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ron vogt Posted 19 July 2009 - 03:09 PM In another topic, we discussed whether an agency could characterize a project as supply and not apply the Recovery Act's Buy American ("BA") provisions. If the agency does that, is there any risk to the contractor? Let's say the agency awards a grant to a recipient, and tells the recipient it is for a supply action and the BA requirements do not apply (as DoE has done). Recipient then awards contracts for the work and does not include any restrictions on the source of materials. Then GAO comes in and disagrees. Or someone reports the foreign products as misuse or fraud. Where does that leave the contractor, when it performed in accordance with its contract? This is not a far-fetched scenario. There is widespread misunderstanding and confusion at the state and local level over when and how to apply the BA requirements. This has the potential to put contractors in a bind when they do everything they can to get clarification on the requirements, and eventually sign a contract with no BA restrictions in it. carl r culham Posted 19 July 2009 - 08:43 PM In reading of 2 CFR 176 and your example I would suggest that the agency and the contractor have equal responsibility. ARRA is a law and while an award official might say something is okay a recipient still has the responsibility to comply with the law. Further recipient could be subject to 2 CFR 176.130 which is noted below. Unlike the requirement for inclusion of appropriate wages rates over which Dept of Labor has the final authority on application the agency award official does retain advice authority on BA but is subject to GAO audit who it would appear would have the final authority. Noting this if the agency is unclear with regard to application of ARRA BA they should be seeking formal advice from OMB. Hopefully OMB would then balance a response with advice/counsel from GAO. If the recipient is unclear they should seek formal advice from the award official but again doing so may not let them off the hook for corrective action required of 176.130. 176.130 Noncompliance. The award official must? (a) Review allegations of violations of section 1605 of the Recovery Act; (b) Unless fraud is suspected, notify the recipient of the apparent unauthorized use of foreign iron, steel, and/or manufactured goods and request a reply, to include proposed corrective action; and (c) If the review reveals that a recipient or subrecipient has used foreign iron, steel, and/or manufactured goods without authorization, take appropriate action, including one or more of the following: (1) Process a determination concerning the inapplicability of section 1605 of the Recovery Act in accordance with 176.120. (2) Consider requiring the removal and replacement of the unauthorized foreign iron, steel, and/or manufactured goods. (3) If removal and replacement of foreign iron, steel, and/or manufactured goods used in a public building or a public work would be impracticable, cause undue delay, or otherwise be detrimental to the interests of the Federal Government, the award official may determine in writing that the foreign iron, steel, and/or manufactured goods need not be removed and replaced. A determination to retain foreign iron, steel, and/or manufactured goods does not constitute a determination that an exception to section 1605 of the Recovery Act applies, and this should be stated in the determination. Further, a determination to retain foreign iron, steel, and/or manufactured goods does not affect the Federal Government's right to reduce the amount of the award by the cost of the steel, iron, or manufactured goods that are used in the project or to take enforcement or termination action in accordance with the agency's grants management regulations. (4) If the noncompliance is sufficiently serious, consider exercising appropriate remedies, such as withholding cash payments pending correction of the deficiency, suspending or terminating the award, and withholding further awards for the project. Also consider preparing and forwarding a report to the agency suspending or debarring official in accordance with the agency's debarment rule implementing 2 CFR part 180. If the noncompliance appears to be fraudulent, refer the matter to other appropriate agency officials, such as the officer responsible for criminal investigation. ron vogt Posted 20 July 2009 - 12:32 AM Carl, I don't believe 176.130 talks about the contractor. The "recipient" is the entity that receives money from a federal agency in the form of a grant, cooperative agreement, or loan. A recipient is not a contractor. A recipient awards contracts to the contractors that will perform the work. Applying 176.130 to the scenario and using your analysis, would you say then that the agency and the recipient share responsibility?

Contractor Liability

ron vogt

Posted 19 July 2009 - 03:09 PM

In another topic, we discussed whether an agency could characterize a project as supply and not apply the Recovery Act's Buy American ("BA") provisions. If the agency does that, is there any risk to the contractor?

Let's say the agency awards a grant to a recipient, and tells the recipient it is for a supply action and the BA requirements do not apply (as DoE has done). Recipient then awards contracts for the work and does not include any restrictions on the source of materials. Then GAO comes in and disagrees. Or someone reports the foreign products as misuse or fraud. Where does that leave the contractor, when it performed in accordance with its contract?

This is not a far-fetched scenario. There is widespread misunderstanding and confusion at the state and local level over when and how to apply the BA requirements. This has the potential to put contractors in a bind when they do everything they can to get clarification on the requirements, and eventually sign a contract with no BA restrictions in it.

carl r culham

Posted 19 July 2009 - 08:43 PM

In reading of 2 CFR 176 and your example I would suggest that the agency and the contractor have equal responsibility. ARRA is a law and while an award official might say something is okay a recipient still has the responsibility to comply with the law. Further recipient could be subject to 2 CFR 176.130 which is noted below.

Unlike the requirement for inclusion of appropriate wages rates over which Dept of Labor has the final authority on application the agency award official does retain advice authority on BA but is subject to GAO audit who it would appear would have the final authority. Noting this if the agency is unclear with regard to application of ARRA BA they should be seeking formal advice from OMB. Hopefully OMB would then balance a response with advice/counsel from GAO. If the recipient is unclear they should seek formal advice from the award official but again doing so may not let them off the hook for corrective action required of 176.130.

176.130 Noncompliance.

The award official must?

(a) Review allegations of violations of section 1605 of the Recovery Act;

(b) Unless fraud is suspected, notify the recipient of the apparent unauthorized use of foreign iron, steel, and/or manufactured goods and request a reply, to include proposed corrective action; and

(c) If the review reveals that a recipient or subrecipient has used foreign iron, steel, and/or manufactured goods without authorization, take appropriate action, including one or more of the following:

(1) Process a determination concerning the inapplicability of section 1605 of the Recovery Act in accordance with 176.120.

(2) Consider requiring the removal and replacement of the unauthorized foreign iron, steel, and/or manufactured goods.

(3) If removal and replacement of foreign iron, steel, and/or manufactured goods used in a public building or a public work would be impracticable, cause undue delay, or otherwise be detrimental to the interests of the Federal Government, the award official may determine in writing that the foreign iron, steel, and/or manufactured goods need not be removed and replaced. A determination to retain foreign iron, steel, and/or manufactured goods does not constitute a determination that an exception to section 1605 of the Recovery Act applies, and this should be stated in the determination. Further, a determination to retain foreign iron, steel, and/or manufactured goods does not affect the Federal Government's right to reduce the amount of the award by the cost of the steel, iron, or manufactured goods that are used in the project or to take enforcement or termination action in accordance with the agency's grants management regulations.

(4) If the noncompliance is sufficiently serious, consider exercising appropriate remedies, such as withholding cash payments pending correction of the deficiency, suspending or terminating the award, and withholding further awards for the project. Also consider preparing and forwarding a report to the agency suspending or debarring official in accordance with the agency's debarment rule implementing 2 CFR part 180. If the noncompliance appears to be fraudulent, refer the matter to other appropriate agency officials, such as the officer responsible for criminal investigation.

ron vogt

Posted 20 July 2009 - 12:32 AM

Carl,

I don't believe 176.130 talks about the contractor. The "recipient" is the entity that receives money from a federal agency in the form of a grant, cooperative agreement, or loan. A recipient is not a contractor. A recipient awards contracts to the contractors that will perform the work. Applying 176.130 to the scenario and using your analysis, would you say then that the agency and the recipient share responsibility?