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BUY AMERICA (BA) REQUIREMENTS

BUY AMERICA REQUIREMENTS BY RAFIQ DARJI, P.E. CONSTRUCTION AND MATERIALS ENGINEER FHWA – FLORIDA DIVISION. BUY AMERICA (BA) REQUIREMENTS. Who made these requirements? Why this law was created? What materials covered under BA requirements? Buy America (BA) requirements

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BUY AMERICA (BA) REQUIREMENTS

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  1. BUY AMERICAREQUIREMENTSBYRAFIQ DARJI, P.E.CONSTRUCTION AND MATERIALS ENGINEERFHWA – FLORIDA DIVISION

  2. BUY AMERICA (BA) REQUIREMENTS Who made these requirements? Why this law was created? What materials covered under BA requirements? Buy America (BA) requirements How to comply with BA requirements? What happens when BA requirements were not met? BA waiver request and approval process BA Common Q & A for Federal–Aid Program

  3. BUY AMERICA (BA) REQUIREMENTS Who made these requirements? • It is a Law. • U.S. Congress pass the law requiring Secretary of Transportation shall not obligate any funds authorized to be appropriated to carry out the Surface Transportation Assistance Act of 1982 (96 Stat. 2097) or this title and administered by the Department of Transportation, unless steel and iron used in such project are produced in the United States. • Laws • The FHWA's statutory provisions for Buy America are found in Title 23 United States Code, Section 313. • Regulations • Title 23 C.F.R. 635.410provides the FHWA's regulatory policy regarding Buy America.

  4. Why this law was created? Congress created this law to ensure that American made goods and materials have preference over imported products with respect to government procurement and infrastructures projects. This is the only way to ensure taxpayer dollars are used to create and maintain manufacturing jobs in the US.

  5. What materials covered under BA requirements? • Steel and Iron products and application of their coatings.

  6. Buy America (BA) requirements Buy America applies only to the Federal-aid highway construction program. Applies to iron and steel products including application of their coatings. All manufacturing processes must take place domestically. Manufacturing is any process that modifies the chemical content; physical shape or size; or final finish of a product. Manufacturing begins with the initial melting and mixing, and continues through the bending and coating stages. If a domestic product is taken out of the US for any process, it becomes foreign source material. Materials must be permanently installed, not temporary. Temporary materials may be left in place at the contractor's convenience. Minimal Use Criteria - Non-domestic iron and steel materials may be used provided, the cost of such material does not exceed one-tenth of one percent (0.1 percent) of the total contract cost or $2,500, whichever is greater. For purposes of this paragraph, the cost is that shown to be the value of the steel and iron products as they are delivered to the project.

  7. Buy America (BA) requirements (contd.) Under an alternate bid procedure, foreign source materials may be used if the total project bid using foreign source materials is 25% less than the lowest total bid using domestic materials. Project specific waivers may be approved by the Regional Administrator. Buy America is a separate and distinct program from Buy American. Buy American applies to all federal direct procurements; it covers approximately 100 products and has completely different rules. Requirements are found in 41 U.S.C. 10(a)-10(c). State restrictions may include additional products but must allow any US domestic source.

  8. How to comply with BA requirements? Enforcement & Oversight: • State DOTs are responsible for enforcement of Buy America provisions. • Adequate material certification process is acceptable for compliance. • In 1989, AASHTO approved a resolution supporting the use of step-step (i.e. step) certification for BA compliance. • FHWA endorsed step certification process as a method to provide greater awareness of and adherence to BA requirements. The process would also establish accountability and better enable States to take enforcement actions against intentional violators.

  9. How to comply with BA requirements? (contd.) Documentation/Certification: • Step certification creates a paper trail which documents the location of the manufacturing process involved with the production of steel and iron materials. • A step certification is a process under which each handler (supplier, fabricator, manufacturer, processor, etc) of the iron and steel products certifies that their step in the process was domestically performed. • FHWA recommends the following language on the certification or state may establish its own enforcement requirements. “All manufacturing processes for these steel and Iron materials, including the application of coating (unless granted a waiver pursuant to 23 CFR 635.410), have occurred in the United States.”

  10. What happens when BA requirements were not met? Remove the excess foreign iron and steel products and replace with domestic iron and steel products. Otherwise, the entire project will be classified as non-compliance and costs for the entire project will become ineligible.

  11. BA waiver request and approval process • Waiver process is initiated by contracting agency (state DOT/LPA) if it believes waiver is warranted under provisions of 23 CFR 635.410. • State DOT submits waiver request to the Division in advance of need (preferably during preliminary engineering state). • The Division reviews the waiver for sufficiency and forward to Headquarters with recommendations. Waiver request must include: • Federal –aid project number • Project description • Project cost • Waiver item cost • Country of origin for the product (if known at the time of request) • Reason for the waiver • Re-design with alternate domestic product

  12. Steps taken by FHWA during waiver approval process: • Coordinate with appropriate industry associations (NSBA, AISI, and AISC). • Provide summary of findings and justifications for the waiver. • If the Secretary makes a finding that a waiver is warranted; • (A) Publish in Federal Register with written justification • (B) Provide notice of such finding and an opportunity for public comment period not to exceed 60 days • Secretary submits annual report to the appropriations Committee of the Congress by February 1 of each year on any waivers granted under the Buy America requirements.

  13. BA Common Q & A for Federal–Aid Program The Office of Program Administration has been posting questions and answers so that FHWA Division Offices, State DOTs, and the general public will be aware of the FHWA's responses. http://www.fhwa.dot.gov/construction/contracts/buyam_qa.cfm • Q# 1. Where can I find FHWA's Buy America policies? A# 1. The FHWA Buy America statutory provisions are in 23 U.S.C.313 and the regulatory provisions are in 23 CFR 635.410. For other policy and guidance links, see the Construction Program Guide • Q# 2. Can a waiver be granted for the Buy America requirements? A# 2. Yes. Under 23 CFR 635.410 (c)(1)(i), a waiver of Buy America requirements may be granted on a project-by-project basis if: • The application of Buy America provisions would be inconsistent with the public interest, or • Steel and iron materials/products are not produced in the United States in sufficient and reasonably available quantities which are of a satisfactory quality. Also, FHWA regulations also waive the applicability of Buy America when alternate bidding procedures are used and lowest overall total bid based on using domestic steel is 25% more than the lowest overall total bid based on using foreign steel. • Q# 8. How often does FHWA approve waivers based on public interest? A# 8. Not very often. An example of when a public interest waiver may be considered could be during an emergency situation. Another example may be where a certain steel or iron product is to be evaluated on an experimental basis.

  14. Q# 12. Do Buy America requirements apply to manufactured products? A# 12.No.The FHWA's 1983 final Buy America regulations (see http://www.fhwa.dot.gov/programadmin/contracts/112583.cfm) waive the application of Buy America to manufactured products other than steel and iron manufactured products. • Q# 13. Does Buy America apply to recycled steel? A# 13. No. Although raw materials used in the steel manufacturing process may be imported, all manufacturing processes to produce steel products must occur domestically, including the addition of additives and the application of coatings. However, raw materials such as iron ore, limestone and waste products are not covered. The FHWA's November 25, 2983 final rule defined waste products to include scrap as steel that is no longer useful in its present form (e.g. steel from old automobiles, machinery, pipe, railroad tracks, etc.). • Q# 23. Has FHWA denied any waiver request? A# 23. Yes. If FHWA discovers a domestic product during the review of waiver request, the request will be denied. See http://www.fhwa.dot.gov/construction/contracts/waivers.cfm for Buy America waiver requests denied. • Q# 26. Is a waiver necessary for an item that would otherwise be non-participating? A# 26. Yes. A Buy America waiver request is necessary for all foreign iron and steel products permanently incorporated into a Federal-aid project even if there is no Federal funding involved in the purchase of the iron and steel products. • Q# 30. When a domestic steel product leaves the country for non-domestic fabrication, how should I calculate the value of non-domestic content? A# 30. Fabrication is a manufacturing process that must take place in the United States. If a domestic steel product leaves the country for non-domestic fabrication, the entire steel product becomes foreign steel.

  15. Q# 36. Do Buy America provisions apply to Federal-aid construction projects that are not considered to be highway construction? A# 36. Yes. All iron or steel products that are permanently incorporated in a Title 23-funded project are covered by Buy America requirements. The coverage for Title 23 eligible projects includes projects that may not have been historically considered to be highway construction (e.g. harbor cranes, bicycle racks, railroad stations, trains, motor vehicles, etc). • Q# 37. Does Buy America apply to iron and steel products donated by State DOT, Public Local Agency, or Contractor for construction of Federal-aid projects? A# 37. Yes. Buy America applies to all donated iron and steel products • Q# 42. Is welding process covered by Buy America requirements? A# 42. Yes. All welding process must take place domestically since the welding rod itself is typically an iron/steel product and the welding process substantially alters the rod. • Q# 44. Do Buy America requirements apply to a utility project being completed by the utility company under State/Utility company agreement and is re-reimbursable with Federal funds? A# 44. Yes. Note that application of Buy America is triggered by the obligation of Federal funds. If $1.00 of Federal funds is used in the utility relocation project, Buy America requirements apply. See also Utilities/Buy America Questions and Answers

  16. Q# 45. Does Buy America apply to a stand-alone utility project independently let by state DOT with no Federal funds involved, but to accommodate future Federal-aid project? A# 45. No. Buy America does not apply to a stand-alone project funded with 100% state funds. However, State DOTs may establish standard contract provisions requiring the use of domestic materials or products to the same or greater extent than the FHWA Buy America requirements. • Q# 46. Does Buy America apply to domestic iron/steel products purchased by contractor and shipped overseas for use in physical assembly (i.e. reinforcement bars for formation of concrete pipes, and shapes)? A# 46. No. Buy America does not apply to iron/steel products shipped overseas strictly for physical assembly. Note that if any of the manufacturing process (bending, extruding, drilling, coating etc.) occurs on the domestic iron/steel product while overseas, the resulting product becomes foreign and does not conform with Buy America requirements. • Q# 47. In using the alternate bid procedure mentioned in 23 CFR 635.410(b)(3), is the comparison for the 25% differential based on the value of the total iron/steel products in each bid? A# 47. No. The comparison must be between the total lowest bid using domestic iron/steel product and the total lowest bid using foreign iron/steel product. Note that if the state elects to use alternate bid provisions, all bidders must be required to submit a bid based on furnishing domestic iron/steel. The contract must be awarded to bidder who submits the lowest total bid based on furnishing domestic steel, unless this bid is more than 25% higher than the total bid based on foreign steel or iron products.

  17. Buy America Issues to Consider for Utility Contracts and Agreements The following guidance addresses the applicability of the Buy America requirements to contracts or agreements involving utility work using Federal-aid highway program (FAHP) funding: • Do the Buy America requirements apply to contracts or agreements for utility work using FAHP funding? Yes, any contract involving utility work that uses any amount of FAHP funding must comply with the Buy America requirements (as specified in 23 U.S.C. 313 and 23 CFR 635.410). For example, if the utility work is accomplished through a standalone contract or agreement and uses FAHP funding, the Buy America requirements apply. Additional policy and guidance information is available in the FHWA Construction Program Guide at: http://www.fhwa.dot.gov/construction/cqit/buyam.cfm • Do the Buy America requirements apply to standalone utility work or contracts with no Federal funds involved? No. If the utility work is accomplished through a contract or agreement separate from a highway improvement contract and uses only State or local funding, the Buy America requirements do not apply. However, utility work that is accomplished through contracts or agreements that do not comply with the Buy America requirements (as specified in 23 U.S.C. 313 and 23 CFR 635.410) cannot be used to meet the non-Federal share of costs for subsequent phases (e.g., construction) of a project using FAHP funding. More information on non-Federal match requirements may be found at: http://www.fhwa.dot.gov/legsregs/directives/policy/memonfmr20091229.htm.

  18. Can foreign steel be allowed in utility work using FAHP funding if the foreign items are made non-participating? No. All materials permanently incorporated into a project using FAHP funding must meet the Buy America requirements (as specified in 23 U.S.C. 313 and 23 CFR 635.410). For example, it is not acceptable to allow foreign steel as a permanent component of an FAHP project by using State or local funds for the non-conforming items. It is generally not acceptable for non- conforming materials to be donated to a project using FAHP funding. Additional information on Buy America requirements is available in the FHWA Construction Program Guide at: http://www.fhwa.dot.gov/construction/cqit/buyam.cfm • What Buy America and utility issues should be considered when developing agreements to relocate utilities that utilize FAHP funding? Utility contracts or agreements for utility work that utilize FAHP funding must include the provisions to meet the Buy America requirements (as specified in 23 U.S.C. 313 and 23 CFR 635.410). The contract or agreement shall require the contractor to provide a definitive statement about the origin of all products, permanently incorporated into the project, covered under the Buy America requirements. Additional information on the Buy America requirements to include in utility contracts and agreements is available in the FHWA Construction Program Guide at: http://www.fhwa.dot.gov/construction/cqit/buyam.cfm, and in the FHWA Contract Administration Core Curriculum Participant’s Manual and Reference Guide 2006 at: http://www.fhwa.dot.gov/programadmin/contracts/core02.cfm#s2B01.

  19. Do the Buy America requirements take precedence over the requirements pertaining to the relocation or accommodation of utility facilities? Yes, based on the Buy America requirements (as specified in 23 U.S.C. 313) being codified in Federal law, these requirements take precedence over regulations pertaining to the accommodation or relocation of utility facilities (as specified in 23 CFR 645) on contracts or agreements involving FAHP funding. • For example, the Buy America requirements take precedence over the regulations which allow utilities to furnish materials from company stock (as specified in 23 CFR 645.117(e)). This provision allows the utility owner to furnish materials from company stock only in the case where the supplied materials meet the Buy America requirements. Company stock materials that do not meet Buy America requirements may not be permanently incorporated into an FAHP funded project. • Another example where the Buy America requirements take precedence over utility requirements is the statement 'The utility shall not be required to change its existing standards for materials used in permanent changes to its facilities' (as specified in 23 CFR 645.117(e)). Once again, Buy America requirements take precedence over this utility provision. Therefore, a utility is not required to change its existing standards for materials as long as the Buy America requirements are met.

  20. Additional valuable information can be obtained at the following web links; H ://www.fhwa.dot.gov/construction/contracts/waivers.cfm Construction Program Guide: Buy America Laws and Regulations: • http://www.fhwa.dot.gov/construction/cqit/buyam.cfm Buy America Waiver information: • http://www.fhwa.dot.gov/construction/contracts/waivers.cfm Buy America Q and A: • http://www.fhwa.dot.gov/construction/contracts/buyam_qa.cfm

  21. ThanksAny Additional questions? Rafiq Darji, P.E. FHWA – Florida Division rafiq.darji@dot.gov 850-553-2242

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