I’m not sure how I missed this (actually, I have an idea – more on that in a minute), but back in February the Federal Transit Administration issued the following warning about strengthened “Buy America” transit procurement protectionism:
Congress and the Obama Administration asked Americans to provide $787 billion to help avoid an economic catastrophe and restore and modernize America’s infrastructure. In return, the Federal Government asks recipients of Recovery Act funds to be held accountable to the American public by using these resources to maximize opportunities to put Americans back to work and to support our domestic manufacturing industry.
In order to support this goal, the Federal Transit Administration (FTA) will not consider any requests for a public interest waiver of FTA’s Buy America regulation for Recovery Act projects. If issued, such waivers would allow recipients of Recovery Act funds to procure steel, iron, or manufactured products, including rolling stock, that are not produced or manufactured in the United States. I will not waive Buy America for Recovery Act projects because such action would undermine the very purpose and intent of the Recovery Act—to preserve and create jobs in America. In addition, FTA will continue to carefully scrutinize requests for waivers based on non-availability to determine whether suitable American-made alternatives exist, and if none do, whether the funds can be used in an alternative manner that fulfills the goals of the Recovery Act. Similarly, FTA will examine requests for cost-differential waivers to determine whether the cost savings justifies the loss of American jobs, especially in critical manufacturing sectors. By necessity, FTA will extend existing, standing waivers—for products exempted by the Federal Acquisition Regulation, microprocessors and microcomputers, and small purchases—to Recovery Act-funded procurements, although I encourage recipients to use their best efforts to carry out the intent of Congress and the Obama Administration by carefully stewarding their Recovery Act funds in a manner that supports a healthy and robust domestic manufacturing base.
Buy America is a policy dating back to the Great Depression which requires the government to buy goods made in America when at all possible. For transit, it means that 60% of all materials, from steel to streetcars, must be sourced domestically, and final assembly must take place in the US as well. This final assembly requirement sometimes (often?) means that transit vehicles manufactured abroad are disassembled, shipped to the US, and then reassembled by American workers – the modern-day equivalent of paying people to dig holes and then fill them back up. Normally there are waivers if parts and materials would raise the cost by more than 25% and in the nebulous case that applying Buy American “would be inconsistent with the public interest” (seems to me like it’s always inconsistent with the public interest), but it doesn’t look like the current administration will be granting them any longer.
And while I think it’s a dumb policy in all circumstances, I suppose that the stimulus (“Recovery Act”) was intended as a Keynesian jobs program, so I’m not surprised to see Buy America applied very strictly to those funds. This part, though, was not something that I was expecting:
In addition to the above guidance, please note that this heightened standard is not exclusive to the Recovery Act. FTA has raised the bar for all Buy America waiver requests. All requests will be scrutinized. Most requests will result in FTA offering technical assistance to develop a solution that will not necessitate a waiver. Please be cautious about leading your projects down a path where a Buy America waiver will be needed, as it is unlikely to be granted.
When I last wrote about Buy America provisions hampering transit procurement, I caught some flak from some commenters for calling it Obama’s policy, since it’s been in force for decades – but he owns this one.
Transit advocates are always asking for more subsidies, but they seem remarkably unconcerned about the byzantine tangle of FTA, FRA, and union rules that cause America to have some of the most expensive and inefficient transit in the developed world. Last week I suggested that planners’ reluctance to speak out against cost-increasing union work rules is caused by the ideological affinity between liberal urban planners and organized labor, and I think there’s something similar at play with this recent increase in protectionism. Mass transit boosters waste no opportunity to brag about all the domestic jobs it creates, but all this talk about “green jobs” has its costs.