Dear Mr. Encarnación:
This letter responds to your Departmentís December 11, 2000, request for clarification of the Buy America regulations, as they apply to the use of steel rebar in certain concrete materials on the Tren Urbano mass transit project under construction by the Puerto Rico Highway and Transportation Authority. You state that concrete guideway parapets, concrete semi-circular segments for the vaulted roofs of stations, and reinforced concrete drainage pipes, which were manufactured in Puerto Rico, contain foreign rebar, a reinforcing and strengthening element of these products. Your concern is whether the use of foreign rebar in this case constitutes a violation of the Federal Transit Administrationís (FTA) Buy America regulation (49 CFR Part 661). For the reasons below, we have determined that the use of foreign rebar to reinforce the concrete items at issue does not violate the regulation.
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. These items include, but are not limited to, structural steel or iron, steel or iron beams and columns, running rail and contact rail. These requirements do not apply to steel or iron used as components or subcomponents of other manufactured products or rolling stock.
49 CFR 661.5(c) (emphasis added). According to the information in your letter, the supplier manufactures the concrete items reinforced with rebar at a plant in Puerto Rico then transports them to the construction site for incorporation into the project. These pre-fabricated concrete items contain three to five percent volume of steel rebar; accordingly, the items are not primarily made of steel.
Since the items at issue do not fall within the scope of 49 CFR 661.5(b) or (c), we must determine whether the concrete items are manufactured in compliance with section 661.5(d)(1), which requires that all manufacturing processes take place in the United States. The regulations further 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). FTAís Best Practices Procurement Manual specifically addresses the issue of construction contracts and Buy America:
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 you have presented, the deliverable items are the stations and the guideway sections; accordingly, the concrete guideway parapets, concrete semi-circular segments for the vaulted roofs of stations, and reinforced concrete drainage pipes, which are directly incorporated into the project at the job site, are components of the deliverable items.
Because the concrete items at issue are not construction materials made primarily of steel, but components of a manufactured product, it follows that the rebar used to reinforce these concrete items is a subcomponent and, as such, may be of foreign or domestic origin.
If you have any questions concerning this letter, please contact Meghan G. Ludtke, at (202) 366-4011.
Very truly yours,
Gregory B. McBride
Deputy Chief Counsel