2014 Burgett and Scheimer Buy America Requirements For Federally Funded Bikeshare Projects 2014 Dec

Buy America and BikeShare
Presented by the North American BikeShare Association
Dave Burgett, Hogan Lovells

Mike Scheimer, Hogan Lovells
Steve Hoyt-McBeth, North American BikeShare
Association (moderator)
Speakers
Dave Burgett, Hogan Lovells
Mike Scheimer, Hogan Lovells
Buy America
Requirements for Federally-funded Bikeshare Projects
Dave Burgett
Partner
&
Mike Scheimer
Associate
December 3, 2014
Government Contracts & Grants / Washington, DC
Grants from the US Dept. of Transportation

Two USDOT administrations provide funding
through 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.
www.hoganlovells.com
FTA Funding Potential 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.
FHWA Funding Potential Uses
Bicycle docks
Software / control systems
Rental / payment kiosks
Bicycles
Repositioning vehicles
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 statutory Buy America standards are very

similar for both agencies
but the agencies have implemented them
differently in certain key aspects.
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.
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 nonfederal funding does not mean that 10 percent of the
purchases may be non-compliant.
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 possible
level.
10
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)
11
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
12
Steel and Iron End Products (2)

Steel or iron components of manufactured end
products are not covered.
Manufactured end products: Infrastructure projects not
made primarily of steel or iron, including structures
(terminals, depots, garages, and bus shelters), ties and
ballast; contact rail not made primarily of steel or iron; fare
collection systems; computers; information systems;
security systems; data processing systems; and mobile
lifts, 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)
13
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
14
Manufactured End Products

Applies only to FTA funds (FHWA has waived the
limitation)
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 manufactured
anywhere.
This is a very demanding standard, since global

sourcing of components is commonplace.
15
Components vs. subcomponents

Components are the elements combined to form the
end product at the final stage of assembly.
16
What is a manufactured good? -- System vs.

product
The FTA regulations permit the FTA to treat a
system 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., a
turnstile 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.
17
Definition of system
System means a machine, product, or device, or a
combination of such equipment, consisting of individual
components, whether separate or interconnected by
piping, transmission devices, electrical cables or circuitry,
or by other devices, which are intended to contribute
together to a clearly defined function. Factors to consider
in determining whether a system constitutes an end
product include: Whether performance warranties apply to
an integrated system (regardless of whether components
are separately warranteed); whether products perform on
an integrated basis with other products in a system, or are
operated independently of associated products in the
system; or whether transit agencies routinely procure a
product separately (other than as replacement or spare
parts).
18
FTA does not treat a bikeshare system as a

single system.
Alta Bikeshare argued that a bikesharing system
should 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.
19
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.
20
Potential expansion of FTA funding to

bicycles
A draft bill would amend the definitions of
associated 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.
21
Potential expansion of FTA funding to

bicycles
Therefore, the very strict manufactured goods
standard 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.
22
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% US
components by cost)
FHWA: No Buy America requirement
Steel structural components of stations

Steel must be produced and the component fabricated in
the US
23
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.
24
Discussion
Dave Burgett
david.burgett@hoganlovells.com
+1 202 637 6597
Michael J. Scheimer
michael.scheimer@hoganlovells.com
+1 202 637 6584
25
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2014 Burgett and Scheimer Buy America Requirements For Federally Funded Bikeshare Projects 2014 Dec

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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

Grants from the US Dept. of Transportation

Each has multiple funding programs that may

FTA Funding Potential Uses

FTA funding is not currently available for bicycles

FHWA Funding Potential Uses

Statutory Buy America Requirements

The statutory Buy America standards are very

General Principles Applicable to Buy America (1)

Potential severe liability for noncompliance (false

General Principles Applicable to Buy America(2)

A waiver may apply to an end product or to

Categories of Buy America Limitations

Applies to both FTA and FHWA

Steel and Iron End Products (1)

Steel and Iron End Products (2)

Manufactured End Products

This is a very demanding standard, since global

Components vs. subcomponents

What is a manufactured good? -- System vs.

FTA does not treat a bikeshare system as a

This does not rule out the possibility of certain

FTA Rolling Stock Requirements

A component is deemed US-manufactured if it is

Potential expansion of FTA funding to

Potential expansion of FTA funding to

Prospects for passage of the bill are uncertain.

Steel structural components of stations

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