Dear Mr. Jimenez:
This letter responds to your recent request for clarification of the Buy America regulations as they apply to the manufacture of structural steel formed into pipes and plates for use in constructing station canopies on alignments 1 through 9 of the Tren Urbano mass transit project. 1
With respect to alignment 1, you state that the pipes and plates, and the steel of which they are made, are of U.S. origin. You note, however, that the pipes and plates were drilled, cut, machined, welded, polished and primed to make canopy segments in Mexico, with final assembly of the canopy occurring in Puerto Rico. You explain that Tren Urbano has not yet been informed by its contractor of the origin of the steel used to manufacture the pipes for alignments 2, 4, and 5; however, it has been determined that the steel used to manufacture the plates for these alignments was produced in the U.S. You also indicate that the pipes and plates for these alignments were manufactured and prepared in the U.S. for final assembly in Puerto Rico. With respect to alignment 3, you indicate that all manufacturing activities related to the construction of the canopy occurred in the U.S. You further state that the structural steel for the station canopies at alignments 6 through 9 has not yet been "delivered to the construction sites."
Applicable Law and Policy
The regulation states that "[a]ll steel and iron manufacturing processes must take place in the United States . . . ." 49 CFR 661.5(b). This requirement applies "to all construction materials made primarily of steel or iron and used in infrastructure projects such as transit or maintenance facilities, rail lines, and bridges." 49 CFR 661.5(c).
The regulations also provide that all components of a manufactured product must be of U.S. origin and that a "component is considered of U.S. origin if it is manufactured in the United States, regardless of the origin of its subcomponents." 49 CFR 661.5(d)(2). A similar situation is described in the Federal Transit Administration’s (FTA) Best Practices Procurement Manual:
FTA treats the procurement of a construction project as the procurement of a "manufactured product" subject to 49 CFR 661.5. Final assembly of the project takes place at the construction site, and items directly incorporated into the project at the job site are considered "components." For instance, if the deliverable under a particular contract is the building of a passenger terminal, the terminal itself is the end product, and the main elements incorporated into the terminal, e.g., shelters, elevators, and platforms, are components of the end product. These main elements are generally specified in the construction contract.
Based on the facts presented and the law and policy cited above, I can provide the following guidance:
The canopy at alignment 1 was constructed in accordance with Buy America requirements because, first, the pipes and plates, and the steel of which they are made, are of U.S. origin as required by 49 CFR 661.5(b) and (c). Second, since the deliverable items for this alignment are the station and segments of track, the canopy is a component and the pipes and plates are subcomponents of the station, and; accordingly, the pipes and plates may be of U.S. or foreign origin as long as steel from which they are made is produced in the U.S. See 49 CFR 661.5(d)(2).
Alignments 2, 4, and 5
The steel plates used to construct the canopies at alignments 2, 4, and 5 were manufactured in accordance with Buy America requirements based on the same reasoning set forth for alignment 1. However, as noted, the origin of the steel used to manufacture the pipes remains uncertain at this time.
The canopy at alignment 3 was constructed in accordance with Buy America requirements, since all manufacturing activities and processes relating to structural steel occurred in the U.S. See 49 CFR 661.5(b), (c) and (d)(2).
Alignment 6, 7, 8, and 9
Tren Urbano is, of course, responsible for ensuring compliance with the Buy America regulations for these alignments as well.
Unless Tren Urbano can verify compliance with the Buy America requirements regarding the origin of the steel used to manufacture the pipes for the canopies at alignments 2, 4, and 5, FTA may have to consider suspending its financial participation in those project alignments. I would, therefore, appreciate receiving that information as soon as possible.
If you have any questions concerning this letter, please contact Meghan G. Ludtke, at (202) 366-4011.
1 Alignment 1 – Bayamon
Alignment 2 – Rio Bayamon
Alignment 3 – STTT
Alignments 4 and 5 -- Centro Medico
Alignment 6 – Villa Nevarez
Alignment 7 – Rio Piedras
Alignments 8 and 9 – Hato Rey
Very truly yours,
Gregory B. McBride
Acting Chief Counsel
cc: The Honorable José Izquierdo Encarnación
Region Four Administrator, FTA