Iron and steel: why every step from melt to coating has to be US

There is no percentage to hit for iron and steel under Build America, Buy America (BABA), and that surprises people who arrive from the 55 percent world of manufactured products. Iron and steel is a pass-or-fail standard: all of the manufacturing has to happen in the United States, and one offshore step anywhere in the chain fails the whole article.

The standard, in one sentence

All iron and steel used in the project must be produced in the United States, meaning all manufacturing processes, from the initial melting stage through the application of coatings, occurred in the United States. That is the OMB M-24-02 language, and it is the same standard the funding agencies apply on top of the government-wide baseline.

What all manufacturing processes covers

The phrase is deliberately broad. It starts at the initial melt (the point where raw material becomes molten steel or iron) and follows the material through every process that shapes and finishes it. In practice that includes:

• Initial melting and refining of the metal.
• Continuous casting or pouring into a shape.
• Rolling, forming, bending, and fabrication into the finished article.
• Application of any coatings, such as galvanizing, epoxy coating, or painting done as part of manufacture.

Which articles this standard governs

The iron and steel standard applies to articles, materials, and products that consist wholly or predominantly of iron or steel, or a combination of both. A product that is only partly iron or steel, sitting inside a larger assembly, is usually judged as a manufactured product against the 55 percent component-cost test instead. Getting the category right is the first decision on every bill of materials, because it decides which of the three standards the line is measured against.

A worked example

A fabricator supplies galvanized guardrail for a federally funded road. The steel is melted and poured at a domestic mill, rolled and formed domestically, then shipped abroad for galvanizing before delivery. Every step but one was in the United States. The coating step was not, and coatings are inside the manufacturing chain the standard names, so the guardrail is non-compliant. Move the galvanizing back onshore and the same article passes. Nothing about the price changed; the location of a single finishing step decided the verdict.

If a compliant option does not exist

When domestic iron or steel is genuinely not available in sufficient and reasonably available quantities or of a satisfactory quality, the nonavailability waiver is the category that fits, and the unreasonable cost waiver covers the case where the domestic option would raise overall project cost by more than 25 percent. As with every BABA waiver, it must be requested from the funding agency and granted before you can rely on it. Until then, the line stays non-compliant, not waived.