Buy American Hire American

Transcription

1

2 Buy American Hire American 2019 Update Brian Waagner Hal J. Perloff

3 Buy American Hire American-2019 Buy American Act (BAA) Government Contracts Buy America Federal Transit Administration (FTA) Funded Projects Compliance Strategies Recent developments EO and BuyAmerican.gov Act

4 Buy American Act Supplies (41 U.S.C. 8302, FAR to -8 Applies to unmanufactured articles, materials, and supplies... acquired for public use.... Preference for: End products that are mined or produced in the USA; or End products that are manufactured in the USA and: at least 50% of the component costs are for products mined, produced, or manufactured in USA; or the end product is a commercially available off-the-shelf (COTS) item ( bulk cargo is not a COTS under this provision)

5 Buy American Act Construction materials (41 U.S.C. 8303, FAR to -12) Applicable to any contract for construction, alteration, or repair of any public building or public work in [the USA].... Preference for use of domestic construction materials Unmanufactured articles, materials, and supplies that have been mined or produced in US Construction materials that are manufactured in the USA, and: at least 50% components cost mined, produced, or manufactured in the United States; or end product is a commercially available off-the-shelf (COTS) item; or emergency life safety systems

6 Buy American Act Exceptions The cost of domestic construction material is unreasonable (i.e. 6% higher) Applying BAA would be impracticable or inconsistent with the public interest Domestic materials are not available in sufficient quantities and satisfactory quality Information technology that is a commercial item

7 Buy American Act Exceptions

8 Trade Agreements Act Trade Agreements treat products and materials from certain countries as equivalent to domestic for BAA purposes Different trade agreements have different dollar thresholds No Procurement Agreements with China or Malaysia

9 Trade Agreements Act Free Trade Agreement Countries: Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Korea (Republic of), Mexico, Morocco, Nicaragua, Oman, Panama, Peru, & Singapore World Trade Organization GPA Countries: Armenia, Aruba, Austria, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea (Republic of), Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Singapore, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Taiwan, and the United Kingdom

10 Trade Agreements Act cont. Least Developed Countries: Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, Comoros, Democratic Republic of Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea- Bissau, Haiti, Kiribati, Laos, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Nepal, Niger, Rwanda, Samoa, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, Tanzania, Timor-Leste, Togo, Tuvalu, Uganda, Vanuatu, Yemen, and Zambia Caribbean Basin Countries: Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize, Bonaire, British Virgin Islands, Curacao, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, Saba, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Sint Eustatius, Sint Maarten, and Trinidad and Tobago

11 FTA Buy America Federal Public Transportation Law 49 U.S.C. 5323(j) DOT Regulations 49 C.F.R. Part 661 Guidance FTA Buy America Website Regulations, Waiver Letters, Best Practices

12 FTA Buy America generally 49 CFR General Requirements (a) no funds may be obligated by FTA for a grantee project unless all iron, steel, and manufactured products used in the project are produced in [US]. (b) steel and iron manufacturing processes must take place in [US], except metallurgical processes involving refinement of steel additives.

13 FTA Buy America generally 49 CFR General Requirements (c) steel and iron requirements apply to all construction materials made primarily of steel or iron and used in infrastructure projects (ex. transit or maintenance facilities, rail lines, & bridges) E.g. structural steel, beams, columns, running rail, contact rail Does not apply to steel or iron used as components or subcomponents of manufactured products or rolling stock

14 FTA Buy America generally 49 CFR General Requirement (d) Manufactured product All manufacturing processes take place in the US All components must be of US origin A component is considered US origin if manufactured in the US, regardless of subcomponents origins

15 Buy America Manufacturing Manufacturing is more than mere assembly 49 CFR 661.3, Definitions: Manufacturing process means the application of processes to alter the form or function of materials or of elements of the product in a manner adding value and transforming those materials or elements so that they represent a new end product functionally different from that which would result from mere assembly of the elements or materials.

16 Buy America Manufacturing End Product Definition 49 C.F.R [A]ny vehicle, structure, product, article, material, supply, or system, which directly incorporates constituent components at the final assembly location, that is acquired for public use under a federally-funded third-party contract, and which is ready to provide its intended end function or use without any further manufacturing or assembly change(s).

17 Buy America Manufacturing 49 CFR 661.3, Appendix A Manufactured end products: Infrastructure projects not made primarily of steel or iron, including structures (terminals, depots, garages, and bus shelters), ties and ballast; contact rail not made primarily of steel or iron; fare collection systems; computers; information systems; security systems; data processing systems; and mobile lifts, hoists, and elevators.

18 Elevators & Escalators FTA 12/7/2010 letter to SF Muni FTA considers elevators and escalators to be COMPONENTS of an end product (station) Manufacturing processes for components must occur in US Escalator drive & reversing stations = subcomponents

19 Elevators & Escalators FTA 4/9/12 letter to Kone Installing escalator at project manufacturing If no manufacturing processes occur at the component level then those processes must occur in the US at the subcomponent level Escalator manufactured in China and then disassembled Installation at the project = mere assembly

20 Elevators & Escalators FTA 8/23/2013 letter to Otis Elevator Installation, integration, interconnection, and testing of escalator subcomponents = manufacturing Extensive activities off-site at Florence, SC plant

21 Elevators & Escalators FTA 1/8/2015 letter to Kone Elevator door frames and guide rails are subcomponents Elevator door frames and guide rails are not a construction material made primarily of steel or iron Not structural or loadbearing element of a building

22 FTA Certification Requirements For any contract for steel or manufactured products Bidders / Offerors must submit a signed certificate that they either comply they do not comply, but they qualify for a waiver of the requirements

23 Buy America Waivers Four statutory waivers (48 USC 5323(j)(2)) Public interest Non-availability Rolling stock Price-differential

24 Public Interest Waiver Written detailed justification Published in the Federal Register

25 Non-availability Waiver Goods or materials not produced in US in sufficient and reasonably available quantities and of a satisfactory quality No offers in response to a solicitation Appendix A to 49 CFR FAR list of unavailable items applies here General waiver for microprocessors, computers, software used for processing or storing data Small purchases below the simplified acquisition threshold - $150,000 (FAR 2.101)

26 Price Differential Waiver Use of domestic material would increase the cost of the overall project by more than 25% Look at OVERALL PROJECT COST Not the cost of the item Difficult to meet

27 Obtaining a Waiver Offeror seeks through Grantee Grantee submits to FTA with detailed facts & justification FTA decides FTA publishes waivers and decision letters at

28 Applies to Buy American Act 41 USC 8303; FTA Buy America 49 USC 5253(j); Obtaining a Waiver 48 CFR CFR 661 Basic requirement Component test Construction, alteration, or repair of public buildings or public works; does not apply to maintenance Public transportation projects funded by FTA (metro stations, bus stations, rail lines, bridges, FHWA Buy America 23 USC 313; 23 CFR Interstate highways and bridges, if at least one project contract is funded by FHWA FAA Buy American 49 USC 50101; 49 CFR 501 FAA-funded construction such as airports Offeror contracts seeks through etc.) Grantee Articles, materials, supplies Steel, iron, and For steel or iron materials, must be mined, produced, manufactured goods used all manufacturing processes, Grantee or manufactured submits in US in to the project FTA must with be detailed including application facts of a & justification produced in US coating, must occur in US FTA Except decides for COTS items; Components must be Steel or iron materials must 50% of cost of components manufactured in US; except be manufactured in US, must be US-sourced for rolling stock, no origin regardless of status as an FTA publishes waivers requirement for and decision end product, letters component, at or subcomponents subcomponent Cost differential for domestic materials Trade Agreements? Unreasonable costs 6% for construction materials For construction contracts over specified thresholds, materials substantially transformed in designated countries can be used Requirement may be waived if domestic goods increase cost of entire project by 25% Requirement may be waived if domestic goods increase cost of entire project by 25% Steel and manufactured goods used in the project must be produced in the US wholly produced in America and are of 100% US materials; FAA may waive if 60% of cost of components and subcomponents are of US origin Requirement may be waived if domestic goods increase cost of entire project by 25% Not applicable Not applicable Not applicable

29 Non-Compliance If no fraud suspected, then: Request corrective action from contractor Consider removal and replacement Contractual Adjustment Possible termination, suspension or debarment If fraud suspected or serious noncompliance: Terminate for default Report to Agency Suspension and Debarment Official Refer to appropriate agency officials for investigation

30 Compliance Strategies Know the source of the requirement Seek clarifications / waivers early Before submission of offers! Establish a posture of compliance Inform Bind Administer Enforce

31 Recent Developments E.O Strengthening Buy-American Preferences for Infrastructure Projects (Jan. 31, 2019) United States Mexico Canada Agreement (Nov. 30, 2018) (NAFTA 2.0) E.O Buy American and Hire American (Apr. 18, 2017) Legislative changes under consideration The infrastructure plan?

32 Buy American and Hire American Executive Order No , signed April 18, 2017 Scrupulously monitor, enforce and comply with existing Buy American laws Agency heads directed to study compliance and develop new policies OMB and Dep t of Commerce to report to the President

33 Strengthening Buy-American Preferences for Infrastructure Projects Executive Order No , signed Jan. 31, 2019 Applies to federally-funded infrastructure construction, including buildings, internet infrastructure, energy projects that are not covered by a comparable domestic preference Not mandatory. By May 1, 2019, agencies are to encourage recipients of federal funds to maximize use of domestic products By May 31, agencies are to report to President on tools, techniques, terms and conditions that have been or could be used to maximize use of domestic products.

34 BuyAmerican.gov Act Introduced January 9, 2018 (S. 2284) Bipartisan bill (Murphy, Portman, Graham, Brown) Limit availability of public interest waivers Agency head decision Requirement for detailed justification for use of foreign products Certificate of good-faith effort to solicit bids for domestic items No approval of waiver without making proposed waiver publicly available for comment

35 Buy America 2.0 Act Introduced March 8, 2018 (H.R. 5137) Brendan Boyle (D. Pa 13) & 21 D cosponsors Increases Buy America percentage thresholds for rolling stock and aviation facilities Public transportation (49 USC 5323(j)) Aviation facilities (49 USC 50101) Extension of Buy America requirements for construction of public water systems (42 USC 300j-12)

36 USMCA (NAFTA 2.0) United States Mexico Canada Agreement (USMCA) Increases minimum wage requirements for non-us workers 30% of labor must be done by workers earning $16/hour. Increases domestic content requirements for automobiles to 75%. Increased safety requirements for Mexican trucks. No change in substantial transformation standard in Trade Agreements Act. Canada removed from Chapter 13 on Government Procurement; Mexico remains. Executed November 30, 2018, but won t be effective unless ratified by Congress.

37 Buy American Hire American 2019 Brian Waagner Hal J. Perloff