Buy America and DBE: how federal money sets the rules on US transport bids

On a US highway, transit or airport contract, the federal rules on what a supplier may install and whether Disadvantaged Business Enterprise (DBE) subcontracting goals apply come with the federal money in the project. On highway work, even two bids for similar work in the same state can face different tests, depending on when each project was obligated. As of 28 October 2026, federal rules bar DBE contract goals wherever the certifying programme that covers the buyer has not finished reevaluating its DBE firms.^{1, 17}

An advertisement does not always say where the money comes from. The Port Authority of New York and New Jersey’s advertisement for rehabilitating Runway 13-31 at LaGuardia Airport, work that includes replacing lighting, guidance signage and sensor systems, had bids due on 24 September 2026. It said that the project may be federally funded and left the federal provisions to the solicitation and the resulting contract.² On federal-aid highway projects the reach is wider still. Once one contract in a project is funded under title 23 of the US Code, Buy America applies to every contract in the project that is eligible for that assistance and within the scope of its environmental review, whatever pays for it.³ A package paid for entirely with state or local money can therefore carry the federal domestic-content test because another contract in the same project carries title 23 money.

Federal-aid highway funds under title 23 may be obligated for a project only if the steel, iron and manufactured products used in it are produced in the United States.³ For iron and steel, the Federal Highway Administration (FHWA) requires every manufacturing process, coating included, to take place in the United States. An item is classed as it is brought to the work site: one whose iron and steel content costs more than 50% of all its components is an iron or steel product under that rule, not a manufactured product.⁴

Manufactured products are the recent change: FHWA’s rule of 14 January 2025 ended a general waiver for them that had been in place since 1983 and stayed in force until 1 October 2025.⁵ For projects obligated from 1 October 2025, a manufactured product must be manufactured in the United States. For projects obligated from 1 October 2026, the cost of its components mined, produced or manufactured in the United States must also be more than 55% of the cost of all its components. In that test, a bought-in component counts at its acquisition cost, with transport to where it is incorporated into the product and any duty, and a component the manufacturer makes itself counts at its cost plus allocable overhead, without profit.⁴ On design-build and other alternative delivery contracts, the obligation of the construction phase decides, even where preconstruction work was funded earlier.⁵

Some steel inside manufactured products is held to the iron and steel rule as well. That covers the iron or steel parts of precast concrete products, and the cabinets of intelligent transportation systems (ITS) and other electronic hardware in the highway right of way, where they are wholly or mostly iron or steel. Their cost still counts in the product’s 55% test.⁴

A second statute fills the gaps. The Build America, Buy America Act (BABA) makes every federal agency apply a Buy America preference to infrastructure programmes for each category of product not already covered, so FHWA’s guidance applies it to construction materials, which FHWA’s own statute does not cover.⁶ The government-wide rule at 2 CFR part 184 lists those materials: non-ferrous metals, plastic and polymer-based products, glass, fibre optic cable, optical fibre, lumber, engineered wood and drywall. Each counts as produced in the United States only if all its manufacturing processes took place there. The preference must flow down into every subaward, contract and purchase order under the federal award.⁷

Transit grants carry their own statute: Federal Transit Administration (FTA) funds may be obligated only if the steel, iron and manufactured goods used in the project are produced in the United States.⁸ Under FTA’s regulation, steel and iron, including structural steel, running rail and contact rail, need every manufacturing process in the United States except the metallurgical refinement of steel additives. A manufactured product needs all its manufacturing processes there and all its components of US origin; a component counts as US if it is manufactured in the United States, wherever its subcomponents come from.⁹ Rolling stock, including train control, communication and traction power equipment, has its own route: the general rule may be waived where US components and subcomponents make up more than 70% of the cost of all components and final assembly takes place in the United States.⁸

Airport grants carry their own statute too: Airport Improvement Program (AIP) funds may be used only if the steel and manufactured goods in the project are produced in the United States. The rule may be waived for a facility or equipment whose US components and subcomponents make up more than 60% of the cost of all components, with final assembly in the United States; the labour of final assembly does not count as component cost.¹⁰ Grant recipients certify that the steel and manufactured products on any part of an AIP-funded project are produced in the United States and of 100% US materials; equipment on the FAA’s Buy American Conformance List of nationwide waivers needs no request of its own.¹¹ According to its fact sheet (page last updated 28 July 2023), the FAA applies the statute together with BABA, so construction materials are covered too.¹²

Read side by side, the percentages do different jobs. On federal-aid highway projects and under BABA, a US share of more than 55% of component cost is part of what ‘produced in the United States’ means. For FTA rolling stock (70%) and FAA facilities and equipment (60%), the percentage is a ground on which the agency may waive a stricter general rule.

All four regimes allow waivers in the public interest and for products not produced in the United States in sufficient and reasonably available quantities or of satisfactory quality. All four also have a cost test: domestic material raising the cost of the overall project, for highways the overall project contract, by more than 25%.^{3, 7, 8, 10} FTA’s regulation applies its test to the contract between the grantee and its supplier of the item. It grants the waiver if the lowest responsive and responsible bid offering a foreign item, multiplied by 1.25, is less than the lowest such bid offering a US item.⁹ Highway buyers can settle the iron and steel question inside the bid too. Under alternate bid provisions every bidder prices domestic iron and steel, and the lowest domestic bid wins unless it is more than 25% above the lowest bid based on foreign iron and steel.⁴ In both, the 25% margin is measured between the bids themselves.

Under BABA, recipients request waivers in writing, and a waiver becomes final only after the agency has published it with its reasons for at least 15 calendar days of public comment.⁷ A highway waiver needs at least 15 days’ public notice before it is issued, and a waiver under the airport statute must be posted with its justification for comment at least 10 days before it takes effect.^{3, 10} FTA presumes a non-availability waiver justified if no responsive and responsible bid offers a US-produced item. After award, it may grant one where a bidder certified in good faith but the item can no longer be obtained domestically, for reasons of commercial impossibility or impracticability.⁹

Small amounts and small projects have their own waiver, which the Department of Transportation issued under BABA and under the highway, transit and airport statutes alike.¹³ On FHWA projects its de minimis part covers manufactured products and construction materials only; iron and steel stay under FHWA’s own minimal-use allowance, including the steel in precast concrete and in ITS cabinets.¹⁴ None of this caps what a state may demand: it may impose stricter domestic-content requirements on highway and transit projects it carries out with federal assistance.^{3, 8}

Federal-aid highway construction is let by competitive bidding, free, open and adequately advertised, unless the state department of transportation shows FHWA that another method is more cost effective or that an emergency exists. Design-build, construction manager/general contractor (CM/GC) and indefinite delivery/indefinite quantity (ID/IQ) contracts need no cost justification.¹⁵

The state may not use bonding, licensing or qualification rules to keep out a responsible contractor from inside or outside the state. No licence can be required before a bid is submitted or considered, though one may be required at or after award, and prequalification can be a condition for bidding or for award only if the bidding period leaves time to obtain the rating. The advertisement and plans must be available at least 3 weeks before bid opening, unless a shorter period is approved in special cases. Bidding must be open to qualified bidders regardless of national, state or local boundaries, and where a state provision would block a bid, the notice has to say that it does not apply. On a conventionally let contract, what remains for a firm from another state or another country is the qualification itself: a prequalification rating where the state requires one, and a licence at or after award.¹⁵

Design-build, CM/GC and ID/IQ procurements work differently: the state may use its own bonding, licensing, qualification or prequalification procedures at any phase, though licensing may not bar an otherwise responsive proposal from consideration, and can make state or local licensing a condition of award. No in-state or local preference may enter at any stage, and an office’s location cannot be a selection criterion, though a successful design-builder can be required to open a local office after award.¹⁵

Engineering and design consultants on federal-aid highway projects are chosen on qualifications under the Brooks Act: price may not be used to evaluate, rank or select them, and cost proposals are submitted concealed and separately. Out-of-state consultants must get a fair opportunity, though a licence in the state can be a minimum qualification, and a local presence and certified DBE subconsultants may together carry no more than 10% of the evaluation.¹⁶

How state departments of transportation run prequalification in practice is the subject of our guide to how road authorities buy works.

The DBE rule binds recipients of federal highway, transit and airport funds, each of which sets an overall DBE goal, and it does not reach a contract with no Department of Transportation (DOT) money in it.¹

An interim final rule of 3 October 2025, effective the same day, removed the race- and sex-based presumptions of disadvantage and required every firm, including those already certified, to prove disadvantage individually. It also required the Unified Certification Programs (UCPs) that certify DBEs to reevaluate every certified firm.^{1, 17, 18} Until the UCP covering a recipient finishes, the recipient may not set contract goals or count DBE participation towards its goals.^{1, 17} The final rule of 25 September 2026, also effective on publication, follows the interim rule with few modifications; the Department said it saw no alternative to pausing the goal system until only firms that meet the new requirements can take part.¹⁸ It set a deadline: each UCP must finish by 24 December 2026, with a one-time extension of up to 90 days if requested in advance and granted for good cause. A UCP that finishes must promptly email the Department and, within three business days, send a copy to every recipient of DOT funding in its jurisdiction.^{1, 18}

As of 28 October 2026, the electronic Code of Federal Regulations shows both prohibitions in force.^{1, 17} For each buyer the bar lifts when its UCP finishes, and the UCP’s copy of its completion notice is what tells the buyer so. Commenters on the interim rule told the Department that the pause had led prime contractors to drop DBE subcontractors from their teams.¹⁸ Once that bar lifts, a contract that carries a goal is awarded only to a bidder that documents enough DBE participation, or adequate good-faith efforts to reach it. A team formed without DBE firms during the pause is measured against the goal again on the first contract that sets one.

Source: the statutes, regulations, rules and guidance cited below, in the versions the source list names.^{3, 4, 6, 7, 8, 9, 10, 11, 12, 13, 14}

ListingMinds, “Buy America and DBE: how federal money sets the rules on US transport bids”, 3 November 2026. https://www.listingminds.com/transport/guides/buy-america-dbe-federal-aid