Exceptions and Waivers for the Buy American Act and Buy America Provisions

Canada – U.S. Agreement on Government Procurement

The Canada-U.S. Agreement on Government Procurement allows further exceptions to Buy American (BAA) provisions found within the American Recovery and Reinvestment Act (ARRA). When the total cost of an ARRA funded project exceeds the thresholds of the WTO GPA (US$7.358 million), Canadian iron, steel and manufactured goods are exempt from Section 1605 of the ARRA for seven programs, including programs funded by the U.S. Department of Housing and Urban Development (HUD), U.S. Department of Energy (DOE) and the Environmental Protection Agency (EPA). For the complete details of the agreement, please see our page on the Canada-U.S. Agreement on Government Procurement.

Waivers

Applications can be made to waive Buy American provisions for certain foreign made products, regardless of the product, procuring entity or source of funding. Waivers can be used to exempt a product from 1933 Buy American Act, 1982 Buy America Act and for procurement opportunities outside of the seven programs specified in the 2009 ARRA. Exceptions to the Buy American rules can be made by the heads of federal departments or agencies and may receive a waiver when the use of a domestic product is:

• Inconsistent with the public interest.
• Insufficient or reasonably unavailable quantities of the domestic product or its quality are unsatisfactory.
• Likely to increase the overall total cost of the project by 25%.

For example, the EPA has issued several waivers claiming 'public interest' or 'unavailability'. Waiver requests and reviews are posted on the Federal Register.

Waivers, Buy American and Construction Projects

Construction materials that are 100% manufactured in the U.S. and with greater than 50% U.S. content must be used in contracts of less than $10,079,365 unless:

• the cost would be unreasonable, unless the agency head determines otherwise. (When evaluating offers contracting officers will add 6% to the cost of foreign materials contained in the offer.); or
• there are not sufficient reasonably available commercial quantities of a satisfactory quality; or
• the agency head determines that it would be impracticable; or
• the agency head determines it would be inconsistent with the public interest.

Prime contractors can request a waiver from the contracting agency based on one or more of these exceptions.

Canadian firms should be certain their sales personnel in Canada and the U.S. are aware of Buy American and how it applies. In several cases, U.S. distributors have cancelled orders upon realizing that waivers would be needed to use a Canadian product. Suppliers should be ready to explain the rules to potential buyers and contractors. Most of all, Canadian representatives should do all they can to make the waiver process as straightforward as possible. That might include:

• talking to contracting officers who might be involved in a request for waiver;
• finding out who would have to recommend and approve the waiver request;
• if possible, meeting with contracting agency officials to determine whether they would be willing to consider a waiver to use the Canadian product;
• working with the contracting agency to draft correct language and justification (as provided by the FAR) for a waiver request; and
• preparing a draft letter, on blank paper, for use by the prime contractor and others as required to make the request.

Be Prepared to Market in Advance for Waivers

The prime contractor must either certify that all materials to be used in the project meet the requirements of BAA or, to list exceptions that are proposed. Therefore, the prime contractor must apply to the contracting agency to get BAA waived. A waiver must be obtained before an otherwise ineligible product may be used in the project.

Successful marketing to use a Canadian product or system in a public work can begin in the design phase of the project, with the engineering firm that is hired to write the specifications.

If, as often happens, the Canadian firm is selling to a distributor who is supplying a subcontractor to the electrical contractor that is subbing to the prime contractor who won the bid for the overall project the rule is the same: only the prime contractor may apply for the waiver. The whole chain of contractors has to want to use the Canadian product more than any other American product (typically on the grounds of significant price or technological advantage) and, convince the prime contractor to apply for the waiver.

Even if the consulting architect or engineer specifies a Canadian product, the prime contractor must still obtain a waiver in order to use that product in the project. If the consulting engineer specified a Canadian building product, system, or component, that would strengthen the argument a prime contractor could make to the government agency in a waiver request.

Waivers, Buy America and Transit Projects

BAA waiver requests are fairly common in rolling stock procurements. The FTA's Washington, D.C. office, can advise grant recipients on foreign content issues.

To request a waiver, the grant recipient, contractor and subcontractor involved must:

• provide a certificate of non-compliance to the FTA stating that their bids will not comply with BAA requirements, in which they list the items for which waivers will be sought, and then,
• apply for those waivers from the FTA.

The Administrator of the FTA may waive Buy America provisions at the request of the grant recipient based on:

• public interest: the use of American goods would be contrary to the public interest of the United States [49 CFR Part 661.7 (b)];
• non-availability: the materials for which the waiver is requested are not available in sufficient quantity and reasonable quality [49 CFR Part 661.7 (b)]; or
• price: inclusion of American goods would increase the cost of the contract between the grantee and the supplier of that item by more than 25% [49 CFR Part 661.7 (d)].

Unsolicited Proposals

Innovative and unique products or technology may be submitted to a federal department or agency for review. Should this product be found to have use but, no domestically produced counterpart, the product could receive a waiver exempting it from all BAA provisions. The review process varies between departments and agencies, particularly for determinations made by the Federal Transit Administration concerning Buy America. Learn more about unsolicited proposals.

For more information, please contact your nearest Canadian Trade Commissioner – In Canada or Abroad.