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7/24/2019 2014 Burgett and Scheimer Buy America Requirements for Federally Funded Bikeshare Projects 2014 Dec
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Buy America and BikeShare
Presented by the North American BikeShare Association
Dave Burgett
, Hogan Lovells
Mike Scheimer, Hogan Lovells
Steve Hoyt McBeth
, North American BikeShareAssociation (moderator)
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Speakers
Dave Burgett, Hogan Lovells
Mike Scheimer, Hogan Lovells
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December 3, 2014
Government Contracts & Grants / Washington, DC
Buy AmericaRequirements for Federally-funded Bikeshare Projects
Dave Burgett & Mike ScheimerPartner Associate
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Grants from the US Dept. of Transportation
Two USDOT administrations provide fundingthrough grants to cities and transit authorities.
Federal Transit Administration (FTA)
Federal Highway Administration (FHWA) Each has multiple funding programs that may
support bikeshare systems.
Depending on the program, the federal share may
be as much as 80, 90, or 95 percent.
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FTA FundingPotential Uses
Permitted uses include:
Bicycle docks
Software / control systems
Rental / payment kiosks Repositioning vehicles
FTA funding is not currently available for bicycles
However, a bill pending in Congress would expand
funding to bicycles.
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FHWA FundingPotential Uses
Bicycle docks
Software / control systems
Rental / payment kiosks
Bicycles Repositioning vehicles
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Statutory Buy America Requirements
FTA and FHWA each has its own statute that:
Gives grant making authority
Imposes Buy America limitations on what can be
purchased with grant funds
The statutoryBuy America standards are very
similar for both agencies
but the agencies have implemented them
differently in certain key aspects.
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General Principles Applicable to Buy America (1)
Grant funding is conditional on compliance.
Grantee agencies must pass the requirements on to
their contractors and suppliers, and require them to
certify compliance. The system generally relies on self-certification, but
grantees and the federal grantors may audit.
Potential severe liability for noncompliance (false
certification) under the False Claims Act.
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General Principles Applicable to Buy America(2)
Standards apply to the funded project as a whole,not just the federally-funded amount.
For example, the fact that you have 10 percent non-
federal funding does not mean that 10 percent of the
purchases may be non-compliant.
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Waivers
Waivers may be granted on a case-by-case basis. Public interest
Cost differential of > 25 percent (based on total cost of the
grantees contract with the supplier of the item)
Unavailability of a compliant item
A waiver may apply to an end product or to
particular components.
Waivers are intended to be made at the lowest possiblelevel.
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Categories of Buy America Limitations
There are three relevant categories: 1. Iron and steel products
Applies to both FTA and FHWA
2. Manufactured goods
FTA only
(Statutes apply this standard to both agencies but the FHWA has
waived Buy America as to manufactured goods)
3. Rolling stock
FTA only (No such statutory requirement for FHWA)
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Steel and Iron End Products (1)
These are elements used in construction projects(fixtures) that are primarily made of steel.
Steel and iron end products:Items made primarily of steel
or iron such as structures, bridges, and track work,
including running rail, contact rail, and turnouts.
Examples:
Steel bicycle docks
Steel frame of map / information station Steel shelter frame / bench
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Steel and Iron End Products (2)
Steel or iron components of manufactured endproducts are not covered. Manufactured end products:Infrastructure projects not
made primarily of steel or iron, including structures
(terminals, depots, garages, and bus shelters), ties andballast; contact rail not made primarily of steel or iron; farecollection systems; computers; information systems;security systems; data processing systems; and mobilelifts, hoists, and elevators.
Examples: Steel parts in a payment kiosk
Steel fasteners (e.g., screws in a docking station)
Steel bicycle components (e.g., sprocket, axle)
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Steel
All manufacturing processes for the steel product(including melting and pouring through fabrication)
must be performed in the US
Sole exception: metallurgical processes for steel
additives
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Manufactured End Products
Applies only to FTA funds (FHWA has waived thelimitation)
Currently, bicycles are only funded by FHWA, and
are not subject to Buy America limitations. Standard:
1. The end product must be manufactured in the US. and
2. All of its components must be manufactured in the
USbut subcomponents may be manufacturedanywhere.
This is a very demanding standard, since global
sourcing of components is commonplace.
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Components vs. subcomponents
Components are the elements combined to form theend product at the final stage of assembly.
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What is a manufactured good? -- System vs.
product
The FTA regulations permit the FTA to treat asystem as a single product.
For example, a fare collection system might be considered
a single system, even though it comprises elements that
could be purchased and installed separately (e.g., aturnstile gate).
In this case, the turnstile is a component (not a
manufactured good). Therefore its parts are only
subcomponents and need not be manufactured in the US. The FTA has some leeway in drawing the line.
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Definition of system
Systemmeans a machine, product, or device, or acombination of such equipment, consisting of individualcomponents, whether separate or interconnected bypiping, transmission devices, electrical cables or circuitry,or by other devices, which are intended to contribute
together to a clearly defined function. Factors to considerin determining whether a system constitutes an endproduct include: Whether performance warranties apply toan integrated system (regardless of whether componentsare separately warranteed); whether products perform on
an integrated basiswith other products in a system, or areoperated independently of associated products in thesystem; or whether transit agencies routinely procure aproduct separately(other than as replacement or spareparts).
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FTA does not treat a bikeshare system as a
single system.
Alta Bikeshare argued that a bikesharing systemshould be treated as a single system for Buy
America purposes
FTA found this to be too broad.
This does not rule out the possibility of certain
systems within a bikeshare system.
For example, an integrated kiosk / docking system.
These would have to scrutinized on a case-by-case basis. FTA may be asked to opine.
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FTA Rolling Stock Requirements
Applies to motor vehicles (e.g., repositioning vans) Bicycles are not funded by FTA, nor are they rolling
stock.
Standard:
End product (the vehicle) must be manufactured in the US
60 percent of the total component cost must be
attributable to US components.
Note that this is less restrictive than the FTA manufactured product
standard.
A component is deemed US-manufactured if it is
manufactured in the US and US subcomponent content
represents 60 percent of total subcomponent cost.
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Potential expansion of FTA funding to
bicycles
A draft bill would amend the definitions ofassociated transit improvement and capital
project in 49 USC 5302.
The net effect would be to enable FTA funding of bicycle
purchases as part of bikeshare capital projects.
At present, the bill does not contain provisions creating
any special Buy America requirements or exemptions for
bicycles.
Under the current general FTA Buy America regulations,
bicycles would not qualify as rolling stock, but would
qualify as manufactured goods.
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Potential expansion of FTA funding to
bicycles
Therefore, the very strict manufactured goodsstandard would apply, requiring that all components,
as well as the final product, be manufactured in the
US.
Grantees would likely have to obtain a Buy America
waiver in order to fund bicycle purchases.
Prospects for passage of the bill are uncertain.
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Summary (1)
Bicycles Currently funded only by FHWA; no Buy America
requirement
In the foreseeable future, FTA funding may also be
available, but a Buy America waiver may be needed. Repositioning vans
FTA: Rolling stock standard (US manufacture + 60% UScomponents by cost)
FHWA: No Buy America requirement Steel structural components of stations
Steel must be produced and the component fabricated inthe US
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Summary (2)
Manufactured end products The product and all components (but not subcomponents)
must be manufactured in the US.
In some cases an integrated systembut not the entire
bikeshare infrastructuremay qualify as an end product.
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Discussion
Dave Burgett Michael J. Scheimer
[email protected] [email protected]
+1 202 637 6597 +1 202 637 6584
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