If you build or source equipment for government projects, you’ve probably heard of the Build America, Buy America (or BABA) Act by now. Or, at least heard about new material sourcing requirements.
What are these requirements, and how do they impact your projects?
Let's take a look.
What is the Build America, Buy America Act?
In November 2021, the United States government created the Build America, Buy America Act (BABAA) as part of the Infrastructure Investment and Jobs Act. The goal of the act is threefold:
- Create American jobs
- Prioritize American businesses
- Increase American production of raw materials
How does this act incentivize these goals?
By requiring federal projects to use materials and products sourced and made in the United States.
Effective May 14, 2022, federal agencies can only grant funding to companies using compliant products. Compliant products must meet these requirements:
- “The product was manufactured in the United States; and
- The cost of the components of the manufactured product that are mined, produced, or manufactured in the United States is greater than 55 percent of the total cost of all components of the manufactured product.” (Section 70912(6)(B)(ii) of the BABA Act)
If you have a federal infrastructure project (think roads, harbors, airports, utilities, etc.) you must use products that meet these requirements.
What about electrical transformers? Well, transformers and their necessary components are manufactured products. So, if your project has any federal funding, you must use BABA compliant products. This means over 55% of your product material costs must come from American produced materials. While there are limited waiver exceptions, these are not guaranteed and can delay project timelines.
How does the BABA Act affect the transformer market?
So, what does this mean for the transformer market?
Demand is still outpacing supply, and extra project requirements may slow things down. Meaning…if you need BABA compliant units, you will probably have fewer vendors to choose from. The United States imports a lot of transformers from foreign vendors. Approximately $27.3B worth of transformers were imported in 2023. And only 18% of large power class transformers (over 100MVA) were built domestically in 2019.
BABA requirements along with additional pressure from tariffs are increasing the demand for transformers made in the USA.
Maddox Makes BABA Compliant Transformers
Even with more material requirements, your projects don’t have to suffer longer lead times and higher costs.
Maddox builds BABA compliant transformers right here in the USA. We also remanufacture existing BABA compliant units giving them new life in the grid. We stock these transformers in yards across the country, and offer BABA certifications.
If you need transformers that are BABA compliant, fill out the form below.
