ANNOUNCED AS TEMPORARYNo
Public procurement localisation
In a June 17, 2013 Federal Register notice the Federal Highway Administration (FHWA) published a finding that a conditional Buy America waiver is appropriate in 74 projects involving the purchase of approximately 3,500 vehicles (including sedans, vans, pickups, SUVs, trucks, buses, and equipment, such as backhoes, street sweepers, and tractors) that are being paid for using Federal aid. The waiver is also applicable in those projects using retrofit vehicles with individual vehicle components, so long as they are assembled in the United States. Despite the waiver, the FHWA is not instituting a rule on vehicle domestic-content requirements at this time. Departments of transportation in the state governments will continue to be required to make a 'good faith' effort to comply with Buy American rules in projects where Federal funds are used.
The FHWA's Buy America requirement was initially established in 1983 when the acquisition of vehicles was not eligible for assistance under the Federal-aid highway program. At that time, vehicles were not the types of products that were envisioned as being purchased with Federal-aid highway funds. It generally requires that 100% of all steel and iron that is permanently incorporated into a project must be domestically manufactured. With respect to vehicles, manufacturers typically assemble these products with many different components and subcomponents containing steel and iron. As a result, vehicles are typically referred to as being made where the final product rolls off the assembly line for delivery into the marketplace. The FHWA is unaware of any vehicle that is comprised of 100% domestically produced steel and iron, resulting in a need for a conditional Buy America waiver for these projects to proceed.
The FHWA's Buy America regulations at 23 CFR 635.410 require a domestic manufacturing process for any steel or iron products (including protective coatings) that are permanently incorporated in a Federal-aid construction project. The regulation also provides for a waiver of the Buy America requirements when the application would be inconsistent with the public interest or when satisfactory quality domestic steel and iron products are not sufficiently available.
While the manufacture of steel and iron products that are typically used in highway construction (such as pipe, rebar, struts, and beams) generally refers to the various processes that go into actually making the entire product, the manufacture of vehicles typically refers to where the vehicle is assembled. Thus, given the inherent differences in the type of products that are typically used in highway construction and vehicles, the agency believes that simply waiving the Buy America requirement, which is based on the domestic content of the product, without any regard to where the vehicle is assembled, would diminish the purpose of the Buy America requirement. Nevertheless, the FHWA does not believe that it is appropriate to establish a vehicle domestic content requirement threshold at the present time.
State departments of transportation will need to make a good faith effort to determine whether the final assembly of a vehicle or vehicle retrofit occurs in the United States. With respect to passenger motor vehicles, the FHWA notes that the National Highway Traffic Safety Administration has established criteria for vehicles subject to the America Automobile Labeling Act (AALA). Vehicles meeting the criteria for final assembly under the AALA is one option for State DOTs to make a good faith effort in determining whether final assembly of vehicles subject to AALA requirements occurs in the United States.
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