De minimis waiver under BABA: the 5 percent and $1 million example

The de minimis waiver is one of the most searched and most misunderstood corners of Build America, Buy America. In plain terms, it recognises that chasing the origin of every tiny, low-cost component would be disproportionate, so it allows a small share of non-compliant material through. The trouble is that people stretch it well past what it covers. This guide sets out what the de minimis threshold actually does, and what it does not.

What de minimis is for

De minimis exists to keep the rules workable. A project can contain countless minor items, and requiring a full origin trace on a handful of low-value parts would cost more than it protects. The de minimis waiver lets those minor non-compliant components through provided they stay under a defined portion of total cost. It is applied as a general allowance rather than something you argue case by case.

A de minimis waiver allows for a limited amount of non-compliant components below a defined percentage of the total cost of the project's materials. (BABA waiver framework, summarised)

What it is not

Here is the misunderstanding to avoid. De minimis is not a back door around the 55 percent manufactured-products test. You cannot take a manufactured product that lands at, say, 50 percent domestic content and wave it through as de minimis. The two rules answer different questions: the 55 percent test decides whether a manufactured product is domestic, while de minimis is a project-level allowance for genuinely minor items.

Where the boundaries sit

The figure OMB gives in M-24-02 is an example: 5 percent of applicable project costs, up to a maximum of $1,000,000, where applicable project costs means the material costs subject to the Buy America preference. The waiver is a general applicability public interest waiver, so an agency has to adopt it for the funds it administers. Confirm that your funding agency has adopted it, and which base it measures against, before you rely on the allowance. Our waivers overview covers where de minimis sits among the five categories, and the de minimis waiver page carries the detail the ruleset holds.

How to use it without overreaching

Treat de minimis as the last, small tidy-up after you have done the real work, not as a strategy. Classify every item, run the 55 percent math on manufactured products, and resolve genuine shortfalls through the proper waiver. If a modest residue of truly minor non-compliant material remains, that is where de minimis belongs. For the governing rules, OMB's Made in America Office is the authority.