With the Federal Highway Administration’s (FHWA) recent elimination of the Manufactured Products General Waiver, contractors working on federally funded highway projects must brace for potentially disruptive consequences. Legal and construction advisors warn the new requirements under the Build America, Buy America Act could lead to higher costs, tighter timelines, and quality assurance challenges if not proactively addressed.

Michael Peloso and Dan McCrave-Bessette, associate director and director at the Construction Advisory Services practice of global consulting firm J.S. Held, outlined these implications in a recent analysis. “The rescinding of the Manufactured Products General Waiver will likely have implications to the cost, schedule and quality of federally funded projects,” they said.

Buy America Expansion Finalized

The final rule, issued by FHWA on January 14 and set to take effect on March 17, implements stricter domestic content mandates as part of the Build America, Buy America Act. Enacted in 2021 through the Infrastructure Investment and Jobs Act, the legislation aims to bolster U.S. manufacturing and reduce reliance on foreign suppliers. The rule applies to all transportation infrastructure projects that receive federal funding.

Contractors will now be required to certify that manufactured products used on federally supported projects meet two key criteria:

• By October 1, 2025: Final assembly must occur in the U.S.
• By October 1, 2026: Products must include at least 55% domestic content by cost

While the Biden administration ushered in the changes, the Trump campaign has signaled potential for even stronger Buy America enforcement if it returns to office.

Financial and Procurement Impacts

One of the most immediate challenges for contractors and suppliers is cost. As project teams adjust to the stricter sourcing requirements, both procurement and compliance costs are expected to rise. This could strain budgets, reduce margins, and increase the likelihood of disputes related to change orders or delays in bonding new work.

“As contractors and suppliers are compelled to utilize domestic sources for manufactured products, the availability of materials, at least in the short term, is likely to be limited, leading to increased demand and rising prices,” said Peloso and McCrave-Bessette. “The additional requirements will also result in the need for greater resources to ensure compliance with the Buy America requirements over a broader range of products than has been needed historically.”

They emphasized that contractors should account for the expanded administrative and compliance burden during the early planning phase to avoid downstream financial complications.

Timeline Disruptions

Project timelines may also be at risk. The new rules could affect the full product procurement lifecycle—from buyout to engineering, fabrication, and delivery—especially given the challenge of identifying compliant domestic vendors.

“With the potential for more restrictions on product availability, the supply chain will likely entail longer-than-normal efforts to identify suitable domestic suppliers in place of foreign firms,” said McCrave-Bessette. “Additional time must be allotted to vet these companies to ensure compliance with Buy America requirements and technical specifications.”

Delays in approvals for waivers or sourcing could create a domino effect, disrupting construction schedules and affecting downstream activities. Some states, such as Rhode Island, have already updated their contract specifications to shift responsibility for waiver-related delays entirely to the contractor.

“Besides costs, contractors and suppliers would be wise to evaluate these additional time considerations associated with these processes during the development of early schedules – including pre-bid and project baselines,” the authors advised.

Quality Assurance Risks

Beyond budget and schedule, quality control may become a growing concern. As new domestic manufacturers enter the market to meet increased demand, there is potential for variation in the quality of materials and compliance with technical standards.

“Contractors will want to increase quality assurance and control efforts to ensure that proper due diligence of products continues to meet the quality standards required by the contract, specifications and industry standards,” said Peloso and McCrave-Bessette.

Failing to identify substandard materials could not only lead to project defects but also trigger reputational or even legal consequences for project stakeholders.

“As with cost and schedule, it would be prudent of contractors and suppliers to evaluate what additions or changes need to be made to their quality management programs to ensure that the products coming from domestic sources comply with contract requirements,” they noted. “Adherence to quality is not only a requirement in contracts and industry, but failures that occur because of quality issues can lead to reputational or potentially criminal issues.”

Steps for Compliance and Risk Mitigation

To help the industry adapt to these new requirements, the authors recommend a three-stage approach to compliance: during the pre-bid phase, the active construction phase, and through change management protocols.

Pre-bid Stage:
Contractors and suppliers should begin by reviewing their existing supply chains to identify areas that may fall short of Buy America mandates. Engaging early with suppliers and stakeholders will be essential. Analyzing alternative sourcing options and incorporating procurement changes into pre-bid documents and discussions will ensure teams are aligned from the outset.

Active Construction Stage:
During the construction phase, strong communication and documentation are vital. Contractors must work closely with suppliers to track material origins and manage compliance in real time. Implementing or upgrading material tracking systems and onsite verification measures will help maintain alignment with contract and federal requirements.

Change Management:
When substitutions or design changes are required, a documented process should be in place to assess and approve alternatives. Robust documentation, including certifications, contract modifications and waiver requests, will be critical in defending decisions and maintaining transparency.

“It is in the best interest of all stakeholders to be disciplined in maintaining documentation related to all certifications, waivers and contract modifications,” the authors advised.

Looking Ahead: More Scrutiny, More Strategy

The expansion of Buy America reflects broader federal priorities around domestic economic development and manufacturing. However, Peloso and McCrave-Bessette emphasize that the transition demands thoughtful, early-stage planning.

“The rescinding of the Manufactured Products General Waiver will likely have consequences that contractors and suppliers should begin planning for as early as possible,” they said. “While the rule remains in a regulatory freeze, contractors and suppliers would do well to consider the implications on future projects.”

Strategic preparation—particularly around budget forecasting, procurement scheduling, and quality controls—will be essential for project teams aiming to meet compliance requirements without sacrificing performance.

“This includes additional focus on early and continual risk management to identify the cost, schedule and quality impacts, and working with suppliers to understand the constraints on the supply chain,” they concluded. “This will be critical in understanding and mitigating those impacts.”

Originally reported by Michael Peloso & Dan McCrave-Bessette in Construction Dive.