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US territories and freely associated states get a temporary waiver for Buy America policy


 

By Mar-Vic Cagurangan

 

Contractors for federally funded projects in the U.S. territories and freely associated states have received the green light to purchase construction materials from foreign countries.


The U.S. Department of Transportation has finalized a waiver of the Build America, Buy America Act requirement under the Bipartisan Infrastructure Law. The waiver, which applies to federal grants that are obligated between April 29, 2024 and March 1, 2025, covers Guam the Northern Marianas, American Samoa, Palau, the Marshall Islands and the Federated States of Micronesia.


From 2018 to 2022, DOT has provided over $340 million in funding assistance for 160 capital projects in the U.S. territories, while the Federal Aviation Authority has awarded $88 million in airport improvement grants for 20 projects in Palau, the FSM and the Marshall Islands.


The Buy America policy requires that iron, steel, manufactured products and all construction materials used for federally funded infrastructure projects must be produced in the United States.


However, Christopher Coes, the department’s acting undersecretary for policy, noted the impracticality of imposing the domestic purchase preference on the Pacific jurisdictions located more than 5,000 miles from the mainland. The distance aspect results in higher shipping costs and construction delays, he said.


“DOT is concerned that complying with Buy America requirements may increase already elevated project time and costs—particularly in the short run,” Coe said in the final rule published in the Federal Register on April 29.


Pacific island economies have few local heavy manufacturers and rely largely on established regional supply chains from East Asia, Australia and New Zealand.


“Materials sourced from the United States lead to additional shipping fees and longer lead times, thus significantly extending construction activity schedules,” Coes said. “Ongoing gaps in supply chain availability impact lead times for materials, increasing project timelines.”


Washington is particularly concerned about the slow pace of military construction on Guam in the face of preparations for the relocation of 5,000 Marines from Okinawa and combat planning to address the growing tensions in the region.


“The challenge is the tyranny of distance in many instances. Guam is a very difficult place to get cement to and to get steel to. The challenges that we have in addition to just the tyranny of distance are the limiting factors of the port capacity,” Brendan Owens, assistant secretary of Defense told U.S. senators during a budget hearing held last month by the Senate Committee on Appropriations Subcommittee on Military Construction and Veterans Affairs. “This is problematic from a war-fighting perspective. It's also problematic from a construction perspective,” he added.


Given the restrictive factors, Coes said DOT has determined that “it is in the public interest” to exempt Pacific territories and states from the Buy America policy.

“The waiver will provide time for DOT to collect and analyze evidence to determine if a more targeted waiver of these requirements is in the public interest,” Coes said. “The waiver will be reviewed prior to its expiration.”





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