2014 burgett and scheimer buy america requirements for federally funded bikeshare projects 2014 dec

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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www.hoganlovells.com

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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mailto:[email protected]:[email protected]:[email protected]:[email protected]


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