October 05, 2004
William A. Mitchell, Jr., Esq.
Massachusetts Bay Transportation Authority
Ten Park Plaza
Boston, Massachusetts 02116-3974
Mr. Eyal Banni
7910 Woodmont Avenue, Suite 820
Bethesda, Maryland 20814
Dear Messrs. Mitchell and Banni:
This letter follows the Federal Transit Administration’s (FTA) decision not to investigate alleged Buy America violations in the Massachusetts Bay Transportation Authority (MBTA) Bomb Containment Trashcan procurement. After MBTA awarded the contract to Mistral Security, American Innovations, the disappointed bidder, petitioned FTA to investigate.
Although MBTA used FTA clauses in the solicitation, FTA’s requirements do not apply to this procurement because MBTA did not use FTA funds for the purchase: FTA has verified that MBTA used grant funds from the Department of Homeland Security. As stated in FTA’s Buy America regulation, “[u]nless otherwise noted, this part applies to all federally assisted procurements using funds authorized by the Federal Mass Transit Act of 1964, as amended ….” 49 C.F.R. 661.3.
In its letter to MBTA dated June 23, 2004, Mistral Security argues that the Buy America requirements do not apply to this procurement because
[t]he Buy America requirements of 49 United States Code 5323(j), clearly reflects that it is the intent of Chapter 53—Mass Transportation, Subtitle III—General and Intermodal Programs to apply this requirement for the procurement of buses and other Intermodal [sic] transportation like conveyances and when such projects are funded to acquire manufactured goods that use steel and iron in these general categories, then Section 5323(j) will apply. [Emphasis in original].
As noted, the Buy America requirements do not apply to this procurement due to the funding source, not the products purchased. When FTA grant funds appropriated under Chapter 53 of the U.S. Code are used, the Buy America requirements apply to all steel, iron, and manufactured products purchased with those funds. See, 49 C.F.R. 661.5(a) and 49 U.S.C. 5323(j)(1). This includes trashcans, which are manufactured products.
Mistral also quotes from 49 C.F.R. 661.5(c) to support its position. This part of the regulation explains that the steel and iron requirements apply to construction materials made primarily of steel or iron; since trashcans are not construction materials, Mistral argues, section 661.5(c) does not apply. Mistral is correct; however, 661.5(d) would apply because it requires that manufactured products be of domestic origin, and trashcans are manufactured products.
Mistral also argues that the Buy America requirements do not apply to this procurement under Executive Order 12849, dated May 25, 1993. But E.O. 12849, which I have enclosed for your convenience, exempts certain procurements from the requirements of 41 U.S.C. 10a-10d, known as the Buy American Act, not from the requirements of 49 U.S.C. 5323(j).
If you have any further questions, please contact Joseph Pixley of our staff at (202) 366-1936.
Very truly yours,
Gregory B. McBride
Deputy Chief Counsel
cc: Dick Doyle, Regional Administrator