How the Build America, Buy America Act (BABAA) Influences the IoT Business

The Build America, Buy America Act (BABAA), a key component of the Infrastructure Investment and Jobs Act, is shaping the landscape for businesses pursuing projects funded by U.S. federal sources. Designed to bolster domestic manufacturing, BABAA has far-reaching implications, extending beyond construction to sectors like IoT hardware suppliers, making compliance essential for participation in these initiatives. We see many of 1NCE US customers analyzing the impact of the Act on their IoT projects. Enclosed are some of the most relevant and fundamental questions we collected so far.

1. What is the Build America, Buy America Act (BABAA)?

BABAA is part of a broader push to strengthen domestic supply chains and ensure infrastructure projects contribute to American industry growth. The Act specifies that all iron, steel, manufactured products, and construction materials used in federally funded infrastructure projects must be produced within the US territory. Specifically, at least 55% of the cost of the product components must have the US origin.

2. Which industries does BABAA influence?

The Build America, Buy America (BABA) Act directly impacts businesses involved in federal infrastructure projects, including those in broadband, telecommunications, manufacturing, and IoT sectors. For IoT businesses with the Act’s domestic manufacturing requirements is needed for participation in projects funded by federal programs like the Broadband Equity, Access, and Deployment (BEAD) initiative. This goes beyond just IoT hardware suppliers—it affects IoT service providers, connectivity enablers, and integrators who support infrastructure projects. By ensuring that products, software, and services meet BABA standards, IoT businesses can position themselves as reliable partners in federally funded initiatives. Understanding these requirements allows 1NCE customers to align their offerings with compliance expectations, paving the way for smooth project execution and sustained growth within the US market.

3. Where Does BABAA influence my IoT Project?

BABAA Compliance requires determining whether the U.S.-origin components exceed 55% of the total component cost.

This includes:

Purchased Components: Acquisition and transportation costs.
Manufacturer-Made Components: Production and overhead costs (excluding profit).

4. Are there any exceptions to BABAA requirements?

Yes, BABAA allows waivers in cases where:

Domestic production is unavailable in sufficient quantity or quality.

If specific materials, components, or products required for an infrastructure project are not produced in the U.S. in the necessary amounts or do not meet quality standards, a waiver may be granted. For example, if certain high-tech sensors needed for a project cannot be sourced domestically, this exception applies.

U.S.-made products increase project costs by over 25%.

This applies when using U.S.-manufactured components significantly raises the total cost of the project—by more than 25% compared to alternatives. For example, if sourcing all U.S.-made components for a smart grid system makes the project prohibitively expensive, this criterion allows for consideration of non-U.S. components.

Application of the preference is inconsistent with public interest

This exception is broader and applies when adhering strictly to BABAA requirements would conflict with the overall goals or needs of the project. For instance, if strict compliance would delay a critical infrastructure project that addresses public safety or national security, a waiver could be issued in the interest of completing the project quickly and effectively.

5. Does BABAA affect 1NCE?

BABAA mandates that at least 55% of the cost of components used in manufactured products must originate from the United States. At the same time, the cost for 1NCE IoT SIM cards, not produced in the US, typically represents only a small fraction of the total cost of an IoT device. Customers will need to evaluate how the IoT SIM cards, along with other device components, fit into the overall cost structure and meet the domestic content requirements.

6. What does 1NCE offer to support compliance?

1NCE can provide detailed information about the cost and origin of our products, enabling customers to calculate and declare compliance ratios accurately. This transparency helps hardware manufacturers and service providers incorporate 1NCE into their IoT solutions while remaining compliant with BABAA,. To support our customers in making their products BABA compliant, 1NCE can provide a clear breakdown of products and services accordingly. In an example scenario, assuming the use of a 1NCE SIM Card Business and considering software and connectivity services a possible breakdown would look like:

A 1NCE IoT SIM Card Business costs $1 (non-U.S.-made).
Software and connectivity services cost $10, provided globally, including the U.S.

This will help hardware manufacturers in the process of fulfilling the acts requirements.

7. How can 1NCE customers navigate BABAA requirements?

Navigating BABAA compliance requires careful planning, especially for the solutions in federally funded projects. Here’s what we recommend doing:

Evaluate the cost composition of the IoT project/hardware.
Confirm how 1NCE products & services integrate into their broader compliance strategies.
Consult BABAA guidance documents and legal experts to address specific project needs.

8. Where can I find more information?

Visit the following official resources for comprehensive BABAA guidelines:

To sum up, 1NCE will support its customers by providing full transparency in cost composition as required by the Act.

This post provides guidance to help our customers understand the implications of the BABAA in their daily business operations. It is intended for informational purposes only and does not constitute legal advice. For specific legal guidance, please consult a qualified legal professional.