Compliance What Is It

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Q: Who is responsible for determining whether a product is subject to the Buy American provisions?

A: Grantees are responsible. To assist grantees in making these determinations, EERE has issued a guidance documentPDF.

Q: How do grantees document compliance with Buy American?

A: EERE has issued guidance for grantees to help with determining and documenting compliance with the Buy American provisionsPDF.

Q: How do grantees ensure that their subrecipients or subcontracts/vendors comply with the Buy American provisions?

A: The Special Terms and Conditions applicable to Recovery Act funded projects require that the financial assistance recipient flow down the Recovery Act special terms and conditions in any subaward or subcontract.

Based on the fact that the Special Terms and Conditions flow down to all subawards and sub-contracts, and the fact that a vendor is not a subawardee, sub-recipient, or sub­contractor, the Recovery Act financial assistance recipient and sub-recipients are not required to flow down the Recovery Act’s Special Terms and Conditions to vendors. However, financial assistance recipients, sub-recipients and subawardees are ultimately responsible for complying with the Special Terms and Conditions, and should take whatever measures they deem necessary to ensure that the Buy American requirements of the Recovery Act are adhered to by their respective vendors.

Q: What is the consequence of not complying with the Buy American provisions?

A: Noncompliance with the Buy American provisions constitutes a violation of the Terms and Conditions of your Financial Assistance Agreement. Corrective action can include removing and replacing the improperly purchased foreign-manufactured goods, reducing the amount of the award, or even withholding future funds. In cases of fraud, it can even lead to criminal investigation and prosecution.

Q: How do grantees verify that a product is indeed manufactured in the United States?

A: Grantees should include the Buy American requirements in all solicitations, Requests for Proposals (RFPs), agreements and sub-agreements. Recipients should expect contractors and vendors to verify their compliance with the Buy American provisions.

To assist grantees in making substantial transformation determinations and documenting compliance with the Buy American provisions, EERE has issued guidance documents on manufactured goods and substantial transformation for financial assistance awardsPDF and compliance with the Recovery Act Buy American provisionsPDF.

Q: A vendor indicated that its goods qualify under the Buy American Act of 1933. Is that sufficient compliance?

A: No. The Buy American Act of 1933 is a different law from the Recovery Act. The Buy American provisions of section 1605 of the Recovery Act are not the same as the Buy American Act of 1933.

Q: The General Services Administration (GSA) procurement Web site indicates that a product made in a foreign (e.g., WTO member) country is Recovery Act compliant. Is that sufficient to comply with the Buy American provisions?

A: No. The GSA Web site designations are not applicable to financial assistance recipients. Federal procurement, the process by which agencies acquire goods and services, has its own regulations for implementing the Buy American provision.

Q: Has DOE issued guidance on how it will handle issues of non-compliance with the Buy American Recovery Act provisions where a recipient relied on a manufacturer’s misrepresentation that its product complied with the Buy American Recovery Act provisions?

A: Regarding issues of non-compliance, resulting from a grantee relying on the misrepresentations of a third party, such as a vendor or manufacturer, DOE has not issued specific guidance. However, A Desk Guide to the Buy American Provisions of the Recovery and Reinvestment Act of 2009: Public Guidance on Implementation, Documentation, Compliance and EnforcementPDF (DOE publication no. EE-0393) addresses the question of how these matters are addressed by EERE.

As stated in the Desk Guide, “Each issue of non-compliance will be addressed individually, because each has fact-specific considerations that must be addressed. However, broad guidelines have been developed to ensure consistency.”(Desk Guide, 22)

These broad guidelines include the consideration that at times, a grantee may have been “Mislead by Contractor, Vendor, or Manufacturer: The award recipient or sub-recipient has been misled by a contractor, vendor or manufacturer.” (Desk Guide, 22)

The OMB Interim Final Guidance for the American Recovery and Reinvestment Act (2 C.F.R. Part 176) permits a number of remedies in cases of non-compliance.

Pursuant to that guidance, the Desk Guide states, “…the Contracting Officer may allow the non-compliant materials to remain in the installation, and accommodate the project as it stands, taking no further action and allowing the award recipient to retain the manufactured goods and the full sum of the DOE award.” (Desk Guide, 28-29)

“In cases where all of the following are met:

  1. The value of the affected items is below a certain threshold or compelling exceptional circumstances exist; and
  2. Reasonable effort was made by the award recipient (and sub-recipient where applicable) to comply with the Buy American provisions, but despite these efforts, a mistake was made (or the award recipient, sub-recipient were misled by a contractor, manufacturer, distributor or vendor); and
  3. Reasonable effort was made by any contractor to whom the Buy American provisions were ‘flowed down’ to comply with the Buy American provisions; and
  4. The cost of removal and replacement of the items is unreasonable in respect to the cost of the items involved; and
  5. The award recipient and/or sub-recipient did not willfully disregard any communications or recommendations from Project Officers, Contract Officers, or the Buy American team in regards to compliance with the Buy American provisions; and
  6. The award recipient or sub-recipient has received no similar prior accommodation for this DOE award;

The Contracting Officer, in consultation with the Buy American team and Field Counsel; may choose to issue a determination that no further action will be taken regarding the non-compliance and the award recipient may retain the non-compliant manufactured good as installed, without forfeiting any amount of the DOE award funds.” (Desk Guide, 28-29) (Emphasis in original.)

Because these cases are so fact-specific, DOE is unable to determine whether a case is appropriate for resolution in this manner without a full review of the facts and circumstances. However, the Contracting Officer will strongly consider that the grantee has been misled by a vendor or manufacturer and relied upon the representations of that vendor or manufacturer to their detriment.

Courtesy of US Government




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