America Requirements for De Minimis Costs and Small Grants provide additional information regarding the small grants waiver. MDOT and FHWA have agreed that the BA/BABA domestic material requirements are waived and do not apply when the following conditions are met:

• A contract has a single financial assistance award (including design, utilities, and construction) of less than $499,999
• The project is on its own NEPA decision letter and contains no other federally funded projects for any phase
• The LAP acknowledges in their cost sharing agreement that any amount of funding over the federal award of $499,999 will be a cost borne entirely by the Local Agency.

To identify projects that will have waived BA/BABA domestic material requirements, the following items can be noted:

• The absence of 26SP-105C and 26SP-105D.
• “Domestic Materials Required: No” identified on the project cover sheet
• Notes reflecting capped funding amounts in Phase Initiator
• A cost sharing agreement with the LAP that indicates acknowledgment and acceptance of project costs exceeding the $499,999 federal contribution, for LAP projects.

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Domestic Materials

A - Source of Iron and Steel (Buy America)

All references to iron and steel products means iron products, steel products, or any combination of both iron and steel.

Manufactured products that are predominantly iron or steel or a combination of both are considered iron and steel products. Predominantly iron or steel or a combination of both means the cost of the iron or steel content exceeds 50% of the total cost of the components.

Provide iron or steel products for permanent incorporation into the work that are produced only in the United States per Title 23 of the CFR Section 635.410, Buy America Requirements.

Examples of products that are subject to Buy America coverage regarding iron or steel include, but are not limited to, the following:

• Steel or iron products used in pavements, bridges, tunnels or other structures, which include, but are not limited to, the following: fabricated structural steel, reinforcing steel, piling, high strength bolts, anchor bolts, dowel bars, permanently incorporated sheet piling, bridge bearings, cable wire/strand, pre-stressing/post-tensioning wire, motor/machinery brakes and other equipment for moveable structures;
• Guardrail, guardrail posts, end sections, terminals, cable guardrail;
• Steel fencing material, fence posts;
• Steel or iron pipe, conduit, grates, manhole covers, risers;
• Mast arms, poles, standards, trusses, supporting structural members for signs, luminaires, or traffic control systems; and
• Steel or iron components of precast concrete products, such as reinforcing steel, wire mesh, lifting lugs, and pre-stressing or post-tensioning strands or cables.

All iron and steel products, materials, components, etc., must meet the Buy America requirements. All manufacturing processes, including application of coatings, must occur within the United States.

Minimal use of foreign iron or steel is allowed provided the total invoice cost of foreign iron and steel permanently incorporated into the project does not exceed 0.1 percent (0.1%) of the total contract amount or $2,500, whichever is greater. The total invoice cost is the invoice amount charged for the iron and/or steel within the product, material, or component delivered to the project. The contractor is required to maintain this minimal usage amount and provide the monetary values with product or material delivery prior to incorporation.

The use of foreign iron and/or steel under the minimal usage amount does not need to be approved by the FHWA. This amount is not considered a waiver to the Buy America requirements. The minimal usage amount is to be approved by the engineer as long as the maximum values are not exceeded. The contractor is to provide the engineer with the monetary amount of foreign iron and/or steel in each pay item, product, material or component. The contractor is also required to maintain a list of all foreign steel and iron incorporated into the project and provide the list to the engineer.

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Buy America Waiver

The FHWA has established a Buy America waiver process for iron and steel products, components, and materials that are not domestically produced or processed, but are required per the contract. Waiver approvals are pursued during the preliminary engineering/design phase of projects and do not include after-the-fact discovery of an inadvertent incorporation of foreign iron and steel into a federal-aid project.

Buy America waivers are typically issued per item and on a project basis and are not transferrable to other projects. Occasionally, waivers can be issued for a category of products. These waivers are issued by the Washington D.C. headquarters of the FHWA and are not issued by project staff of any other agency or office. Waiver processing may be necessary after letting for products or components that are no longer domestically produced or processed. This discovery may impact a project schedule and, therefore, waiver discussions must occur as soon as possible upon discovery that domestically produced or processed iron and steel products or processes are not available. Managing offices are to work with the Construction Contracts Unit in the CFS Division for processing and submittal of the waiver request with supporting information to the FHWA Michigan Division Office. The FHWA approval process may take 3 years so prompt submittal of waiver requests are required. Supporting information that is to be provided to the Construction Contracts Unit is as follows and examples can be provided:

• MDOT Contract ID
• FHWA Project Number
• Federal Item Number
• Brief Project Description (from contract inquiry system)
• Original Project Amount
• Current Project Amount (at time of waiver submittal)
• Waiver Pay Item, Product or Process
• Cost of Waiver Pay Item, Product or Process
• Country of Origin of the Pay Item, Product, or Process (if known)
• Reasons for the Waiver Request
• Description of the efforts made by the contractor and MDOT to locate a domestically manufactured product
• Analysis of re-design of the project using alternate or approved equal domestic product

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Buy American Act

For clarification, there is also a federal requirement and specification for Buy American (note the additional letter "n" in American). Buy American does not apply to road and bridge projects; it is a requirement for direct federal grants (e.g. aeronautics projects). Project staff must ensure that they receive the Buy America certification and not Buy American certification as there is a substantial difference between the two requirements.

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B - Source of Construction Materials (Build America, Buy America Act)

The Contractor must provide construction materials for permanent incorporation into the work that are produced in the United States per 2 CFR Part 184, Buy America Preferences for Infrastructure projects.

The manufacturing processes for each construction material must occur within the United States.

1. Non-ferrous metals All manufacturing processes means from initial smelting or melting through final shaping, coating, and assembly;
2. Plastic and polymer-based products (including polyvinylchloride, composite building materials, and polymers used in fiber optic cables). All manufacturing processes, from initial combination of constituent plastic or polymer-based inputs, or, where applicable, constituent composite materials, until the item is in its final form;
3. Glass (including optic glass). All manufacturing processes, from initial batching and melting of raw materials through annealing, cooling, and cutting;
4. Lumber All manufacturing processes, from initial debarking through treatment and planing;
5. Drywall All manufacturing processes, from initial blending of mined or synthetic gypsum plaster and additives through cutting and drying of sandwiched panels;
6. Fiber Optic Cable (including drop cable). All manufacturing processes, from the initial ribboning (if applicable), through buffering, fiber stranding and jacketing. All manufacturing processes also include the standards for glass and optical fiber, but not for nonferrous metals, plastic and polymer-based products, or any others;
7. Optical Fiber All manufacturing processes, from the initial preform fabrication stage through the completion of the draw; and
8. Engineered Wood All manufacturing processes, from the initial combination of constituent materials until the wood product is in its final form including from initial debarking through pressing, trimming, and sanding of glued sheets or boards.

Certification examples are shown below. See De-Minimis Non-Compliant Construction Materials and Manufactured Products for details regarding de-minimis allowances.

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C - Source of Manufactured Products (Buy America)

The Contractor must provide manufactured products for permanent incorporation into the work that are produced only in the United States per Title 23 of the CFR Section 635.410, Buy America Requirements.

To be considered domestically produced, manufactured products must be manufactured in the United States AND greater than 55 percent of the product's components, by cost, must be mined, produced, or manufactured in the United States

Manufactured products means articles, materials, or supplies that have been processed into a specific form and shape, or combined with other articles, materials, or supplies to create a product with different properties than the individual articles, materials, or supplies. If an item is classified as an iron or steel product, an excluded material, or construction material, then it is not a manufactured product.

An article, material, or supply classified as a manufactured product may include components that are iron or steel products, excluded materials, or construction materials. Mixtures of excluded materials delivered to a work site without final form for incorporation into a project are not a manufactured product.

Items that consist of two or more construction materials that have been combined together through a manufacturing process, and items that include at least one construction material combined with a material that is not a construction material (including steel/iron) through a manufacturing process are treated as manufactured products, rather than as construction materials.

Manufactured products that are predominantly iron or steel must comply with the Source of Iron/Steel. Final assembly for all other manufactured products must occur in the United States for the manufactured product to be considered compliant with the Buy America Act. Precast concrete products are classified as manufactured products and must meet the requirements of 23 CFR 635.410 and subsection 105.10.C of the Standard Specifications for Construction. Components of precast concrete products that consist wholly or predominantly of iron or steel or a combination of both must also meet the requirements of subsection 105.10.A of the Standard Specifications for Construction. The cost of such components may be included in the applicable calculation for purposes of determining whether the precast concrete product is produced in the United States.

Intelligent transportation systems and other electronic hardware systems that are installed in the highway right of way or other real property are classified as manufactured products, the cabinets or other enclosures of such systems that consist wholly or predominantly of iron or steel or a combination of both must meet the requirements of subsection 105.10.A of the Standard Specifications for Construction. The cost of cabinets or other enclosures may be included in the applicable calculation for purposes of determining whether systems referred to in the preceding sentence are produced in the United States.

Some products may be acquired from a manufacturer as a “kit”. FHWA defines a manufactured product kit as a product acquired from a single manufacturer as separate components with the intent of the components being assembled to form a single product at the work site. If the components are from different manufacturers, it is not a kit. A “kit” is not to be confused with a “system”. A kit is limited to specific product, machine, or device performing a unified function that is assembled onsite. Wide-ranging systems of interconnected manufactured products like an HVAC system is not a kit. A kit is evaluated as a single manufactured product regardless of when or how its individual components are brought to the work site. A “kit” is evaluated as a whole and not by the parts. The kit must meet the 55% domestic component requirement, but the final assembly in the US requirement is satisfied by the onsite assembly.

See De-Minimis Non-Compliant Construction Materials and Manufactured Products for details regarding de-minimis allowances.

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D - Other Materials

Articles, materials or supplies that do not meet subsection 105.10.A or 105.10.B or 105.10.C are classified as Other Materials and do not have any domestic materials requirements. This includes the following items that are specifically categorized as other (excluded) materials per Section 70917(c) of the Infrastructure Investment and Jobs Act of 2021.

1. Cement and cementitious materials, including asphalt cements
2. Aggregates such as stone, sand, or gravel
3. Aggregate binding agents or additives

These materials do not have any requirements for domestic manufacturing.

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MEASUREMENT, DOCUMENTATION & PAYMENT

Measurement

De-Minimis Non-Compliant Construction Materials and Manufactured Products

Multiple projects may be included in the same National Environmental Policy Act (NEPA) Decision letter. When this occurs, even if one of those projects is funded federally in any amount, the entirety of the projects included on that decision letter are required to adhere to BA/BABA requirements.

When multiple projects exist under one National Environmental Policy Act Decision Letter, all projects on that Decision Letter will be subject to the lesser of 5% of total applicable costs or $1 Million. De minimis percentages do not change even in the event of extras or overruns. The weighted cost percentages are populated in Development and a prorated contract-specific allowance is entered into the Special Provision for De-Minimis Calculation for Domestic Materials, Multiple Contracts Under National Environmental Policy Act Decision. Utility work eligible for federal funding is included in the de-minimis costs associated with the project, and is adjusted in development as part of the Special Provision for De-Minimis Calculation for Domestic Materials.

On NEPA decision letters that include only one job, the requirements for construction materials and manufactured products are waived for a de minimis amount defined as when the total value of the non-compliant items is no more than the lesser of $1,000,000 or 5 percent of total applicable costs for the contract.

The total value of non-compliant items is the value of all construction materials and manufactured products that are not compliant with subsections 105.10.B and 105.10.C that are permanently incorporated into the contract. The total applicable contract costs include the costs of all iron, steel, construction materials, and manufactured products used on the contract. The 5 percent threshold of total applicable contract costs is based on the following formula:

A / B

Where:

A = the total value of non-compliant construction materials and manufactured products used in the contract;

B = the total applicable contract costs (iron, steel, construction materials, and manufactured products).

The 5 percent threshold is based on the actual invoiced cost of the iron, steel, construction materials, and manufactured products, not an anticipated cost of those items. Engineers need to work with the Contractor to help ensure the value of the non-compliant items is no more than the lesser of $1,000,000 or 5 percent of total applicable costs. Contractors are to track this value, and Engineers can request documentation at any time.

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Documentation Requirements

AASHTOWare Project uses Material Acceptance Actions to verify if a pay item is justified for payment. Office Technicians will be able to document the Domestic Material Certification acceptance action in one of three ways:

1. Domestic Material Certification – Contractor provided documents such as certificates, letters, or manufacturing statements confirming U.S. origin for steel, iron, or manufactured products.
2. FHWA Waiver – Applies when FHWA grants an exception for a specific material on a specific project (e.g., a product only available from a foreign source). This will be a rarity and Development staff should be consulted to identify waivers, if any, that have been authored for the project at hand.
3. Domestic Material De Minimis Certification – Contractor documentation showing that a material is being counted toward allowable de minimis foreign content under BA/BABA regulations.

Domestic Material Certification documentation will be the most prevalent acceptance method to satisfy the Domestic Material Certification Acceptance Action. This can be satisfied by evaluation of Contractor provided documents, such as Certification letters, examples below, that contains all supporting information to justify payment for the materials. Please refer to Domestic Materials Special Provisions to determine required documentation.

Domestic Material De Minimis Certification documentation will be less common but allows a Contractor to use foreign materials up to a de minimis amount.

FHWA Waiver documentation will be the least likely acceptance for Domestic Materials as waivers are not routinely approved by FHWA. For questions on this item, please contact the Construction Operations Engineer.

The Office Technician will evaluate the acceptance criteria above and supporting documentation before selecting and documenting any of the three acceptance actions options within AASHTOWare Project.

Classification of Materials

A material is classified as either Iron and Steel, Construction Material, Manufactured Product or 70917(c ) items. 70917(c) items are cement, cementitious materials, aggregates or aggregate binding agents or additives.

2 CFR § 184.4(e) and 2 CFR § 184.4(f) require that an article, material or supply must be classified into one of the above categories based on its status at the time it is brough to the work site for incorporation into the project and that the Buy America preference will be applied to this single category.

Note that two exceptions exist to the above:

1. With respect to precast concrete products that are classified as manufactured products, the precast concrete product must meet the manufactured products requirements and components that consist wholly or predominantly of iron or steel or a combination of both shall also meet the iron and steel requirements.
2. With respect to cabinets and enclosures for ITS and Electrical hardware systems that are classified as manufactured products, the cabinet/enclosure must meet the manufactured products requirements and cabinets and enclosures that consist wholly or predominantly of iron or steel or a combination of both shall also meet the iron and steel requirements.

Title 2 CFR Part 184 states the following language specific to Construction Materials:

“Minor additions of articles, materials, supplies, or binding agents to a construction material do not change the categorization of the construction material.”

Federal Office of Management and Budget has chosen not to be overly prescriptive in defining the term Minor Addition, instead allowing for Federal Agencies to apply discretion. For the purposes of classification. FHWA defines in 23 CFR 635.410(c)(1)(iii) predominance as one that composes over 50% of the total cost of the products components, therefore a minor item constitutes less than 50% of the cost. Based on this established federal logic, MDOT will define a Minor Addition as an item whose presence constitutes less than 50% of the estimated material cost of the material or whose presence merely supports the construction material.

The origin or parentage of a minor addition does not dictate the compliance of the material. This is confirmed in 23 CFR 184.3 (2) Definitions.

Examples of Minor Additions incorporated into materials:

• Engineered wood with a small wax treatment is a construction material.
• A BABA compliant plastic pipe with a permanent non-domestic affixed gasket is still a compliant construction material.
• Lumber with a preservative treatment is still a Construction material.
• BABA compliant glass with a film or coating composed of multiple domestic and foreign agents is still a Compliant Construction Material.
• Engineered wood manufactured together with glass into a window assembly is a Manufactured Product.
• A signal lens installed on a signal made by a different manufacturer.

The determination of appropriate category for an article, material or supply will be determined by the Construction Engineer at the project level. AASHTO has worked with FHWA and other State DOTs has developed a self-certification form, which is not required for Michigan projects. Table 1 on this form includes a Material Classifications breakdown as an aid in making project category decisions.

Iron, Steel, and/or Manufactured Products Certification

The following information is provided as a sample letter of certification for Buy America iron/steel and/or manufactured product compliance. Documentation must be provided on company letterhead and include the manufacturer’s name.

Date (when certification was produced)

Company Name

Company Address

City, State Zip

Phone Number

Email Address

Subject: Buy America Certification for Project (XXXXX-XXXXXXA)

I, (company representative), certify that the following product(s)/material(s)/manufactured product(s) provided to the subject project are in full compliance with the Federal Highway Administration (FHWA) Buy America requirements as specified in Title 23 of the Code of Federal Regulations (CFR) Section 635.410.

Pay Item, Products and/or Materials

Water Main, DI, 24 in

- Buy America compliance.

Joint, Expansion, E2

- Dowel Bar, Buy America compliance.

Spun Concrete Poles

- Buy America compliance.

Signed by company representative

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Construction Materials Certification

The following information is provided as a sample letter of certification for Buy America Construction Material compliance. Documentation must be provided on company letterhead and include the manufacturer’s name.

Date (when certification was produced)

Company Name

Company Address

City, State Zip

Phone Number

Email Address

Subject: Buy America Certification for Project (XXXXX-XXXXXXA)

I, (company representative), certify that the following construction material(s) provided to the subject project are in full compliance with the requirements in the Special Provision for Domestic Materials / Special Provision for Domestic Materials, Multiple Contracts under National Environmental Policy Act Decision.

Materials

Lumber

- Full Compliance

Fiber Optic Cable

- Full Compliance

Signed by company representative

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Basis of Payment

No payment, including stockpile and delivered payments, is to be made for any materials or products containing iron or steel until all Buy America certifications have been received by the engineer. The only exception to this requirement is for fabricated elements that are stamped "Approved for Use" by MDOT's Structural Fabrication Unit (internal or contracted inspection personnel) performing shop inspection at fabrication facilities (e.g. structural steel and structural precast concrete). The Structural Fabrication Unit verifies Buy America for materials with "fabrication inspection" as the basis for acceptance, as noted in the Materials Quality Assurance Procedures manual. All elements that are represented by a stamped "Approved for Use" Bill of Lading (shipping document) by the Structural Fabrication Unit must be visually inspected after being unloaded at the project site before being accepted by the engineer. These elements may then be partially or fully paid provided the inspector was given an "Approved for Use" stamped Bill of Lading upon arrival of the elements (structural steel or structural precast concrete). The fabricator is required to maintain a listing of all materials that do not meet Buy America and obtain approval from the engineer prior to incorporation of foreign iron and/or steel into any fabricated products.

Collaboration is necessary between MDOT’s Structural Fabrication Unit and the Engineer to ensure the amount of foreign steel approved for use is less than the minimal usage thresholds above. MDOT's Structural Fabrication Unit will not seek approval from the project office for incorporation of foreign iron and/or steel into a project, but will verify that the engineer has approved the use of foreign iron and/or steel prior to stamping "Approved for Use". The Structural Fabrication Unit will issue fabrication inspection memorandums to the engineer, for projects requiring structural steel and structural precast concrete fabrication inspection, after fabrication is complete for information purposes only. These memorandums summarize the fabrication inspection and state Buy America has been verified at the fabrication facility.

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Oversight and Compliance

MDOT administers Domestic Materials requirements using a trust-but-verify approach. Contractor certifications are relied upon as the primary demonstration of compliance. Verification includes ensuring required certifications are complete and applicable, observing delivered products for readily apparent inconsistencies, and requesting additional supporting information only when facts or circumstances reasonably call the certification into question. MDOT administers Domestic Materials requirements through a tiered oversight process designed to verify contractor certifications, identify observable inconsistencies, and resolve questions before payment:

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Level 1: Field Review

Construction personnel are not expected to independently determine whether a product satisfies Domestic Materials requirements. The purpose of the field review is to identify observable inconsistencies, identify when required documentation may be missing, and elevate questions through the appropriate chain of review.

Construction personnel should make reasonable observations of delivered materials for markings or information that appear inconsistent with the contractor's certification or contract requirements. If observed markings (Such as a stamp or sticker indicating non-domestic country of origin) or documentation appear inconsistent with the contractor's certification, construction staff must follow this decision making process:

1. Is the item Iron or Steel, a Construction Material, or a Manufactured Product as defined in the Special Provisions for Domestic Materials?
   1. If yes, proceed.
   2. If no, stop here. Non-domestic product is allowable.
2. Does the item have a project-specific or general waiver issued by FHWA?
   1. If yes, verify waiver is on the Approved Project-Specific Waivers list or the Approved General Applicability Waivers list. Upon verification that the item matches the waiver, item basis of acceptance is Waiver as above and is appropriate for payment.
   2. If no, notify the Office Technician and Contractor of the apparent inconsistency. The Contractor shall provide clarification or identify the basis under which the item is allowable (e.g., correction of documentation, applicable waiver, or inclusion within the approved de minimis calculation).
3. Are there unresolved questions regarding the applicability of the Special Provision, waiver eligibility, de minimis status, or consistency with the contractor's certification?
   1. If yes, notify the Project Engineer and Office Technician that payment should not be processed until the compliance question has been resolved in accordance with the contract requirements.
   2. If no unresolved questions remain, the item may proceed through the normal documentation and payment process.

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Level 2: Documentation Review

The Office Technician serves as the Department's administrative quality control for project records. Prior to payment, the Office Technician verifies that documentation required by the contract has been received and retained as required. The Office Technician's review is intended to ensure the project file is complete and capable of supporting the Department's acceptance decisions.

The Office Technician will:

• Follow Standard Naming Convention for document storage
• Verify that the job and product are correct on certifications
• Verify signature on certification
• Ensure that the product documentation supports compliance with the Special Provision
• Communicate with the Project Engineer and Central Office in the event of a discrepancy or documentation issue for effective follow-up.

Payment of a contract item through the Department's payment process documents the Department's acceptance decision and indicates that the Field Review and Documentation Review processes have been completed, unless otherwise documented in the project file.

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Level 3: Central Office Review

Central Office provides technical assistance and policy interpretation when questions regarding Domestic Materials requirements cannot be resolved at the project level. Central Office involvement is intended to promote statewide consistency in the application of the Domestic Materials Special Provision and may include interpretation of policy, evaluation of supporting documentation, or coordination with FHWA as appropriate.

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Non-Compliance

Resolution of non-compliance with BABA cannot be fixed by simply adjusting the pay item to a federally non-participating category. This is not compliant per FHWA. Payment for the non-compliant item must be entirely withheld.

To resolve the non-compliance, corrective actions must be pursued in this order:

1. Remove the non-compliant item and replace it with a domestically sourced, compliant equivalent; or
2. If a direct replacement is unavailable, redesign the relevant portion of the project to utilize alternative compliant materials.

Communication with CFS and FHWA may be necessary if items 1 or 2 are not appropriate for the job.

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Communication of Industry-wide shortages and Public Interest Waivers

MDOT will collaborate with FHWA regarding industry-wide material shortages and requests for public interest waivers. To provide FHWA with timely and useful documentation, project offices are asked to notify the Division Administrator and Construction Operations Engineer at the earliest indication of:

• Supply-chain disruptions affecting domestic products that result in previously ordered materials or products becoming unavailable on a nationwide or industry-wide basis; or
• Supply-chain or material availability issues that create an emergent or potentially significant risk to the safety of the motoring public, workers, or critical transportation infrastructure.

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