As infrastructure spending ramps up under new federal funding initiatives, accountants may find themselves navigating unfamiliar, but increasingly vital, regulatory terrain. Foremost among these issues is the Build America, Buy America Act (BABA), an extensive new mandate included within the 2021 Infrastructure and Jobs Act (IIJA).1
At its core, BABA requires that federally funded infrastructure projects use iron, steel, manufactured goods, and construction materials produced in the United States. Although the primary intent of BABA is to support American industry, there are also significant implications for accounting professionals that should not be overlooked.
What Is BABA and Why Does It Matter?
As a means to boost domestic manufacturing and secure American supply chains, BABA applies to a wide range of public infrastructure projects, including but not limited to roads, bridges, water systems, electrical transmission facilities, and even broadband networks.2 Although some limited exceptions exist, federal agencies that administer funding for these projects must now ensure that the materials used are sourced within the United Sates.
The implementation of BABA also aligns with the broader federal strategy to strengthen economic resilience and create more jobs for American workers. According to the Office of Management and Budget (OMB), the law “maximizes the use of goods, products, and materials produced in the United States” while also helping agencies meet the legislated requirements through structured guidance.3
The Impact on Accounting: Why BABA Isn’t Just for Contractors
While BABA may sound like a procurement issue, accountants play a critical role in making compliance possible as funding eligibility is directly tied to source tracking and reporting. For grant recipients, failure to demonstrate that materials were sourced within the United States can jeopardize reimbursements or disqualify entire projects.
In practice, accountants may be called on to validate vendor certifications, allocate costs based on material origin, and work in tandem with procurement teams to ensure proper documentation. An increased need to coordinate with legal and compliance teams to establish internal controls to meet BABA criteria may also exist, especially for organizations that receive multiple federal grants or subawards.
Compliance in Practice: Four Key Focus Areas for Accountants
For accounting professionals working on BABA-eligible projects, the following areas are of particular importance:
- Documentation: Firms must maintain clear, consistent records showing that all relevant materials meet domestic origin requirements. This often includes keeping supplier affidavits and certificates of compliance on file.
- Cost Allocation: Expenses tied to noncompliant materials may not be eligible for reimbursement. Accountants need to distinguish between eligible and ineligible costs, sometimes at the line-item level.
- Vendor Evaluation: Understanding supplier capabilities and verifying their compliance posture is now part of the accounting risk landscape. Accountants may be asked to assess vendors’ documentation and supply chain transparency.
- Audit preparedness: Agencies such as the Department of Transportation and Environmental Protection Agency are stepping up oversight. Internal audits and readiness protocols should be built into regular financial reporting cycles.
Through careful attention to each of these operational priorities, accountants can help ensure financial accuracy while also influencing future strategic funding decisions.
The Expanding Role of Accountants in Federal Compliance
As legislation like BABA shows, the accountant’s job is no longer limited to reporting the numbers: it’s about knowing what those numbers represent and how they align with evolving regulatory expectations. For firms receiving federal infrastructure funds, BABA compliance isn’t a side concern. It’s foundational.
It’s vital to have a comprehensive Accountants Professional Liability policy that will defend you should claims arise. Pearl Insurance has multiple experienced professional liability specialists who are ready to help you. If you have questions about professional liability insurance or the claims process, schedule a time to talk to our experts.
Pearl Insurance is committed to helping you manage your risk. Our carrier, AXA XL, rated A+ (Superior) on AM Best, has been partnering with Pearl for 20 years, providing you with the best professional liability protection.
Ready to get a quote for your Accountants Professional Liability insurance? Give our experts a call at (800) 447-4982 or click on the buttons below to fill out a quote form or schedule time to talk to one of our experts.
Want to know more? Find out for yourself.
(800) 447-4982 | pearlinsurance.com/professional-liability-insurance/
1“Build America Buy America Act.” U.S. Department of Commerce, n.d.
2“Build America, Buy America (BABA) Overview.” U.S. Environmental Protection Agency, March 2025.
3“Initial Implementation Guidance on Application of Buy America Preference in Federal Financial Assistance Programs for Infrastructure.” U.S. Office of Management and Budget, April 2022.
