City and County of Honolulu

Wayne Y. Yoshioka
Director, Department of Transportation Services
City and County of Honolulu
650 South King Street, 3rd Floor
Honolulu, Hawaii 96813

Re: Request for Buy America Waiver

Dear Mr. Yoshioka,

I write in response to your letter asking the Federal Transit Administration to waive its Buy America requirements for two construction contracts related to the Honolulu Rail Transit Project. Specifically, you have asked FTA to waive the procedural aspects of its Buy America requirements for these two contracts because they contemplate design and construction work. For the reasons outlined below, I must deny your request.

Background

According to your letter, the City and County of Honolulu (Honolulu) is in the process of qualifying potential offerors under a two-step competitive sealed proposal procurement. Once qualified, the potential offerors may submit proposals on two contracts—a Design-Build-Operate-Maintain (DBOM) Core Systems Contract and a Design-Build (DB) Maintenance and Storage Facility Contract. Because these contracts contemplate having a single entity complete both design and construction work, the City and County of Honolulu (Honolulu) has asked FTA to waive the procedural aspects of its Buy America requirements. You base your request on informal guidance from the Question and Answer (Q&A) section of FTA’s website. The Q&A guidance indicates FTA may allow DBOM and DB contractors to postpone submitting Buy America certificates until after the design portion of each contract is complete by waiving the procedural requirements of the Buy America regulations.

Legal Standard

With limited exceptions, FTA may not obligate funds for a project unless all iron, steel, and manufactured products used in the project are produced in the United States.[1] One such exception is if applying the requirements would be inconsistent with the public interest.[2]

Public interest waivers are very difficult to obtain. While FTA implements the Buy America requirements in a manner that takes into account the practical realities of the industry, public interest waivers require a clear nexus between the waiver requested and the beneficial impact on the public. For this reason, FTA has only granted public interest waivers to address safety concerns,[3] for the introduction of significant new technology,[4] and where schedule delays would have resulted in a negative impact to the traveling public.[5] Absent these factors, FTA has consistently denied requests for public interest waivers that are predicated on convenience or a cost saving of less than 25 percent.[6]

To ensure compliance with its Buy America requirements, FTA grantees must include a Buy America provision in their procurement documents.[7] Such notice shall require, as a condition of responsiveness, that the bidder or offeror submit with the bid or offer a completed Buy America certificate in accordance with 49 C.F.R. 661.12.[8]

Decision

I understand that you based your request on information from the Q&A section of FTA’s website. Unfortunately, it appears you have cited to an outdated Q&A. I apologize if you were misguided. FTA will remove the outdated Q&A from its website immediately.

Contrary to the Q&A, FTA will not waive its Buy America requirements simply because the project sponsor contemplates using a DB or DBOM contract. This is consistent with recent decisions. For example, in 2008 Siemens Transportation Systems, Inc. inquired whether the use of a Public-Private Partnership would exempt a contract from the Buy America requirements. In response, FTA stated, “All projects funded by FTA are subject to Buy America. FTA has not waived or held out the possibility of relaxing its Buy America requirements by virtue of [a project sponsor’s use of a public-private partnership].”[9]

In keeping with recent decisions and FTA’s longstanding practice of reserving public interest waivers for extremely limited circumstances, please proceed according to the requirements outlined at 49 CFR Part 661: Your procurement documents must include an appropriate notice of the Buy America provision, and must require, as a condition of responsiveness, that the bidder or offeror submit with the bid or offer a completed Buy America certificate in accordance with 49 CFR 661.6 or 661.12 as appropriate.[10] By signing a Certificate of Compliance, a bidder or offeror “certifies that it will comply with the requirements of 49 U.S.C. § 5323(j), and the applicable regulations of 49 C.F.R. 661.11.”[11] By signing a Certificate of Non-Compliance, a bidder or offeror “certifies that it cannot comply with the requirements of 49 U.S.C. § 5323(j), but may qualify for an exception to the requirement.”[12]

If you have any questions, please contact Jayme Blakesley at jayme.blakesley@dot.gov.

Sincerely,


Scott A. Biehl
Acting Chief Counsel


[1] 49 CFR 661.5(a).

[2] 49 CFR 661.7(b).

[3] See letter dated December 16, 2003, from FTA Deputy Chief Counsel to Southeastern Pennsylvania Transportation Authority.

[4] 73 Fed. Reg. 46350 (August 8, 2008) (FTA found that quick and successful deployment of fuel cell bus technology and infrastructure is in the public interest.

[5] Letter dated February 1, 2001, from FTA Deputy Chief Counsel to Port Authority of Allegheny County (FTA granted a public interest waiver to the Port Authority of Allegheny County for final assembly of two remanufactured and two new prototype light rail vehicles. The waiver prevented a nine month delay. Such delay would have negatively affected 27,000 existing riders and 14,000 new riders).

[6] See letter dated November 14, 2008, from FTA Deputy Administrator Sherry E. Little to Daniel A. Grabauskas, General Manager of the Massachusetts Bay Transportation Authority.

[7] 49 CFR 661.13(b).

[8] 49 CFR 661.13(b).

[9] Letter dated February 26, 2008, from FTA Chief Counsel Severn E.S. Miller to Robin Arthur Stimson.

[10] 49 CFR 661.13.

[11] 49 CFR 661.12.

[12] 49 CFR 661.12, emphasis added.

FTA rejects request to waive the procedural aspects of its Buy America requirements for a project being delivered using a Design-Build contract. October 8, 2009