Mr. Benoit Arsenault
President & CEO
FRE Composites, Inc.
75 Wales Street
Dear Mr. Arsenault:
This letter responds to your correspondence of September 7, 2004, in which you request that FTA affirm an earlier informal opinion that fiberglass conduit constitutes a subcomponent of the electrical system on a full-scale transit construction project. For the following reasons, FTA will decline to issue such a decision.
Applicable Law and Policy
The first step in analyzing how the Buy America requirements apply to a particular product is to determine what the “end product” is, followed by a break down of the components and subcomponents. An end product is “‘any item’ . . . that is to be acquired by a grantee, as specified in the overall project contract. The key determinant is the grantee’s specification. For example, if a grantee is procuring a new rail car, the car is the end product and the propulsion motor would be a component of the end product. If that same grantee is procuring a replacement propulsion motor for an existing rail car, that propulsion motor would be the end product.” 56 Fed. Reg. 928 (Jan. 9, 1991). 1
A manufactured product is considered domestic if all of the manufacturing processes for the product take place in the U.S. and all of the components of the product are of U.S. origin. 49 C.F.R. 661.5(d)(1). A component "is considered of U.S. origin if it is manufactured in the United States, regardless of the origin of its subcomponents."
49 C.F.R. 661.5(d)(2). A component is "any article, material, or supply, whether manufactured or unmanufactured, that is directly incorporated into the end product at the final assembly location." 49 C.F.R. 661.3.
As you state in your letter “[w]hether an item constitutes a component or subcomponent in a construction project is determined on a case-by-case basis and depends on the specific deliverable being procured” (emphasis added). FTA agrees and has long applied a case-by-case methodology in its Buy America analysis. For example, in a decision dated March 13, 1989 to the City of Chicago, FTA (then known as UMTA), specifically found “fiberglass conduit” to be the “end product” of the procurement at issue in the case, and thus subject to the Buy America requirements applicable at the time. Moreover, in a decision letter dated October 18, 2001 involving the Santa Clara Transportation Authority, FTA considered a “cable tray” (which is in many respects similar in function to fiberglass conduit) as a component of the Tasman East Corridor light rail project, an analysis which you acknowledged was “appropriate in that case.” Finally, as you state, FTA did opine informally in another procurement that fiberglass conduit constitutes a subcomponent. As these examples show, fiberglass conduit may be considered as an end product, a component, or a subcomponent, depending on the procurement at issue.
In this instance, however, you request that FTA decide that fiberglass conduit should necessarily be considered as “a subcomponent of the electrical systems on a full-scale transit construction project,” thus opening this item to full foreign sourcing in all cases. Because your request for an opinion does not pertain to a specific procurement, but is rather a request for general guidance, FTA will decline to issue such an opinion. As with other manufactured products, FTA will continue to classify fiberglass conduit on a case-by-case basis based on the requirements of particular procurements. As FTA stated in a decision dated December 6, 2002, involving the procurement of an Automated Fare Collection System by the Massachusetts Bay Transportation Authority, “[a]s a matter of logic, one cannot identify the components in a procurement until the end product they comprise has been identified; accordingly, it would be absurd to hang an artificial label for all time and purposes on each manufactured product.”
If you have any questions, please contact Joseph A. Pixley at (202) 366-1936.
Very truly yours,
Gregory B. McBride
Deputy Chief Counsel
1 When discussing construction contracts specifically, FTA determined that the "procurement of construction is treated as procurement of a manufactured product in that the deliverable of the construction contract is considered as the end product and the construction materials used therein are considered components of the end product." 46 Fed. Reg. 5809 (Jan. 19, 1981). Further, when asked to clarify the definition of "end product," FTA concluded that, "the deliverable item specified in the contract is the end product. For example, in a contract for 10 buses that must contain 500 h.p. engines, the 10 buses are the end-products." Id.