Pago Pago, AMERICAN SAMOA — The U.S Department of Interior (USDOI) is proposing a “temporary general applicability public interest waiver” of the requirements of the federal Build America, Buy America Act (BABA) for federal financial assistance awarded for infrastructure projects in the U.S Pacific Territories of American Samoa, the Commonwealth of Northern Mariana Islands (CNMI), and Guam.

In a national notice issued June 15, seeking public comments up to June 30, USDOI said the waiver proposes to permit the use of non-domestic iron, steel, manufactured products, and construction materials in infrastructure projects located within American Samoa, CNMI or Guam when the total Federal award exceeds the Simplified Acquisition Threshold of $250,000.

Addition USDOI proposes to apply the waiver to all awards obligated after the effective date and, in the case of awards obligated prior to the effective date, all expenditures for non-domestic iron, steel, manufactured products, and construction materials incurred after the effective date.

USDOI points out that the federal agency provides grants to the three Pacific Island territories and majority of its financial assistance awards provide funding to state government agencies such as the Department of Homeland Security, Department of Marine and Wildlife Resources, and Department of Port Administration.

Currently, USDOI funded programs include, but are not limited to capital improvement projects, energy programs, maintenance and repair of public schools, roads, water and waste treatment facilities, and ports.

USDOI also provided a summary of financial assistance funding to the three territories. For example, in FY 2021, USDOI issued over $103 million to the territories via 320 financial assistance agreements, of which 96 agreements exceeded the Simplified Acquisition Threshold (SAT) and are not covered under the current USDOI Small Agreements waiver.

Another example is that there are currently 182 financial assistance agreements to the three territories, which are above the SAT and may include various infrastructure projects which will trigger compliance with BABA requirements. USDOI estimates approximately 30 individual projects may require individual BABA waivers.

USDOI explained that economies in the Pacific Islands are over 5,000 miles from the U.S mainland and must import products via air or sea. These economies have few local heavy manufacturers and largely rely on established regional supply chains from East Asia, Australia, and New Zealand.

Most goods, equipment materials and supplies are imported and rely on shipping with associated timelines and unpredictable shipping fuel costs fluctuations. Moreover, materials sourced from the United States lead to additional shipping fees and longer lead times, thus significantly extending construction activity schedules. Lastly, ongoing gaps in supply chain availability impact lead times for materials, increasing project timelines.

For these reasons, USDOI says it is concerned that complying with the domestic sourcing requirements in BABA may increase already elevated project time and costs — particularly in the short run — and seeks time to better understand the local manufacturing footprint and the balance of equities for residents of the Pacific Island territories.

USDOI said it also conducted outreach efforts in 2022 and 2023 through meetings, webinars, and workshops to gauge the impacts of the BABA. The workshop included many representatives from various Territorial agencies/ departments who commented that BABA procurement requirements resulted in significant cost increases and delays in project timelines.

In February 2023, USDOI hosted the federal Interagency Group on Insular Areas (IGIA) in which the governors of the Territories expressed concerns related to BABA implementation and potential project delays. The Governors also requested federal agencies be flexible in these requirements and consider waivers.

During the summer of 2022, and in early 2023, USDOI conducted five webinars to inform recipients of financial assistance of BABA requirements and to allow recipients to share any problems associated with BABA implementation requirements to their respective programs and jurisdiction. One webinar included 33 participants from American Samoa, CNMI, and Guam.

USDOI also received letters from American Samoa, CNMI, and Guam about the impacts of BABA. The feedback collected through the webinars indicates that the isolated geography in the south Pacific Ocean and the associated high costs and lack of availability of construction materials could create project delays, reduce the pool of available vendors, and greatly complicate their ability to successfully manage and complete grant-funded infrastructure projects on schedule, according to DOI.

The territories also expressed concern that BABA requirements could greatly add to the already significant challenges of working in a small, geographically remote territory.

USDOI proposes that it is in the public interest to waive the BABA requirements for Federal financial assistance awarded for infrastructure projects in the Pacific Island territories while we work to gather more information on supply chains, costs, and impacts. This proposed waiver is critical to provide the time for the agency to collect and analyze evidence to determine if a more targeted waiver of these requirements is in the public interest.

USDOI said the agency is concerned that failure to provide these remote infrastructure projects such flexibilities could perpetuate systemic barriers to opportunities and benefits and limit the agency's ability to deliver resources and benefits equitably to all in these Pacific Island territories.

Without the waiver, infrastructure projects located within the Pacific Island territories will experience challenges with product delivery, availability, reliability, and project scheduling. Infrastructure project schedules rely on readily available products delivered within reasonable timeframes.

According to the USDOI notice, proposed duration of the waiver is 18 months after the effective date of the final waiver. USDOI will review this waiver in 12 months to assess whether it remains necessary to the fulfillment of USDOI’s missions and goals and consistent with applicable legal authorities.

DOI may, based on the results of that review, terminate the waiver, or take action to develop a new waiver.

Comments on the proposed waiver can be sent to (DOI_Grants_BuyAmerica_Waiver@ios.doi.gov). Reference the associated project title in the subject line of the email. Comments received prior to the public comment closing date will be reviewed and considered by DOI.

More information here and specific information on the Pacific Islands Territories Waiver at (https://doi.gov/grants/BuyAmerica/WaiversForComment).

The U.S Federal Emergency Management Agency (FEMA) proposed an identical waiver for the three territories and the comment period closed on June 15. No new information was available at press time on the FEMA proposal.