Mr. Lawrence G. Booco, President
Ace Equipment & Supply Company, Inc.
9660 Dallas Street
Henderson, CO 80640
Dear Mr. Booco:
This letter responds to your correspondence of October 5 and 31, 2005 in which you request that the Federal Transit Administration (FTA) investigate the Buy America compliance of the winning offeror in the City of Steamboat Springs’s (City) procurement for the removal and replacement of vehicle maintenance lifts. As explained more fully below, I will not be initiating an investigation, on the grounds that an investigation has been rendered moot.
The Buy America standard for manufactured products at 49 C.F.R. 661.5(d) is the applicable standard for this lift equipment. Under the Buy America standard for manufactured products, 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.
Under FTA regulations, grantees must ensure that contractors certify in their bids or offers, as a condition of responsiveness, that they will comply with Buy America. 49 C.F.R. 661.13(b). In this case, the awardee, SWIS Automotive & Truck Equipment (SWIS), certified compliance with Buy America as part of its offer, on the mistaken assumption that the rolling stock standard (60 percent domestic content) rather than the manufactured product standard (100 percent domestic content) applied to the procurement. See 49 C.F.R. 661.5(d) and 661.11. Upon learning of this deficiency, the City correctly advised SWIS that they must bring their proposal into Buy America compliance without changing the proposal price, or risk being in breach of the awarded contract. When notified by SWIS that it could not bring its proposal into compliance, the City cancelled the contract. These actions were appropriate and fully in accord with the requirements of 49 C.F.R. 661.17.1
Because the City promptly took corrective action in this matter, the request for a Buy America investigation of this procurement by Ace Equipment & Supply Co. has been rendered moot, and I will therefore deny such request.
Nevertheless, in your letter of October 31, you ask “would SWIS not be subject to sanctions as specified by 49 CFR, 661.19?” The provision you cite states that “[a] willful refusal to comply with a certification by a successful bidder may lead to the initiation of debarment or suspension proceedings under part 29 of this title. See 49 CFR, 661.19. FTA is not aware of any evidence or allegation that SWIS’s failure to comply with their Buy America certification was in any way “willful.” Accordingly, FTA will not initiate suspension or debarment proceedings against SWIS.
I understand that the City is in the process of re-soliciting proposals for the removal and replacement of vehicle maintenance lifts. With respect to the re-solicitation, you ask whether SWIS will be allowed to participate. FTA has no information whether SWIS, or any particular contractor, will participate or not. The question is premature and FTA will not opine on this matter at this stage.
Finally, with respect to the re-solicited RFP, you state that the City’s requirement that offerors itemize unit costs for equipment and installation, and preclusion of lump sum proposals, subverts Buy America. On its face, FTA sees no violation. Be assured that on a procurement of this type, the value of the contract for Buy America purposes would include the costs of the lift equipment and its installation. FTA will monitor this procurement to assure continued compliance with the requirements of Buy America.
If you have any questions, please contact Joe Pixley at (202) 366-1936.
David B. Horner