Title: Enforcement of Buy America

Phase(s): Final Design, Construction

Category: Management

Date: September 16, 2008

1. Background

The Charlotte Area Transit System (CATS) South Corridor Light Rail Project (SCLRP) is located in Mecklenburg County, North Carolina, and links Uptown Charlotte’s Central Business District to the I-485 Station.  The light rail line operates within the existing Norfolk Southern Railroad (NSRR) Right of Way (ROW) for approximately 9.6 miles. 

Buy America requirements are put in place to ensure that all iron, steel, and manufactured products used in the project are produced in the United States.  Here is a summary of its impact on the project and what could be done to minimize this situation from re-occurring.

Foreign material was delivered to the project, which could have caused potential delay in construction schedule, cost growth, and violation of contract and FTA requirements.  Station Finishes contract had a problem due to foreign steel being used in manufacturing of station canopies by its supplier.  After several schedule delays were reported on the manufacturing and delivery of Station Canopies, the Contractor and the Construction Manager got involved in tracking and monitoring canopy fabrication and delivery but discovered that the supplier had used Canadian built steel for all support columns in canopies that were being manufactured for the northern stations of the South Corridor project.

After detail inspection and evaluation, CATS reported that only the center support columns were affected, and no other steel for the canopy was at issue.  CATS clarified that all columns for these canopies were affected. 

CATS estimated that the cost of the affected steel would be about $76,000.  It was determined that if the issue was not resolved immediately, it could potentially impact the schedule and delay the systems contract; however, CATS stated that it had about 30 days in float in the canopy, but some system elements needed to be installed.

An evaluation of the situation revealed that, if the installed canopies had to be removed and replaced, a schedule impact to follow-on system contractors could be significant with impacts to the Project Revenue Operations Date.

CATS concluded that the best option would be to leave the installed canopies in place and get full credit for them from the contractor.  FTA/PMOC concurred with these findings.  CATS contended that any associated cost in mitigating this issue would be the Contractor’s responsibility, not just Buy America, but overall.

The CM assessed the situation and determined the minor components did not require replacement.  The Contractor was given the option of replacing the components or providing a credit for the materials.  This issue required several months to resolve.

The issue was ultimately resolved without any impact to the project FFGA revenue date, but system work that needed to be installed on the station canopies was impacted.  Credit was issued by the Contractor for the Canadian steel that remained in place.  CATS continued to track any cost associated with this impact and resolved it during contract closeout.

In these cases the requirements were included in contract specifications, and certifications were required and issued by contractors.  However, the violations were not discovered until the material was delivered and installed in place, which affected several parts of the project including:

• Installation of all related activities were put on hold pending resolution of issues
• The follow-on installation might have to be removed and re-installed.
• Schedule was affected and some activities were impacted with a potential delay to the contract and project critical path.
• Cost impacts were collected to be charged back to the contractor.
• Credit change order issued for the affected steel that needed to remain in place.
• PMOC, FTA and Other oversight groups had to get involved to evaluate, report and enforce FTA required corrective actions.

During the course of the project, other violations, such as handrails and fences, were also discovered to be in violation of Buy America requirements and were replaced with correct material.

2. The Lesson

Buy America Requirement needs to be included in all contracts, including all levels of sub-contractors, suppliers, and so forth.

Just because the clause is written into the contract does not mean that contractors automatically follow it.  QA requirements could be strengthened for major material to allow earlier inspection and identification of this type of issue before it impacts the project.  QA/QC of the requirements need to be expanded and fully enforced, verified, and when discovered, proper notifications and actions need to be initiated immediately:

Projects with Buy America Clause could be improved by taking the following actions:

• Specifications should contain clear Buy America language;
• Ensure that the QA/QC processes include Buy America;
• Clear in-house procedures for addressing violations and solutions should be developed.

Depending on the situation and criticality of the material in question, other alternatives are available, such as the ones implemented on this project including crediting the project for non-compliant materials.

3. Applicability

Buy America is a requirement in all FTA funded projects, and proactive management and enforcement is necessary to avoid potential cost and schedule impact to the project.

4. References

Spot report 18 dated 8/27/07