Pago Pago, AMERICAN SAMOA — The U.S Federal Emergency Management Agency (FEMA) 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 American Samoa, the Commonwealth of Northern Mariana Islands (CNMI), and Guam.

According to the FEMA national notice issued May 31, the waiver proposes to permit the use of non-domestic iron, steel, manufactured products, and construction materials in infrastructure projects within the three U.S Pacific territories when the total project cost exceeds the Simplified Acquisition Threshold of $250,000.

FEMA 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, according to the notice.

As previously reported by Samoa News, Gov. Lemanu P. S. Mauga in his written testimony earlier this year before the U.S Senate Committee on Energy and Natural Resources, shared his concerns with provision of the BABA law.

The governor explained that often times, meeting requirements of the Build America Buy America Act, which designates procuring American made materials and supplies, is not feasible for the territory, since American Samoa is so isolated from the rest of the nation, and American made products are not readily available.

He told the congressional committee that American Samoa’s geographic location is closer to New Zealand, Australia, the Pacific Island nations and Asian countries where similar products are manufactured at slightly lower costs.

“Shipping of these materials and supplies to the Territory is also more time efficient,” he said. (See Samoa News edition Feb. 22, 2023 for details.)

In the national notice, FEMA noted that the 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 cost 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,” said FEMA.

For these reasons, the agency 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.

The federal agency points out that these economic and logistical constraints were also confirmed by the market research that FEMA performed. In early 2023, FEMA conducted research through Requests for Information from the Pacific Island territories to assess the impacts of BABA.

For American Samoa, FEMA quoted local representatives in their response that: “As a containerized community, our territories depend on goods, equipment, materials and supplies to be imported.”

They said: “we can purchase equipment from foreign countries closer to American Samoa and with reasonable prices and shorter shipping time,” according to FEMA.

“American Samoa representatives also noted that availability of materials from nearby foreign countries such as New Zealand and Australia would be a significant cost savings to the grantors,” the federal agency recalled what local representatives stated. 

For CNMI and Guam, they responded that shipping costs from Asia are lower due to geographic distance and other cost efficiencies.

According to FEMA, the 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.

Additionally, the waiver would allow time for the agency to offer technical assistance to reduce the administrative burden to potential assistance recipients in the remote communities in the Pacific Island territories where complying with the domestic sourcing requirements in BABA presents challenges.

“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,” FEMA explained.

Uncertainties regarding capacity, shipping, and supply networks make domestic sourcing in the Pacific Island territories challenging for assistance recipients, shippers, and FEMA staff in the short run.

FEMA is engaging to understand opportunities to leverage existing shipping and transportation processes to make domestic sourcing feasible over the longer term.

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

PUBLIC COMMENTS SOUGHT

FEMA seeks public comment from all interested parties. In particular, comments regarding the scope of this waiver. Relevant information and comments will help FEMA to understand completely the facts surrounding the waiver requests and the agency’s proposal. This notice will be closed for comments on June 15, 2023.

Comments can be sent to (FEMA-grants-buyamerica@fema.dhs.gov). Reference the associated waiver title in the subject line of the email. Comments received prior to the public  comment closing date will be reviewed and considered by FEMA.

Full details of notice online: https://www.fema.gov/sites/default/files/documents/fema-babaa-proposed-p...) or on FEMA’s website (https://www.fema.gov/grants/policy-guidance/buy-america)