Buy America to build in the territories hikes project costs

Pago Pago, AMERICAN SAMOA — The US Transportation Department (USDOT) has joined the growing list of federal agencies proposing an 18-month “temporary general applicability public interest waiver” of the requirements for the federal Build America, Buy America Act (BABA) for federal financial assistance awarded for infrastructure projects in American Samoa, the Commonwealth of Northern Mariana Islands (CNMI), and Guam.

In a public notice issued Aug. 08 and posted via federal portal (www.regulations.gov), the USDOT is expanding the waiver to also include funds awarded to the Freely Associated States. Public comments are being sought and the deadline to submit comments is by Aug. 24.

The Buy America preferences set forth in provisions of the BABA require that all iron, steel, manufactured products, and construction materials used for infrastructure projects in the United States under federal financial assistance awards be produced in the United States.

As of yesterday morning two comments were received and posted. One comment came from Natalia Palamo, who strongly agrees with the waiver for the territories, saying that she is an employee of the American Samoa Department of Port Administration, and “it is always a challenge to source these products, and costly to transport them to American Samoa — the southern most American Territory.”

“This puts us at a great disadvantage, the logistics to source and then ship to the islands, has always resulted in an increase in cost,” Palamo wrote. “For federal grants, this puts our cost estimates for a project, almost 3 times higher than the same project in the continental USA.”

However, the Mississippi-based family owned Taylor Machine Works, Inc. voiced concerns with the waiver. The 93-year old company informed USDOT that it provided forklifts and container handlers into the Pacific Island Territories in the past and are currently in process of supplying BABA compliant Loaded Container Handlers (Top Picks) and Empty Container Handlers (Side Picks) into Guam to support recovery efforts from the recent typhoon.

“While we fully understand the challenges the vast distance between the US Mainland and the Pacific Island Territories pose, we urge against a blanket waiver that would allow inferior Asian products to flow freely into these US territories,” wrote Spencer Pope, Product Manager of Taylor Machine Works, Inc., to USDOT.

“These are also strategic locations that should be guarded against foreign technology that could be detrimental to the safety of those territories,” said Pope. “We ask that any application that requires material handling equipment that can be provided by a US (BABA) manufacturer, be prioritized over Foreign sourced equipment.”

“We appreciate the consideration and will always do everything we can to be a timely solution provider for our valued private and government customers in the Pacific Island Territories,” said Pope, whose letter included a sample list of equipment that the company can provide.

Pope noted the company also provides BABA compliant Zero Emission Battery Electric versions of many models.

In its federal notice, USDOT noted that the economies in the Pacific Islands are over 5,000 miles from the mainland United States and must import products via air or sea. These economies have few local heavy manufacturers and largely rely on established regional supply chains from east Asia, Australia, and New Zealand.

And most goods, equipment, materials, and supplies are imported and rely on shipping with associated timelines and unpredictable shipping fuel costs fluctuations. Moreover, materials sourced from the United States lead to additional shipping fees and longer lead times, thus significantly extending construction activity schedules.

In considering this waiver, USDOT said it consulted with the relevant Federal assistance programs in the USDOT’s Operating Administrations and also relied on other communications that it has received from stakeholders in those territories.

For example, CNMI and Guam have cited their isolated location in the Western Pacific and reliance on ocean freight as the only mode of transporting commodities to the island as creating significant challenges in obtaining materials from domestic sources, with impacts on both project costs and delivery schedules.

USDOT noted that other Federal agencies have also conducted outreach efforts to the Pacific Island territories and received similar feedback. For example, representatives from American Samoa have indicated to the U.S Federal Emergency Management Agencythat “As a containerized community, our territories depend on goods, equipment, materials, and supplies to be imported.”

They further stated that “we can purchase equipment from foreign countries closer to American Samoa and with reasonable prices and shorter shipping time.” American Samoa representatives also noted that availability of materials from nearby foreign countries such as New Zealand and Australia would result in a significant cost savings to the grantors.

According to USDOT, the proposed duration of the waiver is 18 months after the effective date of the final waiver. The department will review this waiver in 12 months to assess whether it remains necessary to the fulfillment of USDOT's missions and goals and consistent with applicable legal authorities.

Without the waiver, USDOT-assisted infrastructure projects located within the Pacific Island territories and Freely Associated States will continue to experience challenges with product delivery, availability, reliability, and project scheduling, according to the notice.

Infrastructure project schedules rely on readily available products delivered within reasonable timeframes, it says.