Detroit Department of Transportation

Karmun P. Newby
General Manager, Administration
Detroit Department of Transportation
1301 East Warren
Detroit, MI 48207

Re: Request for Buy America Waiver

Dear Ms. Newby:

I write in response to your letter dated July 28, 2008, in which you ask the Federal Transit Administration (FTA) to waive its Buy America requirements for 28” x 0.500” steel tubing to be used in the contract between the Detroit Department of Transportation (DDOT) and USA Shade & Fabric Structures, Inc. (USA Shade) for the construction of the canopy at the Rosa Parks Transit Center. The basis for your request is that the eight steel tubes, 28 inches in outside diameter and approximately 0.500” thick with minimum yield strength of 46,000 psi, are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality. After careful consideration, I have decided to waive FTA’s Buy America requirements for the eight steel tubes required to construct the canopy of DDOT’s Rosa Parks Transit Center.

Background

DDOT has asked FTA to waive its Buy America requirements for eight steel tubes; certain schedule 100 steel pipes, 28 inches in outside diameter and approximately 0.500 inch thick with minimum yield strength of 46,000 psi, which its contractor USA Shade will use to construct a canopy for DDOT’s Rosa Parks Transit Center. These eight steel tubes constitute only 5.5 percent of the total weight of steel for the entire project. The basis for DDOT’s request is the eight steel tubes are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality.

In March 2007, as part of its proposal to construct the Rosa Parks Transit Center, USA Shade, Birdair, Inc. and Graboplan, Inc. all certified compliance with FTA’s Buy America requirements. The contract was awarded to USA Shade on September 4, 2007, and the notice to proceed issued on September 7, 2007.

USA Shade explains that during the bidding stages, engineers estimate preliminary steel sizes and the prices offered in the bid are based on the average steel market value at that particular time. Sizing is strictly for rough pricing and no more than a guide to the final product. For this reason, steel sizes are not included in the project specifications. It is not until the contract is awarded that the long process of design engineering begins. Ultimately, design engineering determines the final steel sizes. Once these final steel sizes are approved by the customer, it then goes out for pricing.

After completing design engineering, USA Shade contacted its suppliers and learned that eight steel tubes were not available from a domestic source. The 28” x 0.500” steel tubing is not available domestically in sufficient quantity. They are only available from a foreign producer.

USA Shade has provided DDOT and FTA with a copy of its response from Federal Steel Supply, Inc., which states there is no domestic material available in this size in the USA. It can only be found from sources in Japan and Ukraine. DDOT has also provided a copy of a letter from the Economic Development Corporation of the City of Detroit, which provides a list of three of the 10 steel companies which were unsuccessfully contacted for this specific tubing.

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. The steel and iron requirements apply 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.

Pursuant to 49 U.S.C. 5323(j)(2), FTA may waive its Buy America requirements if the materials for which the waiver is requested are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality. After contract award, FTA may grant such a non-availability waiver only if the grantee provides sufficient evidence that the contractor’s original certification was made in good faith and that the item to be procured cannot now be obtained domestically due to commercial impossibility or impracticability. In determining whether the conditions exist to grant a post-award non-availability waiver, FTA will consider all appropriate factors on a case-by-case basis.

Before granting a post-award waiver, FTA requires evidence of bidders’ and offerors’ good faith in originally certifying compliance. This evidence would include information about the origin of the product or materials, invoices, or other relevant solicitation documents, and may include price quotes indicating the availability of domestic material at the time the contractor certified compliance.

FTA will grant a post-award non-availability waiver only if the grantee provides sufficient evidence that the original certification was made in good faith and that the item to be procured cannot now be obtained domestically due to commercial impossibility or impracticability. When considering the circumstances under which it would grant a post-award waiver, FTA will look to existing precedents in public contracting law and practice. FTA believes the commercially senseless standard, as articulated in Federal case law represents the appropriate standard for determining commercial impracticability in Buy America post-award waivers. Therefore, when questions arise as to what constitutes commercial impracticability or impossibility in a specific post-award waiver request, FTA will rely on the precedents established in Federal contract law for guidance.

Finally, in determining whether the conditions exist to grant a post-award non-availability waiver, FTA will consider all appropriate factors on a case-by-case basis. Such factors will include the status of other bidders or offerors who are Buy America compliant and can furnish domestic material or products on an FTA-funded project, and may include project schedule and budget.

Decision

It is DDOT’s position that FTA can waive its Buy America requirements because USA Shade certified compliance with Buy America in good faith, but can no longer comply with its certification because steel tubing is not available due to commercial impossibility or impracticability. As stated above, FTA may waive its Buy America requirements if DDOT has provided sufficient evidence (1) that USA Shade made its original certification in good faith, (2) steel tubing cannot now be obtained domestically due to commercial impossibility or impracticability, and (3) after considering all appropriate factors, including the status of other bidders or offeror.

After careful review of the facts, it is my opinion that USA Shade has satisfied the above criteria. Based on the information above, I hereby grant DDOT a post-award non-availability waiver for the eight 28” x 0.500” steel tubes that its contractor USA Shade will use to construct a canopy as part of the Rosa Parks Transit Center.

Feel free to contact Jayme L. Blakesley at (202) 366-0304 or jayme.blakesley@dot.gov with any questions.

Sincerely,

Severn E.S. Miller
Chief Counsel

Post-award, non-availability waiver for the purchase of steel tubing to be used for the construction of a canopy at the Rosa Parks Transit Center. January 14, 2009