ANNOUNCEMENT 05 Oct 2018

Two provisions in a bill that reauthorizes the Federal Aviation Administration may make the Department of Transportation more reluctant to issue waivers of existing Buy American rules.

 

NUMBER OF INTERVENTIONS

1

  • 0 harmful
  • 1 neutral
  • 0 liberalising
Inception date: 05 Oct 2018 | Removal date: open ended

Public procurement localisation

On October 5, 2018 President Trump signed into law a bill (H.R.302) that reauthorizes the Federal Aviation Administration. Two provisions in this bill affect the implementation of Buy American rules by this agency of the Department of Transportation.

Under existing law – namely section 50101(a) of title 49, United States Code -- the Secretary of Transportation is generally required to impose Buy American restrictions for projects building air navigation facilities or facilities to regulate and protect air traffic. Such project must incorporate only steel and manufactured goods that are produced in the United States. That same existing nonetheless provides in section 50101(b) an authority by which the secretary may waive these requirements if (1) imposing such restrictions “would be inconsistent with the public interest,” (2) “the steel and goods produced in the United States are not produced in a sufficient and reasonably available amount or are not of a satisfactory quality,” (3) when for certain types of procurement “(A) the cost of components and subcomponents produced in the United States is more than 60 percent of the cost of all components of the facility or equipment; and (B) final assembly of the facility or equipment has occurred in the United States”, or (4) “including domestic material will increase the cost of the overall project by more than 25 percent.”

Section 167 of the new law requires that if the Secretary of Transportation decides to employ this existing waiver authority, this official must “at least 10 days before the date on which the waiver takes effect”

  1. make publicly available, in an easily identifiable location on the website of the Department of Transportation, a detailed written justification of the waiver determination; and
  2. provide an informal public notice and comment opportunity on the waiver determination.

GTA classifies this provision as amber insofar as it does not make a material change in the localization rules. This amendment may nonetheless reasonably be expected to reduce the incidence of such waivers, either by discouraging such decisions or by initiating a process that might lead to such a decision being reversed. The amendment further requires that the department submit an annual report on waivers “to the appropriate committees of Congress.”

Section 544 of this same bill requires an annual report on the purchase of foreign manufactured articles by the Federal Aviation Administration. It provides that --

Not later than 90 days after the end of the fiscal year, the Secretary of Transportation shall submit a report to Congress on the dollar amount of acquisitions subject to the Buy American Act made by the agency from entities that manufacture the articles, materials, or supplies outside of the United States in such fiscal year.

It further requires that this report separately indicate --

the dollar value of any articles, materials, or supplies purchased that were manufactured outside of the United States; and
summary of the total procurement funds spent on goods manufactured in the United States versus funds spent on goods manufactured outside of the United States.

Section 544 also requires that the department “make the report … publicly available on the agency's website not later than 30 days after submission to Congress.”

Like the foregoing amendment, this one may reasonably be expected to reduce the incidence of such waivers, either by discouraging such decisions or by initiating a process that might lead to such a decision being reversed. GTA nevertheless classifies this provision as amber insofar as it does not make a material change in the localization rules.

AFFECTED SECTORS