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Buy American

•  What is the Buy American Act?
•  Buy America requirements for lighting components for projects funded by the Recovery Act
•  Does Buy America apply to ARRA grants to investor-owned utility companies?
•  Applicability of the Recovery Act Buy American provisions to rebates provided to homeowners
•  How flexible is the "unreasonable cost" exception in subpart 25.603?
•  Can a subrecipient seek a nonavailability waiver based on substandard energy efficiency of a U.S. made good?
•  Does compliance with the "Buy American Act" via NAFTA satisfy the Buy America requirements of the Recovery Act for EECBG?
•  What documentation is required to prove that American goods were actually installed? 
•  Where can I find all DOE guidance on Buy America?
•  Can a state government entity choose to treat a Canadian manufacturer the same as a U.S. manufacturer under Buy America for a project valued at less than $7.8 million?
•  What are some ways that State energy offices can ensure subgrantees' compliance with Buy America?
•  Has DOE Issued a Waiver of the Buy American Requirements of the Recovery Act for Solar Thermal Projects?
•  Is a determination made by a State Energy Office that questions the interpretation of the term "manufacture" based on a DOE memorandum reviewable by DOE?
 

1.  What is the Buy American Act? Is it the same as the Buy American provisions of the Recovery Act?

No. The Buy American Act and the Buy American provisions of the Recovery Act are two different laws with very different applications.
The Buy American Act, (41 U.S.C. § 10a-10d), applies to procurements of supplies and construction materials for the United States government. For example, if the U.S. government issues a solicitation for construction of a new wing to the Library of Congress, the Buy American Act would apply to the procurement. The Buy American Act is implemented by the Federal Acquisition Regulation (FAR, Part 25.)

The Buy American provisions of the Recovery Act, (section 1605 of Pub. L. 111-5), require that all iron, steel and manufactured goods used in projects funded by the Recovery Act for the construction, alteration, maintenance or repair of a public building or public work be produced in the United States, with some exceptions. Recovery Act-funded financial assistance is governed by the Buy American provisions of the Recovery Act. For example, if a recipient of financial assistance funded by the Recovery Act is using Recovery Act funds for a public building/works construction project, all of the iron, steel and manufactured goods used in that project must be made in the United States unless one of the exceptions applies and DOE has issued a waiver for it. The Buy American provisions of the Recovery Act for financial assistance are implemented by guidance issued by the Office of Management and Budget, found at 2 C.F.R. Part 176, Subpart B. Recovery Act-funded U.S. government procurements for public building/public works projects requiring iron, steel or manufactured goods, are also governed by the Buy American provisions of the Recovery Act. These regulations are found in the FAR at 48 C.F.R. § 25.6.

2.  We would like to request confirmation that the Buy American restrictions of Section 1605 of the American Recovery and Reinvestment Act of 2009 ("Recovery Act") do not apply to DOE Recovery Act grants to investor-owned utility companies (for projects in which the utility company will construct and own the project).  Our understanding that the Buy American restrictions would not apply in this scenario is based in part on the following guidance from DOE:  "The question to answer is who owns the project, not who is doing the work.  If a state/local government entity "owns" the building/work project, it is a public building/work that would be subject to Sec. 1605 (unless exempted).  The interim rule applies Sec. 1605 to any building/work that is constructed, altered, repaired, or maintained with Recovery Act funds without regard to title." (Available at http://management.energy.gov/documents/
ARRAGuideAttachment10v1.pdf).

Your question stems from the requirements of Section 1605(a) of the American Recovery and Reinvestment Act of 2009, Pub. L. 111-5.  That section requires that none of the funds appropriated or otherwise made available by the Recovery Act may be used for a project for the construction, alteration, maintenance, or repair of a public building or public work unless all of the iron, steel, and manufactured goods used in the project are produced in the United States.  “Public building or public work” has been defined by OMB guidance at 2 C.F.R. § 176.140(a)(2) to mean "a public building of, and a public work of, a governmental entity (the United States; the District of Columbia; commonwealths, territories, an minor outlaying islands of the United States; State and local governments; and multi-State, regional, or interstate entities which have government functions).  These buildings and works may include, without limitation, bridges, dams, plants, highways, parkways, streets, subways, tunnels, sewers, mains, power lines, pumping stations, heavy generators, railways, airports, terminals, docks, piers, wharves, ways, lighthouses, buoys, jetties, breakwaters, levees, and canals, and the construction, alteration, maintenance, or repair of such buildings and works."  The definition of "public building or public work" requires the building or work to be "of a governmental entity."  OMB has indicated that in some instances a privately-owned facility may be a public work, such as when a local government leases private property to use for a government office.  Based on your general facts, we are unaware of a reason to conclude that a privately-owned utility using a grant on privately-owned property is a public work.

3.  If ARRA funds are used for energy efficient equipment rebates provided by a municipal owned utility as an incentive directly to a non-public home or building (i.e.residential single family home owner or multifamily building owner) where the owner pays for the improvements and ARRA funds are then disbursed to the homeowner, would the Buy American Act apply?  Does the answer change if ARRA-funded rebate for energy efficiency equipment rebates is paid directly to the contractor?

First, you asked about the applicability of the Recovery Act Buy American provisions to rebates provided to homeowners.  All rebate holders, whether they are individuals or businesses, must comply with the general rules of the rebate program under the State Energy Plan for which they are receiving the rebate.  Under the Appliance Rebate Program, individual consumers who are eligible for rebates are not considered subrecipients and therefore would not be responsible for the Buy American Recovery Act provisions of the underlying grant.

You also asked if the answer would change if the Recovery Act funded rebate for energy efficiency equipment rebates is paid directly to the contractor. Please note that the Buy American Recovery Act provisions are different from the Davis Bacon Recovery Act provisions.  Although the Davis Bacon Act Recovery Act provisions hinge on the entity receiving payment, the Buy American Recovery Act provisions do not.  As previously stated, the rebate holders must comply with the general rules of the rebate program under the State Energy Plan for which they are receiving the rebate and whether they have to follow the Buy American Recovery Act provisions on rebates depends on whether the individual consumers who are eligible for rebates are considered subrecipients.  Under the Appliance Rebate program, they are not considered subrecipients and therefore the Buy American Recovery Act provisions do not apply to them.

4.  How flexible is the "unreasonable cost" exception in subpart 25.603? Specifically, is the cost of domestic construction material based only on the 25% above the cheapest available foreign option or some average market price for a product?

We need to point out that Part 25 of the Federal Acquisition Regulation (FAR) applies to procurements (contracts) undertaken by the federal government, not financial assistance undertaken by the states.  Contracts undertaken by your State and its subrecipients for projects utilizing Recovery Act funding pursuant to the financial assistance agreements are controlled by section 1605 of the Recovery Act (Pub. L. 111-5).  Section 1605 is implemented by the Office of Management and Budget (OMB) in guidance codified at 2 C.F.R. Part 176.  Instructions for preparing a waiver request due to unreasonable cost are found at 2 CFR 176.140(c).  DOE also has guidance on preparing a waiver.

Under 2 C.F.R. 176.110, the cost in reference is the total estimated cost of the project, if the foreign iron, steel, and/or manufactured goods are to be used in the project based on an exception for unreasonable cost requested by the applicant.  Therefore, it is not the cost of just the domestic construction material, it is the cost of the entire project.

5.  If domestically-available manufactured goods are substantially less energy-efficient than foreign goods (such as solar panels) could a subrecipient seek a nonavailability waiver based on the substandard quality of the U.S. made good?

In order to answer your question, we will point out that under 2 CFR 176.80(a)(1), a waiver may be granted for a manufactured good that is not available in sufficient and reasonably available commercial quantities of a satisfactory quality.  If you believe that a domestically-available manufactured good is not of a satisfactory quality, you may decide to file a waiver request. DOE has guidance on preparing a waiver request.

6.  Are Products that are assembled in Canada, but comply with the "Buy American Act" via the North American Free Trade Agreement as approved by Congress in the NAFTA Implementation Act (Pub. L. 103-182, 107 stat. 2057), meet the requirements of the EECBG for "Buy American"?

For the Recovery Act, only recipients that are Rural Utilities Service(s) may invoke the United States' obligations under NAFTA to determine that products are domestic, and only in the specific circumstances dictated in the Appendix to Subpart B of 2 CFR Part 176. 

However, I have attached the Agreement between the Governments of Canada and the United States that was signed by the U.S. Trade Representative on February 12, 2010.  Among other things, it provides that the United States will provide reciprocal access for Canadian companies to 37 states already covered by the Government Procurement Agreement (GPA) and a limited number of Recovery Act programs.  The list of Recovery Act programs that Canada has access to is in Appendix B, under List C.  One of them is the Energy Efficiency and Conservation Block Grants Program.

Article 5 -- United States Administrative Steps states:
The United States shall, by February 16, 2010, take the necessary administrative steps to provide that section 1605 [the Buy American requirements] of the American Reinvestment and Recovery Act of 2009 shall not be applied to Canadian iron, steel, or manufactured goods in procurement[s] covered by Annex 2 of the 1994 GPA.
 
We are advised by the U.S. Trade Representative's office that this agreement means that for the two DOE programs, the Energy Efficiency and Conservation Block Grant Program and the State Energy Program, U.S. state and local governments are required to treat Canadian iron, steel and manufactured goods the same as U.S. iron, steel and manufactured products in projects funded by the Recovery Act, where the project is valued at or above $7.8 million. 

The U.S. Trade Representative's office also advises that this new requirement went into effect on February 16, 2010, and it applies to any new procurements that are commenced on or after that date.
 
The EERE Buy American coordinator is preparing guidance for Recovery Act recipients concerning how to interpret and implement the Agreement with respect to iron, steel and manufactured goods produced in Canada utilized for Energy Efficiency and Conservation Block Grant and State Energy Program projects.

7.  What documentation will be required to prove that American goods were actually installed for a public project?  We have received conflicting guidance about this issue.

The Recovery Act Buy American provisions do not state what documents are necessary to prove that American goods were actually installed for a public project.  However, according to the Department of Energy's Financial Assistance Rules found at 10 C.F.R. § 600.220(a)(2), "A State must expend and account for grant funds in accordance with State laws and procedures for expending and accounting for its own funds.  Fiscal control and accounting procedures of the State, as well as is subgrantees and cost-type contractors must be sufficient to -- ...[p]ermit the tracing of funds to a level of expenditures adequate to establish that such funds have not been used in violation of the restrictions and prohibitions of applicable statutes." 

Also, the DOE Acquisition and Financial Assistance Implementation Guide for the American Recovery and Reinvestment Act of 2009 states: "Non-Federal entities (States, local governments and non-profit organizations) are required by the Single Audit Act Amendments of 1996 (Single Audit) and OMB Circular A-133 to have an annual audit of the federal awards (E.g. grant programs)" p. 3-3, section 3.4(1).  See also 2 C.F.R. § 176.210 which describes the award term for tracking and documenting Recovery Act expenditures.

Your State, as a state recipient of DOE Recovery Act funds subject to the Single Audit Act (31 U.S.C. 7501-7507), is governed by 10 CFR section 600.226(a).  It states:  "Grantees and subgrantees are responsible for obtaining audits in accordance with the Single Audit Act Amendments of 1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-133, 'Audits of States, Local Governments and Non-Profit Organizations.'"  "State or local governments that provide Federal awards to a subgrantee, which expends $300,000 or more in Federal awards in a fiscal year shall: ... Determine whether the subgrantee spent Federal assistance funds provided in accordance with applicable laws and regulations.  10 CFR section 600.226(b)(2).

Therefore, your State is required to follow the terms of OMB Circular A-133 and to require its subrecipients to follow the terms of OMB Circular A-133 to track and document Recovery Act expenditures.  It is also responsible to determine whether the subgrantee spent Federal assistance funds provided in accordance with applicable laws and regulations.

8.  We are the recipients of an ARRA grant and we are in the process of reissuing a request for proposals for equipment. We are aware of some EPA guidance on the Buy-America provisions, but would appreciate any guidance the Department of Energy has that we could include with the RFP to better ensure the provisions are complied with by the prospective vendors.

DOE has issued agency-wide guidance for the Recovery Act, including the Buy American requirements, in its "Department of Energy Acquisition and Financial Assistance Guide for the American Recovery and Reinvestment Act of 2009,"  http://energy.gov/management/downloads/acquisition-and-financial-assistance-guide-american-recovery-and-reinvestment.  Section 3.9 (p. 3-7) explains the Recovery Act Buy American requirements in general. Additional, specific information is provided in Attachment 10 - "Buy American Issues in the Recovery Act for Financial Assistance Agreements," and Attachment 13 --"Recovery Act Buy American Act Requirements for Information Needed From Financial Assistance Applicants/Recipients for Waiver Requests Based on Unreasonable Cost or Non-Availability." These are detailed explanations of what the Buy American requirements mean, how they apply, and how to request waivers of the Buy American requirements based on unreasonable cost or non-availability.

Also EERE's Request for Information (RFI) on questions pertaining to the Buy American Provisions of the Recovery Act was published in the Federal Register. 75 Fed. Reg. 5783, 5784 (Feb. 4, 2010). The RFI requests two categories of information from stakeholders. Part 1 requests technical information from stakeholders seeking to ascertain the availability of manufactured goods produced in the United States that are needed to carry out projects funded by EERE. Part 2 requests information on questions pertaining to the application and implementation (programmatic questions) of the Buy American provisions in Recovery Act projects funded by EERE. The products and technical specifications submitted in response to Part 1 will be catalogued and disseminated to the domestic manufacturing community in order to ascertain the domestic manufacturing capacity for these products before EERE considers issuing any waivers based on non-availability. Submissions in response to Part 2 (programmatic questions) are addressed by designated program staff.

The Office of Management and Budget (OMB) has promulgated Requirements for Implementing Sections 1512, 1605 (Buy American) and 1606 of the American Recovery and Reinvestment Act of 2009 for Financial Assistance Awards, codified at 2 C.F.R. part 176. The Notice of Required Use of American Iron, Steel, and Manufactured Goods - Section 1605 of the American Recovery and Reinvestment Act of 2009, found at 2 C.F.R. § 176.150, contains the notice to be used in solicitations (RFPs) by agencies requesting applications or proposals for Recovery Act programs or activities that may involve construction, alteration, maintenance or repair of a public building or public work and do not involve iron, steel, and/or manufactured goods covered under international agreements. The Notice of Required Use of American Iron, Steel, and Manufactured Goods (covered under International Agreements) -Section 1605 of the American Recovery and Reinvestment Act of 2009, found at 2 C.F.R. § 176.170, contains the notice to be used in solicitations (RFPs) when requesting applications or proposals for Recovery Act programs or activities that may involve construction, alteration, maintenance, or repair of a public building or public work and involve iron, steel, and/or manufactured goods covered under international agreements.

9.  In the case of a project that is less than $7.8 million and in which a Canadian manufacturer is proposed to be the supplier of manufactured goods, may a state government entity choose to treat the Canadian manufacturer the same as a U.S. manufacturer? Our understanding is that a state government entity is required to treat the Canadian manufacturer the same as a U.S. manufacturer if the project is valued at $7.8 million or more. 2) What are the timelines for granting a waiver from Buy American requirements otherwise applicable to SEP and EECBG projects? 3) What are the standards for granting a waiver from Buy American requirements on the basis of nonavailability of the manufactured goods? For example, assume (i) a particular type of lighting fixture is only produced by a Canadian manufacturer; (ii) this type of lighting fixture is already installed in part of a facility; and (iii) this type of lighting fixture is sought for continuity purposes for use in other parts of the facility. Our question is, do these circumstances warrant granting a waiver from Buy American requirements on the basis of nonavailability?

Your understanding of the requirement to treat the Canadian manufacturer the same as a U.S. manufacturer for projects valued at $7.8 million or more is correct. The Agreement applies to new procurements on or after February 16, 2010 for the State Energy Project (SEP) and the Energy Efficiency and Renewable Energy Block Grant Project (EECBG). It does not extend beyond these two programs.

However, according to advice DOE received from the U.S. Trade Representative concerning the Agreement, it applies only to projects that are valued at or above the $7.8 million threshold and only for the EECBG and SEP programs. We are not aware of any basis for a recipient to choose to treat a Canadian manufacturer the same as a U.S. manufacturer if the project is valued below $7.8 million.

Your second question asks for the timelines for granting a waiver from Buy American requirements otherwise applicable to SEP and EECBG projects. According to the regulations at 2 CFR 176.100(b), before Recovery Act funds are awarded by the Federal agency or obligated by the recipient for a project for the construction, alteration, maintenance or repair of a public building or public work, a recipient may request from the award official a determination concerning the inapplicability of section 1605 of the Recovery Act [waiver] for specifically identified items. Section 176.120 states that if a recipient requests a determination regarding the inapplicability of section 1605 after obligating Recovery Act funds for a project, the recipient must explain why it could not request the determination before making the obligation or why the need for such determination was not reasonably foreseeable. Once a request is submitted, DOE works as quickly as possible to respond to the request. DOE has published guidance on how to apply for a waiver.

Also, EERE has issued an RFI in order to assess whether there are commonly needed items for its Recovery Act grantees that should be determined to be nonavailable that was published in the Federal Register 75FR5783 (Feb. 4, 2010).

In your third question, you ask for the standards for granting a waiver on the basis of nonavailability of the manufactured goods if we assume: (i) a particular type of lighting fixture is only produced by a Canadian manufacturer; (ii) this type of lighting fixture is already installed in part of a facility; and (iii) this type of lighting fixture is sought for continuity purposes for use in other parts of the facility.

The Assistant Secretary of Energy Efficiency and Renewable Energy (EERE) has been delegated authority to make waiver determinations regarding the Buy American Recovery Act provisions for EERE projects. The determinations that she has already made can be found at:  http://www1.eere.energy.gov/recovery/buy_american
_provision.html

The Assistant Secretary of EERE has not considered a waiver request with the circumstances you describe. Therefore, we do not know if the facts you relayed would qualify for a nonavailability waiver, but we can tell you that the manufactured goods must not be produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality. The fact that a lighting fixture is only produced in Canada and is already used in the building and is sought for continuity purposes for use in other parts of the facility, may not, by itself, appear to satisfy the requirements for a waiver based upon nonavailability. However, a more detailed explanation may help.

10.  Can DOE suggest any practical ways in which State energy offices can ensure or otherwise verify compliance by sub-grantees and their contractors with the Buy American requirements? We are under the impression that simply having sub-grantees sign grant agreements including provisions stating that they will comply with Buy American provisions is not sufficient.

Recipients and subrecipients of EERE financial assistance funded by the Recovery Act must comply with the requirement in section 1605 that all of the iron, steel, and manufactured goods used for a project for the construction, alteration, maintenance, or repair of a public building or public work be produced in the United States, unless one of the three listed exceptions applies and DOE issues a waiver, or a recipient can legally avail itself of the U.S.'s obligations under international agreements.

There are no specific requirements imposed by the Recovery Act or OMB guidance in 2 C.F.R. part 176 concerning the specific type of documentation necessary to prove compliance with the Recovery Act Buy American provisions. However, recipients and subrecipients should retain documentation that supports their compliance with the Buy American provisions. During post-award monitoring activities, which may include desk reviews, on-site reviews, and audits, recipients may be asked to produce records sufficient to verify compliance with the Recovery Act Buy American provisions.

Such documentation could include, but not limited to: (1) language in contractual documents that obligates sub-recipients and/or contractors to comply with the Buy American provisions; (2) receipts for the domestically-produced items; (3) a documented certification from the contractor, vendor, distributor, supplier, or manufacturer verifying that the product was manufactured in a U.S. plant; (4) detailed information supporting the claim that the manufactured good has undergone substantial transformation in the U.S; and/or (5) other common-sense documentation per the discretion of the State, Local, or Tribal government financial assistance recipient.

Therefore, in order to ensure that your subrecipients and their contractors are complying with the Buy American requirements of the Recovery Act, we recommend that you require that they maintain documentation such as described above.

Please watch the EERE website for any guidance that it may release on the subject at: http://www.eere.energy.gov/

11.  We have solar thermal projects that will receive ARRA funding that entail installing vacuum tube solar thermal panels. We have found no manufacturers of vacuum tube solar thermal panels in the United States. Has DOE granted a blanket waiver for this technology or must each foreign manufacturer apply for a separate waiver?

To date, DOE has not issued any waivers for vacuum tube solar panels. If a recipient of Recovery Act funded financial assistance from DOE expects to use foreign manufactured vacuum tube solar panels in its Recovery Act-funded project(s), the recipient would need to request a determination regarding the inapplicability of section 1605 of the Recovery Act (a waiver). The instructions for requesting a determination of inapplicability of section 1605 are codified at 2 CFR 176.100 (before funds are awarded or obligated) and at section 176.120 (after funds are obligated). Further information and guidance about obtaining waivers is on the EERE webpage at: www.eere.energy.gov.

12.  Are lighting components that have not undergone "substantial transformation" in the United States disqualified from use in projects funded with American Recovery and Reinvestment Act (ARRA) funds under the Buy American requirements?

The Assistant Secretary for EERE signed a waiver based on non-availability for certain LED lighting on February 11, 2010.  This waiver will allow for certain foreign-made LED lighting in projects funded by the Recovery Act because those products are not available in the United States. 

13.  Is a determination made by a State Energy Office that questions the interpretation of the term "manufacture" based on the May 24, 2010 DOE Memorandum entitled, "Guidance On Manufactured Goods and Substantial Transformation for Financial Assistance Awards" reviewable by DOE?

No, in accordance with the DOE guidance referred to above, DOE cannot approve or disapprove a Recovery Act recipient's determination that a manufactured good has or has not been substantially transformed in the United States.

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