HUD Clarifies Recovery Act's “Buy American” Provision
The American Recovery and Reinvestment Act of 2009, approved on February 17, awarded $4 billion for the Public Housing Capital Fund. A provision of the Recovery Act calls for all of the iron, steel, and manufactured goods used in projects for the construction, alteration, maintenance, or repair of a public building or public work to be produced in the United States. The provision, Section 1605(a), is known as the “Buy American” provision.
Section 1605(b) of the Recovery Act provides for certain exceptions to the Buy American requirement. Specifically, the section says that the provision need not apply in cases or categories in which the head of a federal department or agency finds that:
Applying the Buy American requirement would be inconsistent with the public interest;
Iron, steel, and the relevant manufactured goods are not produced in the U.S. in sufficient and reasonably available quantities or of satisfactory quality; or
Inclusion of iron, steel, and manufactured goods will increase the cost of the overall project by more than 25 percent.
Section 1605(c) states that if the head of a federal department or agency makes a determination based on Section 1605(b), he or she must publish a detailed written justification in the Federal Register.
HUD Lists Five Exceptions
On Sept. 11, 2009, the HUD Office of the Assistant Secretary for Public and Indian Housing outlined specific exceptions in the Federal Register, Vol. 74, No. 175. The exceptions determined applicable, without the necessity of a grantee to seek an individual exception determination, are as follows:
1. If another federal agency (such as the Department of Commerce, Department of Energy, or Environmental Protection Agency) has determined that an exception to the Buy American requirement is applicable under Section 1605(b) for a project including public housing, HUD will accept that agency's determination and permit the public housing agency (PHA) (HUD program grantee) to apply that exception for the remainder of HUD-assisted work in that project.
2. If another HUD Program Office (such as the Office of Community Planning and Development) has determined that an exception to the Buy American requirement is applicable under Section 1605(b) for a project, and an analysis supports its application to another request, HUD's Office of Public and Indian Housing (PIH) may accept that determination and permit the PHA to apply that exception to the remainder of the Capital Fund grant work in that project.
3. Where the size of the Capital Fund grant is less than $100,000 (currently the 24 CFR part 85 simplified acquisition threshold), the Buy American requirement is not applicable.
4. Where the size of a contract funded with Capital Fund grant assistance is less than $100,000, regardless of the size of the PHA, the Buy American requirement is not applicable.
5. For any project substantially under contract or under way prior to the acceptance of Capital Fund funds, the Buy American requirement is not applicable.
In addition to these five national exceptions, there is also a list of non-available articles at 48 CFR 25.104(a) (FAR List). The procedures to apply if any of those articles are manufactured goods needed in the project covered by the Buy American requirement are found at 48 CFR 25.103(b)(1).
Exceptions Intended to Avoid Delays
The five national exceptions specified by the Assistant Secretary's office are intended, overall, to keep projects moving in a timely manner and avoid funding gaps. Specifically, these exceptions are necessary to:
Avoid delays in completing and restoring housing for low-income families and meeting the Recovery Act deadlines;
Avoid delays in the start of construction and modernization of public housing that will jeopardize jobs;
Avoid the possibility of additional funding gaps at the termination of certain contracts because price differences were caused by the re-procurement of goods and equipment;
Avoid the loss of funding for critical projects; and
Address current and emerging situations presented by public housing agencies.
Goal Remains to Buy American
HUD's foremost expectation is that public housing agencies will use American iron, steel, and manufactured goods throughout projects that are being assisted with Recovery Act funds. The intent of the recovery legislation is to provide capital funding to projects as quickly as possible to create jobs, assist those most affected by the recession, and stabilize state and local government budgets.
The outlined exceptions were considered to be appropriate because compliance with the Buy American requirement would be disproportionate to the cost and time involved for public housing agencies and would delay work on critical public housing projects and the jobs associated with them. HUD has decided that cost-based exceptions must be determined on a case-by-case basis and submitted to HUD for review under the PIH's Buy American Implementation Guidance.
For additional information, see http://www.hud.gov/offices/pih/publications/notices or phone the PIH at (202) 402-8500.
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