Buy America and aviation projects

Airport projects are most frequently undertaken by local or regional airport authorities using federal funds provided under federal statutes which require specific levels of domestic content (Buy America) requirements. The two most relevant federal statutes are:

• Aviation Safety & Capacity Expansion Act of 1990 (subtitle B of title IX of PL 101-508), the Omnibus Budget Reconciliation Act of 1990)
• Airport & Airway Safety, Capacity, Noise Improvement & Intermodal Transportation Act of 1992 (PL 102-581, title 1, s. 103-104)

The Federal Aviation Administration (FAA) controls funding for improvements at many local and regional airports throughout the United States. You may learn about scheduled airport funding on the FAA's Airport Improvement Program (AIP) webpage.

The FAA is part of the Department of Transportation (DOT) and is responsible for administering the U.S. aviation system as well as for funding portions of the infrastructure of that system. Canadian companies will generally interact with the FAA in either a direct sale to the FAA or as a subcontractor on an FAA funded project.

The FAA also oversees compliance with federal laws that apply to the use of funds by airports. Implementation of these laws includes following Buy America preference clauses to be used in airport improvement contracts. Examples of standard clauses used in such contracts can be found in the FAA's Contract Writing Toolbox.

Direct procurement by the FAA

Direct procurements by the FAA (i.e., when the FAA purchases something for its own use) was previously covered by the North American Free Trade Agreement (NAFTA) Chapter 10.^{Footnote 1} Since the FAA is not covered under the revised World Trade Organization Agreement on Government Procurement (WTO GPA), Buy American requirements will apply for Canada for all FAA direct procurement.

Federally funded aviation projects

The vast majority of sophisticated airport equipment (e.g. sensing devices, computer systems for other than air navigation, airport safety and security systems, baggage handling equipment, road graders, snow plows) is not purchased directly by the FAA. Similarly, contracts to expand airports, build runways, install ground communication equipment or terminal facilities, or to purchase maintenance equipment are most often managed by state or local governments, or by private sector corporations that receive funds from the Department of Transportation. Typically, the FAA grants funds for these purchases to state and local airport authorities. Certain Buy America requirements are attached to these funds, and may represent a significant barrier for Canadian suppliers.

Buy America preferences

The Aviation Safety and Capacity Expansion Act of 1990 provides that preference be given to steel and manufactured products produced in the United States when funds are expended pursuant to a grant issued under the Airport Improvement Program. The following terms apply:

• steel and manufactured products: the cost of components mined, produced, or manufactured in the United States must exceed 60% of the cost of all components and final assembly must take place in the United States;
• components mean those articles, materials, and supplies incorporated directly into steel and manufactured products;
• the cost of components refers to the costs of producing the components, exclusive of final assembly labor costs.

The successful bidder will be required to provide assurance that only domestic steel and manufactured products will be used by the contractor, subcontractors, and suppliers in the performance of this contract. Exceptions may be granted if:

• goods are not produced in the United States in sufficient and reasonably available quantities and of satisfactory quality; or
• a domestic preference would be inconsistent with the public interest; or
• the inclusion of domestic material will increase the cost of the overall project contract by more than 25 percent; or
• the product is for use outside the U.S.

If facilities and equipment are being acquired under the Airport and Airway Improvement Act of 1982, then no funds may be obligated unless:

• the cost of components and subcomponents which are produced in the U.S. is more than 60% of the cost of all components of the facility or equipment used in the project; and
• final assembly of the facility or equipment occurred in the U.S.

The use of foreign materials in any project will not be permitted unless it is pursuant to one of the exceptions noted above.

Facilities include airport runways, taxiways, lighting and signage systems, things a single airport would acquire or build.

Equipment might include a road grader used for airport road maintenance. The 60% content requirement would apply to the sum of all materials and products used to construct the airport movement area and sign systems. However, in the case of equipment, each individual road grader would need 60% U.S. material content, and the contracting officer would have to be satisfied that manufacturing of the equipment took place in the United States.

U.S. content includes only the value of materials used, not expenses for labour, overhead, marketing, or salaries. For an interpretation of questions (such as how the value of U.S. content in software is calculated), companies should speak to both the contracting officer handling the contract and the FAA office that provided the grant. Both of these officials want to ensure that the Buy America conditions of the project funding are met. If the Canadian components are to be part of a larger system, or will be combined with other products on a single prime contract, firms involved need to check with contract officials to find out how content and assembly requirements must be met.

Thirty-seven American states have undertaken government procurement commitments under the revised WTO Agreement on Government Procurement (GPA). For covered aviation projects in these states, Canadian suppliers may be exempt from Buy America requirements. However, note that a number of the 37 covered states have adopted exceptions for the procurement of construction-grade steel and motor vehicles. More information can be found here.

For additional assistance, please contact your nearest Canadian Trade Commissioner: In Canada or Abroad.

For more information:

• Visit the Department of Transportation (DOT) Buy America webpage.
• FAA developed its own procurement rules, known as the Acquisition Management System (AMS). The FAA has made a considerable amount of procurement related information available online. For an overview of the AMS policy, visit the FAA's FAST (FAA Acquisition System Toolset) website.
• You can also contact the FAA's Office of Dispute Resolution for Acquisition (ODRA).