By Mar-Vic Cagurangan
The U.S. Department of Housing and Urban Development has issued a temporary waiver that exempts Guam, the Northern Marianas and American Samoa from the “Buy America” policy, which requires the procurement of U.S.-made construction materials for federally funded infrastructure projects.
The waiver, which went into effect on Nov. 15, will be in force for 15 months, according to the department’s official notice posted on the Federal Register.
"The waiver would allow time for HUD to offer technical assistance to reduce the administrative burden to recipients for projects in the remote Pacific island territories where complying with the domestic sourcing requirements in (Build America, Buy America Act) presents challenges," the agency said.
Enacted in November 2021, the BABA initiative is a component of the Infrastructure Investment and Jobs Act designed to reinvigorate the U.S. manufacturing industry.
The housing agency, however, pointed out that the U.S. Pacific territories are over 5,000 miles from the mainland U.S., necessitating product shipment by air or sea that entails large shipping costs dictated by unpredictable fuel price fluctuations.
Moreover, the housing department noted that due to distance, materials sourced from the U.S. take a longer time to reach the islands, thus significantly causing delays in construction activity.
“These economies have few local heavy manufacturers and largely rely on established regional supply chains from east Asia, Australia and New Zealand,” the housing department said.
“For these reasons, the agency is concerned that complying with the domestic sourcing requirements in BABA may increase already elevated project time and costs—particularly in the short run—and seeks time to better understand the local manufacturing footprint and the balance of equities for residents of the Pacific island territories,” the agency said.
The housing department said the waiver period will provide the agency the time to gather more information on supply chains, costs and impacts.
"The waiver would also allow time for the agency to offer technical assistance to potential assistance recipients in the remote communities in the Pacific island territories," the department said.
Other federal agencies including the Department of Transportation and the Environmental Protection Agency have proposed a similar waiver for the U.S. Pacific territories and the freely associated states.