Buy American Waivers
David Chin
&
Katie Connors
EPA’s Stimulus Investments
(Nationally)
Dollars in Thousands
$200,000.0
$600,000.0
Total: $7.2 Billion
$100,000.0
$4,000,000.0
$300,000.0
$2,000,000.0
Brownfields
CWSRF
DWSRF
DERA
LUST
Superfund
Clean Water and Drinking Water
State Revolving Fund (SRF)
SRFs create a perpetual source of state funding for
drinking water and wastewater infrastructure.
ARRA Funding
• $4 billion for Clean Water allotted based on
statutory formula
• $2 billion for Drinking Water allotted based on
proportional share of national need
• Minimum 50% subsidy
• 20% Green Project Reserve
• No state match
Since 1987 State
Clean Water and
Drinking Water SRFs
have provided more
than $84 billion for
30,000 projects
Stimulus $$ as a Catalyst
(New England)
ARRA CWSRF funds
$296 million
leveraging,
other means
$1.1 billion
in projects
ARRA DWSRF funds
$149.7 million
leveraging,
other means
$405.6 million
in projects
Buy American Provision

Section 1605(a) of ARRA requires assistance
recipients to use domestic iron, steel, and
manufactured goods that are produced in the
U.S. This is the expected means of compliance.
 Section 1605(b) provides for a waiver of this
requirement under circumstances identified and
limited in that provision.
 Section 1605(c) provides that this requirement
must be implemented “consistent with U.S.
obligations under international agreements”.
Buy American Provision
 Office
of Management & Budget (OMB)
Guidance


http://edocket.access.gpo.gov/2009/pdf/E99073.pdf
Subpart B covers Section 1605 – the Buy
American provision
 EPA


HQ April 28th Memo
Implementation of Buy American provision of
P.L. 111-5, the “American Recovery and
Reinvestment Act of 2009”
http://www.epa.gov/ogd/forms/Buy_Am.pdf
Understanding
Everyone’s Role
Assistance Recipients’ Role
 Should
have adequate documentation in
project files to demonstrate all applicable
means of BA compliance


For US made goods: verification of US
production
For items covered under a national waiver:
the documentation must include all elements
specified in and required by the waiver for an
item or project to be covered
Assistance Recipients’ Role (cont.)


For any component that has been granted an
individual project waiver: Federal Register
Notice of project specific waiver is published
For items subject to an international
agreement
• Communication from applicable state or municipal
party to the agreement that recipient and item(s)
are covered, and
• Verification of country of origin
Assistance Recipients’ Role (cont.)
 Assistance
recipients should require
certification from contractors to
demonstrate BA compliance
 Fraud and abuse will be investigated by
the Office of Inspector General (OIG)
State’s Role
 Communicate
with assistance recipients
the need to comply with BA
 Assist EPA if there is additional
information needed from the State
 Can be as involved or hands off as each
individual State would like
EPA’s Role

Region receives all waiver request packages
from proposed assistance recipients
 Conducts initial completeness review
 Coordinates with national contractor to perform
technical assessment
 Preliminarily approves/denies waiver request
based on technical assessment report and
information provided by the applicant at that time
EPA’s Role (cont.)
 Region
coordinates Waiver Approval
Review Process with EPA HQ (requiring
EPA HQ concurrence)
 Region prepares necessary documents for
Regional Administrator approval



Waiver Approval Memo
Federal Register Notice (critical component)
Regional Waiver checklist
OIG’s Role

Education, training, outreach, audit, evaluation
and investigative activities
 Section 1515 of the ARRA allows the OIG:


To examine any records of the contractor or grantee,
any of its subcontractors, or any State or local agency
administering transactions relating to, the contract,
subcontract, grant, or subgrant
To interview any officer or employee of the contractor,
grantee, subgrantee, or agency regarding such
transactions
OIG’s Role (cont.)

OIG has access to EPA files and records, as
well as those of State, local, tribal and non-profit
agencies, contractors, and sub-contractors,
grantees and sub-grantees, that administer or
spend EPA funds
 EPA Criminal Investigators have the authority to:




Administer and Take Oaths
Serve Subpoenas
Make Arrests
Execute Search and Seizure Warrants
Documentation
 The
April 28, 2009 guidance suggested
that assistance recipients require
certification from contractors to
demonstrate Buy American Compliance
 Fraud and abuse will be investigated by
the Office of Inspector General (OIG)
 Communicate any concerns to
www.epa.gov/oig/hotline/how2file.htm
Certification

Appendix 5 of the April 28, 2009 Guidance
provides a sample certification template that
may be used by ARRA assistance recipient.
 Addresses: (a) identification of domestic
manufactured goods; (b) verification of U.S,
production; (c) documentation regarding nonAmerican made manufactured goods identification, verification, information and
detailed justification of the use of non-American
made goods
Certification
16, 2009 Qs &As – Part 2,
Section B has a detailed discussion on
what is sufficient documentation. The
ARRA assistance recipient is required to
make every effort to have adequate,
appropriate, project specific and verifiable
documentation to demonstrate compliance
with Buy American
 November
National Waivers
4




Nationwide Waivers Issued So Far
Refinancing prior to the ARRA bill signing
Publishing Bids prior to the ARRA bill signing
De Minimis Waiver
Revised De Minimis Waiver
Refinancing Waiver
 For
projects with debt obligations incurred
on or after October 1, 2008 and prior to
February 17, 2009 that are refinanced by
the SRF using ARRA funds
 “Debt obligations” cannot include selffinancing or incurring costs alone
 Justified by specific ARRA provision that
makes eligible projects initially financed in
anticipation of ARRA
Publishing Bids Waiver
 For
projects that solicited bids on or after
October 1, 2008 and prior to the signing of
the bill on February 17, 2009
 To have a project covered, the assistance
recipient must show that bids were
published proactively in anticipation of
ARRA funding
 Expanded on the Refinancing waiver
De Minimis Waiver
 For
incidental components (nuts, bolts,
tubing, fasteners, etc.) of projects, where
they comprise no more than 5% of the
total materials cost and the country of
origin is not easily identifiable
Revised De Minimis Waiver
 Assistance
recipients may decide what
foreign made goods may be allowed,
including incidental components, as long
as they comprise no more than 5% of the
total materials cost.
 Assistance recipients are required to apply
for product waivers for any foreign made
goods that exceed the 5% threshold total
materials cost.
Revised De Minimis waiver

Documentation necessary essentially the same
as required by the initial De Minimis waiver
 Assistance recipients would determine and
retain relevant documentation



Types/categories of items which this waiver is applied
Total cost for each type
Calculations of the total cost of materials used to
determine the dollar value of goods to which they
have applied the waiver
If Covered Under a National Waiver
 The
assistance recipient does not need to
apply for an individual project waiver
 Documentation that a project is covered by
a national waiver must include all
elements required by the waiver
 The assistance recipient must maintain
documentation in their project files
Individual Project
Waivers
Justifications for a Project Waiver
 Applying
Buy American is inconsistent with
public interest (§1605(b)(1))
 US iron, steel, and manufactured goods
are not produced in sufficient and
reasonably available quantities or of
satisfactory quality (§1605(b)(2))
 Inclusion of US iron, steel, and
manufactured goods will increase cost of
overall project by > 25% (§1605(b)(3))
Availability Waivers
 Majority
or nearly all project waivers will
fall under the availability waiver
 EPA’s April 28, 2009 memorandum
defines “reasonably available quantity” as:

“Quantity will be available at the time needed
and place needed, and in the proper form or
specification as specified in the project plans
and design.”
Availability Waiver
 Reasons

to apply for an availability waiver:
Only Non-US Manufactured
• Iron
• Street, or
• Manufactured Good(s)

Meet the Project Specifications
• Performance
• Physical Characteristics
• Timeliness of Delivery
Waiver Request
Submittal Package
BA Waiver Request Submittal
 MUST


Include:
Description of the overall project
Provide Estimated/Projected cost of the
overall project, including a breakdown of
projected materials and manufactured goods
BA Waiver Request Submittal
(Cont.)
 Must

Include:
Detailed Description of the foreign made
equipment
•
•
•
•
Unit of measure
Quantity required
Price per unit or total cost of the equipment
Time of delivery when needed at the construction
site
• Name, address, and contact information for the
manufacturer
BA Waiver Request (cont.)



Justification for the use of the foreign good
Provide Assessment of Domestic alternatives
and why they do not meet the proposed
project specifications
Assessment includes providing written
documentation that you looked at domestic
companies to buy from and either couldn’t find
any or couldn’t find any that would be able to
meet the project design specifications
BA waiver Request (cont.)


Provide written documentation from domestic
manufacturer(s) that its product cannot meet
the applicant’s project specs or written
documentation detailing the level of effort
conducted by the applicant to seek a
domestic supplier
Provide specs from domestic supplier(s)
demonstrating exactly how it (they) do not
meet project specs
Waiver Request (cont.)



Submit design and technical
specifications and requirements involved
with the foreign made good(s)
Provide detailed drawings, if available
If there was any pre-bid selection committee
or any other type of process that came up
with a list of critical specs or criteria for the
product, it should be detailed in the request
package
Waiver Request (cont.)


If the waiver is being requested after
construction has initiated you need to include
a justification as to why it is being requested
now and not earlier
Provide written documentation that the Buy
American provision was included in the bid
documents, and if it was not, an explanation
as to why not
BA Waiver Request (cont.)
 Ensure
the project design specifications
do not unnecessarily preclude US
produced iron, steel, or manufactured
goods (I/S/MG)
 Waivers should be requested:


Prior to or after preparation of bid solicitation
After bids are received and contractors or
suppliers document that I/S/MG are not
produced in sufficient quantities or adequate
quality domestically
Approved Region 1
Waivers
 Auburn,
ME - spring loaded manhole
covers and frames made in Canada
 Franklin, NH – air-bearing turbo aeration
blowers made in South Korea
 Hooksett, NH – biofilm polyethylene chip
carrier elements made in Germany
 Lewiston, ME – constant flow regulator
made in Germany
 Four schools in VT – UV disinfection
systems made in Canada
NH – sludge dewatering
equipment made in Canada
 Kennebec, ME – cast iron valve boxes
made in Canada
 Newburyport, MA – sludge dewatering
equipment made in Canada
 Plymouth,
Pending Waiver
Requests
– hydroelectric generator
 North Conway, NH – high efficiency
boilers made in Germany
 Troy, VT – valves and actuators for
packaged water treatment system made in
Canada
 Old Town, ME – pressure filter media
made in Brazil
 Gloucester, MA – sludge dewatering
equipment made in Canada
 MWRA – wind turbine
 MWRA
Withdrawn/Denied
Waiver Requests
Burlington, VT – hyperbolic mixer
equipment made in Germany
 South Burlington, VT – UV disinfection
equipment made in Canada
 Rochester, NH – catch basin grates made
in Great Britain (planning to use domestic)
 Barre, VT – packaged heat recovery
ventilation units made in Canada (planning
to use domestic)
 Lowell, MA – VFD drives made in Taiwan
(covered under de minimis)
 South
NH – air bearing turbo aeration
blowers (pursuing substantial
transformation angle)
 Putnam, CT – AC wall units and drive
shoes for test wells (de minimis)
 Troy, VT – insulated concrete forms (de
minimis)
 Chatham, MA – submersible mixer wall
recycle pump (domestic alternative
available has been identified)
 Durham,
Substantial Transformation

EPA HQ released ST guidance on October 22,
2009






Roles and Responsibilities
Concerns for States and EPA
Basic Principles of ST Analysis
Analysis to determine whether ST occurred in the
U.S.
When ST can occur on-site
http://www.epa.gov/water/eparecovery/docs/10_23_0
9_Substantial_Transformation_memo_Final.pdf
Substantial Transformation
 EPA
does not approve/deny claims of
substantial transformation; it is the
responsibility of the assistance recipient to
prove it occurs in the US
 Assistance recipient may address a list of
three questions…need to answer “Yes” to
at least one of following questions to have
substantial transformation apply
Substantial Transformation
 1.
Were all of the components of the
manufactured good in the United States,
and were all of the components
assembled into the final product in the
US? (If the answer is yes, then this is
clearly manufactured in the US, and the
inquiry is complete)
Substantial Transformation

2. Was there a change or use of the good or the
components in America? (These questions
apply to the product as a whole, not to individual
components…need to answer “Yes” to one of
the following questions )



Was there a change in the physical and/or chemical
properties or characteristics designed to alter the
functionality of the good?
Did the manufacturing or processing operation result
in a change of a product(s) with one use into a
product with a different use?
Did the manufacturing or processing operation result
in the narrowing of the range of possible uses of a
multi-use product?
Substantial Transformation

3. Was the process performed in the US
(including but not limited to assembly) complex
and meaningful? (need to answer Yes to two of
the following questions)





Did the process take a substantial amount of time?
Was the process costly?
Did the process require a particular high level of
skills?
Did the process require a number of different
operations?
Was substantial value added in the process?
Questions and
Discussion