oversight

Gaps in Guidance, Training, and Oversight Impede FAA's Ability To Comply With Buy American Laws

Published by the Department of Transportation, Office of Inspector General on 2021-06-02.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                 Gaps in Guidance, Training, and
                 Oversight Impede FAA’s Ability
               To Comply With Buy American Laws




Report No. ZA2021026
June 2, 2021
Gaps in Guidance, Training, and Oversight Impede FAA’s Ability
To Comply With Buy American Laws
Requested by Senate Appropriations Committee

Federal Aviation Administration | ZA2021026 | June 2, 2021




What We Looked At
To support its mission to provide the safest, most efficient airspace system in the world, the Federal
Aviation Administration (FAA) seeks to procure state-of-the-art systems, high-quality goods, and first-
rate services. In 2017, for example, the Agency made over $4 billion worth of purchases—of which a
range of $87 million to an estimated $1.7 billion could be subject to the Buy American Act (BAA) and
the FAA-specific Buy American Preference provisions (BAP). In response to a congressional request,
we initiated this audit to assess FAA’s policies and procedures for awarding and administering
contracts in accordance with domestic content laws. Specifically, we evaluated FAA’s policies and
procedures for (1) implementing Buy American requirements and (2) overseeing Buy American
compliance.

What We Found
FAA’s Acquisition Management System requires Buy American–applicable contracts to include specific
clauses that direct vendors to certify the origins of goods or products and contracting officers (CO) to
fully understand BAA and BAP requirements. However, we found Buy American–applicable contracts
where COs had omitted or improperly applied the required clauses, lacked vendor certifications, or
did not fulfill contract filing requirements—due to a lack of BAA- and BAP-specific guidance and
training. As a result, we estimate that FAA may have put up to $127 million in Federal funds at risk
due to contracts missing required vendor certifications. In addition, while Federal policy directed
agencies to monitor, enforce, and comply with the Buy American Laws, FAA does not require its staff
to assess and report on compliance, although it has tools available for this purpose. The Agency also
lacks effective processes for recording “place of manufacture data” or for tracking usage of BAP
waivers. As a result, FAA cannot be certain that it is meeting the intent of the Buy American Laws—to
purchase American-made materials and goods to strengthen our economic and national security.

Our Recommendations
We made eight recommendations to improve FAA’s compliance and oversight for contracts subject to
domestic content laws. FAA concurred with all eight recommendations, which we consider resolved
but open pending completion of the planned actions.


All OIG audit reports are available on our website at www.oig.dot.gov.
For inquiries about this report, please contact our Office of Government and Public Affairs at (202) 366-8751.
Contents
     Memorandum                                                               1

     Background                                                               3

     Results in Brief                                                         6

     FAA Does Not Always Implement Domestic Content Requirements on
        Applicable Contracts                                                  8

     FAA Does Not Adequately Oversee Buy American Compliance When
        Administering Contracts                                              18

     Conclusion                                                              26

     Recommendations                                                         27

     Agency Comments and OIG Response                                        28

     Actions Required                                                        29

     Exhibit A. Scope and Methodology                                        30

     Exhibit B. Organizations Visited or Contacted                           32

     Exhibit C. List of Acronyms                                             33

     Exhibit D. Summary of AMS Guidance on Implementing the Buy
        American Laws                                                        34

     Exhibit E. FPDS-NG Place of Manufacture Codes                           36

     Exhibit F. Complexities Associated With Determining BAP and BAA Usage   37

     Exhibit G. Buy American Reporting Requirements                          38

     Exhibit H. Major Contributors to This Report                            39

     Appendix. Agency Comments                                               40




ZA2021026
           U.S. DEPARTMENT OF TRANSPORTATION
           OFFICE OF INSPECTOR GENERAL




Memorandum
Date:             June 2, 2021

Subject:          ACTION: Gaps in Guidance, Training, and Oversight Impede FAA’s Ability To
                  Comply With Buy American Laws | Report No. ZA2021026

From:             Mary Kay Langan-Feirson
                  Assistant Inspector General for Acquisition and Procurement Audits

To:               Federal Aviation Administrator


                  To support its mission to provide the safest, most efficient airspace system in the
                  world, the Federal Aviation Administration (FAA) seeks to procure state-of-the-art
                  systems, high-quality goods, and first-rate services. In 2017, for example, the
                  Agency made over $4 billion worth of purchases—of which a range of $87 million
                  to an estimated $1.7 billion 1 could be subject to Buy American (BA) Laws. 2 These
                  purchases, like many Federal acquisitions, were governed by domestic content
                  laws—the Buy American Act (BAA) 3 and the FAA-specific Buy American
                  Preference provisions (BAP). 4

                  Domestic content or Buy American Laws promote U.S. manufacturing and
                  products in order to support American industries and strengthen national
                  security. These laws include enforcement and administrative provisions to
                  promote the economy and create good jobs at decent wages for workers in the
                  United States. Still, congressionally mandated audits of Department of Defense
                  (DoD) acquisitions have revealed a high level of noncompliance with the Buy
                  American provisions in recent years. Noting the impact that manufacturing has
                  on our economy, the Senate Appropriations Committee directed our office to
                  audit FAA’s purchases to ensure compliance with the Buy American Laws. 5



1 Our $1.7 billion estimate represents the 90-percent upper confidence limit with a point estimate of $785 million and
a 100-percent lower confidence limit of $87 million.
2 The phrase “Buy American Laws” as referenced in our audit report refers to all statutes, regulations, rules, and

Executive orders (EO) relating to Federal procurements that require, or provide a preference for, the purchase or
acquisition of goods, products, or materials produced in the United States, including iron, steel, and manufactured
goods.
3 Buy American Act (BAA), Title 41, U.S. Code (U.S.C.), §§ 8301–8305.

4 Buy American Preference (BAP), 49 U.S.C. § 50101.
5 Senate Appropriations Committee reports on DOT’s fiscal year 2017 and fiscal year 2018 appropriation bills. S. Rep.

No. 114-243 (April 21, 2016) and S. Rep. No. 115-138 (July 27, 2017).


ZA2021026                                                                                                            1
            Accordingly, we initiated this audit to assess FAA’s policies and procedures for
            awarding and administering contracts in accordance with domestic content laws.
            Specifically, we evaluated FAA’s policies and procedures for (1) implementing Buy
            American requirements and (2) overseeing Buy American compliance.

            We conducted our work in accordance with generally accepted Government
            auditing standards. Exhibit A details our scope and methodology. Exhibit B lists
            the entities we visited or contacted.

            We appreciate the courtesies and cooperation of Department of Transportation
            representatives during this audit. If you have any questions concerning this
            report, please call me at (202) 345-2619 or Darren Murphy, Program Director, at
            (206) 255-1929.


            cc:    The Secretary
                   DOT Audit Liaison, M-1
                   FAA Audit Liaison, AAE-100




ZA2021026                                                                                      2
Background
                  When awarding contracts on the Agency’s behalf, FAA contracting officials must
                  comply with Buy American Laws like the BAP and the BAA, which have
                  overlapping statutory authority.

                  FAA’s BAP states that the Secretary of Transportation may obligate money for
                  projects only if the Agency uses steel and manufactured goods produced in the
                  United States. It does not apply to acquisitions for raw or unmanufactured
                  materials or to ground transportation demonstration projects, air traffic controller
                  performance research, acquisitions funded by airway science curriculum grants,
                  civil aviation security research and development, and acquisitions relating to
                  facilities for advanced training of maintenance technicians for air carrier aircraft.

                  The FAA Administrator 6 has the authority to waive BAP requirements to buy U.S.-
                  produced steel and manufactured goods when:

                       •   The acquisition is inconsistent with public interest;

                       •   The items are not produced in the United States in sufficient and
                           reasonably available quantities or of satisfactory quality;

                       •   In the case of acquisition of facilities and equipment under the Airport
                           and Airway Improvement Act of 1982, the cost of domestically produced
                           components or subcomponents is more than 60 percent of the total cost
                           and final assembly has occurred in the United States; 7 and

                       •   Including domestic materials will increase the cost of overall project by
                           more than 25 percent.

                  These BAP waivers are addressed in FAA’s Acquisition Management System
                  (AMS) guidance (see table D3 in exhibit D). If a BAP waiver has been executed,
                  FAA may acquire the foreign steel or manufactured product. Additionally, in




6 The Secretary has delegated this authority to the FAA Administrator; Title 49, Code of Federal Regulations (CFR)
§ 1.83(a)(11). This authority has been subdelegated to the FAA Acquisition Executive (FAE) and, in part, the Chief of
the Contracting Office and the Contracting Officer; AMS T3.6.4.A.4.
7 The FAA Administrator may only waive the BAP requirements using this justification when procuring a facility or

equipment under 49 U.S.C. § 44502(a)(2) (air navigation facility), § 44509 (demonstration projects necessary for
research and development), chapter 471 (airport development projects, with some exceptions), and chapter 481
(projects funded by the airport and airway trust fund, with some exceptions). See 49 U.S.C. § 50101(b)(3).


ZA2021026                                                                                                               3
                  accordance with the FAA Reauthorization Act of 2018, the Secretary is required to
                  submit an annual report to Congress on new BAP waivers. 8

                  Like the BAP, the BAA requires Federal agencies to procure domestic goods.
                  Unlike the BAP, the BAA is a Governmentwide statute, and it applies to all
                  manufactured and unmanufactured articles, materials, and supplies acquired for
                  public use in the United States, as well as the construction, alteration, or repair of
                  any U.S.-based public building or public work. Furthermore, acquisitions subject
                  to certain international trade agreements (e.g., the North American Free Trade
                  Agreement or NAFTA 9) are treated as domestic purchases for the purposes of
                  both FAA’s BAP and the BAA. 10

                  The BAA contains several exceptions to its domestic content restrictions,
                  including acquisitions where the products:

                      1. Will be used outside the United States;

                      2. Are not produced in the United States in sufficient and reasonably
                         available commercial quantities and are not of a satisfactory quality;

                      3. Are procured under any contract with an award value under the micro-
                         purchase threshold;

                      4. When using a domestic product would make it “impracticable to comply”
                         or “would unreasonably increase the cost;” or

                      5. When using a domestic product would be inconsistent with the public
                         interest. 11

                  According to the FAA Reauthorization Act of 2018, at the end of each fiscal year,
                  FAA must report to Congress the dollar value above the micro-purchase level of
                  all acquisitions subject to the BAA. Such acquisitions include purchases from
                  entities that manufacture articles, materials, or supplies outside the United
                  States. 12 It is worth noting that the FAA Reauthorization reporting requirements
                  for acquisitions falling under the BAP are different from those that fall under the
                  BAA. The BAP reporting requirement relates to waivers, while the BAA reporting
                  requirement relates to the dollar value of U.S. versus foreign purchases.




8 Pub. L. 115-254, Division B, Title I, § 167 (October 5, 2018).
9 The United States-Mexico-Canada Agreement Implementation Act (codified at 19 U.S.C., chapter 29) replaced
NAFTA and took effect in July 2020.
10 AMS T3.6.4.A.1.b.
11 In the 2004 Consolidated Appropriations Act, Congress exempted commercial information technology from the

BAA restrictions; however, it did not amend BAA to reflect this new exception. Pub. L. 108-199, Division F, Title V,
§ 535(a). AMS implements this commercial information technology exemption for acquisitions subject to BAA only.
12 Pub. L. 115-254, § 544(5)(B).




ZA2021026                                                                                                              4
                 In light of this complex and overlapping statutory framework, AMS provides
                 guidance on when the BAP or the BAA applies to a contract (see exhibit F). 13
                 Generally, when FAA acquires steel or manufactured goods, the BAP rather than
                 the BAA applies. AMS notes that, in many instances, the BAA will only apply when
                 FAA acquires raw or unmanufactured materials. One exception to this general
                 rule is when the Agency acquires steel or manufactured goods for a contract that
                 is exempt from the BAP, such as one for civil aviation security research and
                 development. AMS states that these contracts are governed by the BAA and its
                 exceptions.

                 In addition to the Buy American reporting provisions above, Federal agencies also
                 had reporting requirements under Executive Order 13788. 14 This Order directed
                 heads of executive agencies, including FAA, to scrupulously monitor, enforce, and
                 comply with existing Buy American Laws. Additionally, it required agency heads
                 to prepare an annual report for the Secretary of Commerce and the Director of
                 the Office of Management and Budget (OMB) that assesses (i) the monitoring,
                 enforcement, and implementation of, as well as compliance with, the Buy
                 American Laws within their agencies and (ii) the use of waivers within their
                 agencies by type and impact on domestic jobs and manufacturing. 15 It further
                 required agency heads to develop and propose policies to ensure that Federal
                 financial assistance awards and procurements maximize the use of materials
                 produced in the United States, including manufactured products; components of
                 manufactured products; and materials such as steel, iron, aluminum, and cement.

                 Moreover, AMS requires several clauses to be included in contracts subject to the
                 Buy American Laws. For the BAA, these include a clause for supplies 16 and
                 another for construction; 17 the BAP has a clause for steel or manufactured
                 products. 18 AMS also has associated clauses 19 that require vendors participating
                 in Buy American–applicable contracts to certify that their goods or products are
                 domestically made or identify the country of origin.



13 AMS T3.6.4.A.1. and 4.f.
14 Executive Order (EO) 13788, Buy American and Hire American, 82 Fed. Reg. 18837 (April 18, 2017), was recently
revoked by EO 14005, Ensuring the Future Is Made in All of America by All of America’s Workers, 86 Fed. Reg. 7475
(January 25, 2021).
15 EO 13788 required annual reports for the years 2017 through 2020 and authorized the Secretary of Commerce and

OMB Director to request reports for subsequent years. EO 14005 further expands reporting requirements to include a
biannual report on: (1) the agency’s ongoing implementation of and compliance with Made in America Laws; (2) the
agency’s analysis of goods, products, materials, and services not subject to Made in America Laws or where
requirements of the Made in America Laws are waived; (3) the agency’s analysis of spending as a result of waivers
used pursuant to the Trade Agreements Act of 1979, separated by country of origin; and (4) recommendations for
how to further effectuate the Order.
16 AMS 3.6.4-2.

17 AMS 3.6.4-3.
18 AMS 3.6.4-5.

19 AMS 3.6.4-15, BAA certificate; and AMS 3.6.4-18, Certification Regarding Steel and Manufactured Products.




ZA2021026                                                                                                        5
                   FAA uses its National Acquisition Evaluation Program (NAEP) to monitor
                   compliance with these overlapping and complex Buy American Laws. The NAEP
                   requires evaluators to conduct annual reviews of FAA acquisition offices to
                   monitor the implementation of procurement requirements and processes. They
                   examine various stages of the contracting lifecycle, from pre-award planning to
                   post-award documentation and contract closeout.

                   In January 2021, the White House issued Presidential Executive Order 14005,
                   “Ensuring the Future Is Made in All of America by All of America’s Workers,” 20
                   which revoked Executive Order 13788, 21 the applicable criteria for FAA contracts
                   that we reviewed. While our findings are tied to the Executive order that was in
                   effect when we conducted our field work, the recently issued Executive Order
                   14005 contains many similar or more rigorous administrative requirements with
                   which Federal agencies—including FAA—will eventually have to comply. For this
                   reason, this change in policy did not affect our audit findings or resulting
                   recommendations. Where practical, we have noted “like” requirements in the new
                   Executive Order that relate to, and in some cases further support our findings and
                   recommendations.




Results in Brief
                   FAA does not always implement BAA and BAP requirements
                   on applicable contracts.

                   Gaps in guidance, training, and oversight impede the Agency’s ability to comply
                   with domestic content laws. AMS requires Agency contracting officers (CO) to
                   include specific clauses in Buy American–applicable contracts that direct vendors
                   to either certify that their goods or products were made domestically or identify
                   the country of origin. AMS also notes that all FAA employees with delegated
                   contracting authority must demonstrate appropriate knowledge and experience
                   in all types of acquisitions, including those with BAA and BAP requirements.
                   However, within our sample of 76 contracts, we identified 28 22 where COs
                   omitted or improperly applied the required clauses, as well as contract files that
                   lacked vendor certifications. 23 We also found that COs misapplied BAP waivers



20 EO 14005.
21 EO 13788.
22 The following is a breakdown of contracts reviewed: 2 with missing clauses, 12 with missing certifications, and

14 with incorrectly applied Buy American clauses.
23 When FAA purchases products or materials subject to the Buy American Laws, it must include two categories of

clauses in the contract—the main clause (i.e., supply, construction, and steel and manufactured products) and the
associated certification clauses. The certification clauses direct offerors to either certify that their goods or products
were made domestically or identify the country of origin.


ZA2021026                                                                                                                    6
                  and did not always meet contract filing requirements for Buy American–related
                  documents. Such shortfalls may be attributable to a lack of Buy American–specific
                  guidance. For example, 3 of the 28 COs and CORs we interviewed stated that
                  AMS is too complicated to understand and does not incorporate all the
                  requirements for Buy American compliance. FAA’s acquisition training program
                  also has limited content on BAA and BAP requirements, exemptions and waivers,
                  or related AMS procedures. Instead, the Agency relies predominantly on
                  Governmentwide classes that briefly cover the BAA but not the FAA-specific BAP.
                  Without guidance and training to instruct its COs on how to implement these
                  complex requirements, FAA cannot assure Congress that its significant purchases
                  comply with the Buy American Laws. Additionally, until these issues are
                  addressed, FAA cannot accurately report how much it spends to acquire supplies,
                  steel, and manufactured products that originate in the United States.

                  FAA does not adequately oversee Buy American compliance
                  when administering contracts.

                  Executive Order 13788 directed Federal agencies to thoroughly monitor, enforce,
                  and comply with the Buy American Laws. 24 Yet FAA does not have adequate
                  policies or procedures for verifying pre- and post-award compliance with
                  domestic content laws. In particular, FAA does not require its acquisition staff to
                  assess and report on Buy American compliance, even though two methods—such
                  as the NAEP evaluations and the Federal Procurement Data System–Next
                  Generation (FPDS-NG)—are available and could be used more fully. For instance,
                  FAA’s NAEP forms for 2016 and 2017 did not include a separate line item for
                  assessing Buy American compliance. As a result, none of the NAEP reports we
                  examined (all 75 from 2016 and all 56 from 2017) contained comments on
                  whether Buy American compliance had been met. Moreover, although the NAEP
                  form was updated in 2018 to include Buy American clauses in a list of review
                  requirements, we found that evaluators still are not providing sufficient details in
                  this area. FAA also lacks an effective process for ensuring it is correctly entering
                  “place of manufacture” data into FPDS-NG—information that the Agency uses to
                  record contracts with Buy American–compliance requirements. Due to such
                  errors, FAA misreported 21 of 31 Buy American–applicable contracts, valued at
                  $82 million, in FPDS-NG. Finally, although Executive Order 13788 required




24Similarly, EO 14005 provides that “the United States Government should, consistent with applicable law, use terms
and conditions of Federal financial assistance awards and Federal procurements to maximize the use of goods,
products, and materials produced in, and services offered in, the United States. The U.S. Government should,
whenever possible, procure goods, products, materials, and services from sources that will help American businesses
compete in strategic industries and help America’s workers thrive.” EO 14005 also requires agencies to report on their
implementation of and compliance with Made in American Laws.


ZA2021026                                                                                                            7
                  agencies to assess and report on their use of waivers, 25 FAA currently does not
                  have a system in place to track this information. Nevertheless, FAA noted that it is
                  in the process of establishing fields in its contract writing system, the
                  Procurement Information System for Management (PRISM), to help fulfill this
                  requirement. Moreover, FAA’s process for using FPDS-NG (a Governmentwide
                  system) could be modified to track waiver usage—an action encouraged by OMB.
                  As a result of these shortfalls, FAA cannot be certain that it is meeting the intent
                  of the Buy American Laws—to purchase American-made materials and goods to
                  increase U.S. jobs, support American industry, and strengthen our economic and
                  national security.

                  We are making recommendations to improve FAA’s compliance and oversight for
                  contracts subject to domestic content laws.




FAA Does Not Always Implement Domestic Content
Requirements on Applicable Contracts
                  FAA’s AMS implements the BAA and BAP statutory requirements. As such, AMS
                  directs FAA officials to use domestically produced supplies, construction, and
                  steel or manufactured products, unless it is appropriate to use a BAA exception
                  or BAP waiver. However, the Agency’s contracts do not always include BAA- and
                  BAP-required clauses, and FAA lacks the policies, procedures, and training to
                  ensure staff implement these domestic content requirements appropriately when
                  they prepare contract documents.



             FAA’s Contracting Staff Do Not Always
             Apply the Buy American Laws Correctly
             When They Prepare Contracts
                  While some contracts lacked Buy American clauses or the appropriate
                  certifications, others included inapplicable clauses.

                  Missing Buy American Clauses

                  AMS directs Agency COs who are acquiring supplies, construction materials, or
                  steel and manufactured products to include specific clauses in every contract



25Similarly, EO 14005 requires agencies to report on use of longstanding or nationwide waivers in an initial report to
OMB and to subsequently report to OMB on a biannual basis when they waive requirements to Made in America
Laws.


ZA2021026                                                                                                                8
                  where the Buy American Laws apply. 26 Of the 76 contracts in our sample, we
                  identified 31 that were subject to the Buy American Laws. Among those
                  31 contracts, we found 2 27 that did not include the appropriate Buy American
                  clauses; however, FAA officials were unable to explain why the clauses had been
                  omitted. Contracts that lack the correct clauses reduce FAA’s ability to ensure
                  compliance with the Buy American Laws. As such, we estimate that similar
                  omissions could be expected in 179 (7 percent) 28 of the estimated 2,686 BA-
                  applicable contracts 29 in our universe, which have an estimated value of
                  $11 million. 30

                  Missing Buy American Certification Clauses and Vendor
                  Certifications

                  AMS also requires contracts subject to Buy American requirements to include
                  clauses for vendor certifications stating that the offered supplies or steel and
                  manufactured products were made in the United States. Additionally, these
                  certification clauses direct offerors to either certify that their goods or products
                  were made domestically or identify the country of origin. This completed vendor
                  certification becomes part of the permanent contract file.

                  The following is a list of the AMS vendor certification clauses.

                       1. Supplies: Offeror certifies that each end product, except as listed on the
                          certification, is a domestic end product—(1) an unmanufactured end
                          product mined or produced in the U.S. or (2) an end product
                          manufactured in the U.S., if the cost of its components mined, produced,
                          or manufactured in the U.S. exceeds 50 percent of the cost of all its
                          components. 31

                       2. Construction: Offeror agrees that only domestic construction material will
                          be used by the contractor, subcontractors, and suppliers in the


26 AMS 3.6.4-2 BAA (supplies); AMS 3.6.4-3 BAA (construction materials); AMS 3.6.4-5 BAP (steel and manufactured
products).
27 The two contracts had a value of $937,000.

28 Our 179 estimate has a precision of -177 (-3 percent of the 6,002 contracts in our universe) at the 100-percent

confidence level and +206 (+3 percent) at the 90-percent confidence level so that our confidence limits ranged from
2 to 385 (0.03 to 6 percent).
29 Our 2,686 estimate has a precision of +/-602 (+/-10 percent of the 6,002 contracts in our universe) at the

90-percent confidence level so that our confidence limits ranged from 2,085 to 3,288 (35 to 55 percent). These 2,686
contracts have an estimated value of $785 million. Our $785 million estimate has a precision of -$699 million
(-17 percent of the $4 billion in our universe) at the 100-percent confidence level and a precision of +$918 million
(+23 percent) at the 90-percent confidence level, so that our confidence limits ranged from $87 million to $1.7 billion
(2 to 42 percent).
30 Our $11 million estimate has a precision of -$10 million (-0.3 percent of the $4 billion in our universe) at the

100-percent confidence level and a precision of +$13 million (+0.3 percent) at the 90-percent confidence level) so
that our confidence limits ranged from $937 thousand to $24 million (0 to 0.6 percent).
31 AMS 3.6.4-15.




ZA2021026                                                                                                             9
                           performance of this contract, except for foreign construction materials, if
                           any, listed in this contract. 32

                       3. Steel and manufactured products: Offeror certifies: (1) the steel and
                          manufactured goods provided in the contract are entirely produced in the
                          U.S., or (2) the cost of components and subcomponents produced in the
                          U.S. is more than 60 percent of the cost of all components of the facility
                          or equipment and final assembly of has occurred in the U.S. 33

                  Our review found that the files for 12 of the 31 BAA- and BAP-applicable
                  contracts in our sample did not contain the required certifications. These
                  certifications are necessary to avoid unauthorized purchases of foreign supplies
                  and other products. In all, 14 vendor certifications were missing from the
                  12 contract files, including 2 contracts that lacked certifications for both supplies
                  and steel or manufactured products. For example, a contract for more than
                  $500,000 to provide test equipment components for FAA’s air route radar
                  systems included the proper clause, but the CO did not obtain the required
                  vendor certification stating that the items were manufactured in the United
                  States. We found that the procured items in this example had been obtained
                  from a foreign manufacturer in violation of the BAP. Due to the CO’s failure to
                  obtain the required vendor certification, FAA expended more than $500,000 on
                  unauthorized foreign items. 34 Based on our finding that 12 (valued at $70 million)
                  of 31 contracts were missing certifications, we estimate that required
                  certifications could be missing from 987 35 contracts with an estimated value of
                  $127 million. 36 As such, FAA risks spending these funds on foreign items, which
                  could be better spent on items that meet the Buy American Law requirements.

                  We asked FAA officials why the 14 certifications were not in the contract files.
                  Based on their responses, we identified a variety of reasons, including: the COs
                  did not know that vendor certification clauses needed to be in the contracts; the


32 AMS 3.6.4-3.
33 AMS 3.6.4-18.
34 We asked the Agency whether this example of FAA’s noncompliance with the BAP resulted in Anti-Deficiency Act

violations. FAA responded that while this may be a BAP violation, it does not violate the Anti-Deficiency Act solely
because the BAP prohibition on using obligated funds to purchase foreign steel or manufactured goods is not
contained in an appropriations act. This is an executive branch position, which FAA follows, and is based on a 2007
opinion from the Department of Justice Office of Legal Counsel (OLC), Memorandum for the General Counsel,
Environmental Protection Agency, Use of Appropriated Funds to Provide Light Refreshments to Non-Federal Participants
at EPA Conferences, (April 5, 2007); see also OMB Circular A-11, section 145.2. We note that the Government
Accountability Office disagreed with this OLC opinion. See Antideficiency Act—Applicability to Statutory Prohibitions on
the Use of Appropriations (B-317450), March 23, 2009.
35 Our 987 estimate has a precision of +/-445 contracts (+/-7 percent of the 6,002 contracts in our universe) at a

90-percent confidence level, so that our confidence limits range from 541 to 1,432 (9 to 24 percent).
36 Our $127 million estimate has a precision of +/-$28 million (+/-0.7 percent of the $4 billion universe) at a

90-percent confidence level, so that our confidence limits range from $100 million to $155 million (3 to
4 percent).


ZA2021026                                                                                                           10
                      COs were not able to locate the certifications; and the COs left the Agency
                      without ensuring the certifications were obtained and filed. Moreover, based on
                      our review, 3 of the 28 COs and CORs we interviewed do not know where in AMS
                      to find additional guidance on including vendor certification clauses in contracts.
                      One of these COs described the domino effect associated with such an omission,
                      stating that because the relevant clause “was never included in the contract…the
                      vendor did not supply a copy of the Steel and Manufactured Products
                      certification.” When contracts do not require vendors to complete certifications
                      or do not identify the Buy American requirements, FAA may be hindered in its
                      ability to track BAA compliance and could have difficulty holding a noncompliant
                      contractor accountable. Comments from Agency COs suggest that more
                      comprehensive guidance for acquisition staff could both reduce the frequency of
                      these recurring issues and improve FAA’s ability to enforce domestic content
                      laws. Furthermore, contractor certifications can serve as crucial evidence if a
                      product is later determined to be noncompliant and would provide FAA with the
                      opportunity to pursue suspension, debarment, and criminal penalties for false
                      certifications.

                      To gather additional information on the Agency’s Buy American–related practices,
                      we sent a survey to all 236 of FAA’s current COs, and 81 responded. A section of
                      the survey focused on vendor certification; 56 respondents (70 percent) stated
                      that they rely solely on vendor self-certifications to evaluate Buy American
                      compliance, and they do not perform any additional checks. This demonstrates
                      that vendor certifications are critical components of FAA’s limited enforcement
                      framework for domestic content requirements. However, as we discuss later in
                      this report, the COs also told us that they do not conduct significant post-award
                      surveillance to validate the integrity of vendor self-certifications.

                      Inclusion of Inapplicable Clauses

                      We also found that FAA’s contracting staff had included other non-Buy American
                      clauses in 14 of the 31 BAA and BAP contracts in our sample. For example, one
                      contract included a clause for NAFTA, which requires vendors to certify that—
                      except for any Canadian and Mexican items listed in the contract documents—
                      their end products or services originated in the United States. 37 In this case,
                      however, NAFTA did not apply as none of the products were to be acquired from
                      Canada or Mexico, and all the work was to occur in this country. 38 Inserting
                      clauses that may not be applicable in contracts can create confusion and an
                      unnecessary administrative burden for COs and increase the offerors’
                      administrative costs and thus the overall cost of FAA’s acquisitions. Based on our
                      finding that 14 of the 31 BAA- and BAP-applicable contracts (valued at



37   AMS T3.6.4A.7.
38 AMS   T3.6.4-8.


ZA2021026                                                                                              11
                  $71 million) included inapplicable domestic content clauses, we estimate that
                  1,166 39 contracts in our universe valued at $139 million 40 may include similar
                  unnecessary clauses regarding domestic content requirements.

                  Additionally, some COs added clauses detailing Buy American requirements in
                  contracts that did not require them. While 45 41 of the 76 contracts in our sample
                  were not subject to such requirements, 24 of the 45 included Buy American
                  clauses. When we asked about this, Agency COs acknowledged that those clauses
                  had been included in error. FAA officials explained that during fiscal year 2017—
                  the period of our audit—COs had limited aids (e.g., contract writing and matrix
                  tools) to help them determine which of over 600 AMS contract clauses to use;
                  only 10 of the clauses apply to the Buy American Laws. However, in fiscal year
                  2018, FAA upgraded its contract writing system 42 with improved templates that
                  include the appropriate clauses for each type of contract. The 2018 contracts
                  were not within the scope of our review, so we were unable to assess the results
                  of this upgrade.

                  Moreover, the inclusion of unnecessary clauses complicates and confuses CO and
                  vendor efforts to comply with the Buy American Laws. When FAA omits relevant
                  clauses from contracts, it incorrectly signals that the acquisition is not subject to
                  Buy American requirements; as a result, the Agency may expend funds on foreign
                  purchases. Providing staff with proper guidance on identifying appropriate BAA-
                  and BAP-applicable acquisitions, as well as the correct clauses to insert in
                  contracts, can help to correct the errors and eliminate the confusion that we
                  found during the course of our review.



             FAA Contracting Officers Frequently
             Misapply Buy American Preference
             Waivers
                  Unlike the BAA, which applies across the Federal Government, the BAP—which
                  governs acquisitions of steel and manufactured products—is specific to FAA.
                  AMS implements the BAP and directs FAA’s contracting staff to use only U.S.-
                  produced steel and manufactured goods on projects, unless that requirement is
                  waived by an authorized official. 43 We reviewed four BAP waivers executed by the



39 Our 1,166 estimate has a precision of +/-475 contracts (+/-8 percent of the 6,002 contracts in our universe) at a
90-percent confidence level, so that our confidence limits ranged from 691 to 1,640 (12 to 27 percent).
40 Our $139 million estimate has a precision of +/-$30 million (+/-0.7 percent of the $4 billion in our universe) at a

90-percent confidence level, so that our confidence limits ranged from $109 million to $168 million (3 to 4 percent).
41 These were identified as service contracts.
42 The Procurement Information System for Management (PRISM) is FAA’s official system for procurement processing.

43 AMS T3.6.4(A)(4).




ZA2021026                                                                                                          12
                  FAA Acquisition Executive (FAE) in 2013 (see table 1) that were in effect during
                  the course of our audit; three are “public interest” waivers under the BAP.
                  Notably, each of the four is a BAP blanket waiver, which applies to all future
                  contracts that satisfy the waiver’s criteria, is not contract or project-specific, and
                  remains valid unless expressly rescinded by the FAE. 44 For example, the BAP
                  public interest waiver for commercial information technology waives the BAP
                  requirements “to purchase United States-made manufactured goods when those
                  manufactured goods are information technology that are a commercial item.” 45
                  According to FAA officials, the CO is responsible for determining whether a
                  contract satisfies the waivers’ criteria. If a waiver applies, the CO is permitted to
                  purchase foreign steel or manufactured goods.

                  According to AMS, vendor certifications are required for all BAP-related contracts,
                  including instances where waivers are used. However, the blanket waiver for unit
                  purchases that cost less than $3,000 contains contrary language, expressly stating
                  that vendor certifications are not required when this waiver applies, effectively
                  removing the AMS certification requirement. According to FAA, the purpose of
                  this waiver is “to eliminate procurement delays and unnecessary administrative
                  costs from FAA’s procurement process.” 46 In comparison, the blanket waiver
                  involving U.S.-made percentage component costs states that a written
                  certification is required before the contract is awarded. The remaining two
                  blanket waivers do not mention the need for certification and—by default—must
                  abide by the AMS certification requirements.




44 One of the waivers expired in 2016; it was reissued with revisions and is now “effective until expressly rescinded.”
EO 14005 now requires agencies to submit to the Made in America Director an initial report describing the ongoing
use of any longstanding or nationwide waivers of any Made in America Laws, with a written description of the
consistency of such waivers with the policy set forth in the Executive order.
45 Unlike the BAA, the BAP statute does not specifically permit waivers for commercial information technology.

Consequently, FAA created a blanket waiver, using its BAP public interest authority to permit all future purchases of
foreign commercial information technology. This waiver contains language that mirrors language contained within the
statutory BAA commercial information technology exception, which is implemented in both AMS and the Federal
Acquisition Regulation. See 48 C.F.R. § 25.103(e) and AMS T3.6.4.A.2 and T3.6.4.3. FAA created this blanket public
interest waiver without giving the public notice or an opportunity to comment. In addition, as described in greater
detail later in this report, FAA has not posted the waiver on its website.
46 According to FAA officials, this particular waiver was specifically designed for the Mike Monroney Aeronautical

Center. As the Agency’s main logistic center, it processes thousands of small purchases annually.


ZA2021026                                                                                                          13
                 Table 1. FAA Blanket Waivers to BAP Requirements
                   Type               Stated Legal Basis       Scope and Application of BAP Waiver

                   “U.S.-made         Cost exceeds 60          Applies to contract actions where: (1) vendor certifies in
                   Percentage         percent of component     writing before award that U.S.-produced components
                   Component          costs (49 U.S.C. §       cost more than 60 percent of the cost of all components,
                   Cost”              50101(b)(3))             and that final assembly will occur in the United States;
                                                               and (2) CO verifies proper and timely submission of the
                                                               vendor’s certification.
                                                               Effective until expressly rescinded.

                   “Contracts for     Public interest (49      Applies to all contract actions in support of the NAS that
                   FAA’s Logistics    U.S.C. § 50101(b)(1))    are single-sourced based on proprietary data or
                   Center in          and                      configuration standardization.
                   Support of the     Insufficient quality     Effective until expressly rescinded.
                   NAS”               and/or amount (49
                                      U.S.C. § 50101(b)(2))

                   “Purchases Less    Public interest (49      Applies to all contracts for manufactured goods when
                   Than $3,000”       U.S.C. § 50101(b)(1))    those manufactured goods are priced less than or equal
                                                               to $3,000. Also waives need for purchasing officials to
                                                               obtain a certification for each item purchased.
                                                               FAA interprets the $3,000 threshold as an item cost, not
                                                               a total contract cost.
                                                               Effective until expressly rescinded.

                   “Commercial        Public interest (49      Applies to all contracts for manufactured goods
                   Information        U.S.C. § 50101(b)(1))    involving information technology products that are
                   Technology“                                 commercial items.
                                                               Includes broad definitions of “commercial item” and
                                                               “information technology.”
                                                               Effective until expressly rescinded.

                 Source: FAA

                 According to one FAA acquisition official, in 2013, the Agency notified its
                 contracting staff via email about the BAP blanket waivers and how to use them.
                 Yet, beyond that initial outreach, FAA has not provided any further guidance or
                 instructions on this topic. Instead, contracting staff rely solely on AMS, which only
                 establishes who has the authority to make waivers and who can approve them. 47
                 As some COs told us, AMS does not specifically discuss when it is appropriate to
                 apply or document that COs use the BAP waivers—a point we confirmed when
                 we reviewed FAA’s acquisition guidance. In contrast, AMS does require COs to
                 document all BAA exceptions within contract files. AMS also requires a legal
                 review of contracts (BAA and BAP) over $100,000. But again, we found no




47The Secretary has delegated this authority to the FAA Administrator; for more information, see the Background
section of this report.


ZA2021026                                                                                                         14
                    evidence within our sample that FAA conducted legal sufficiency reviews to verify
                    that the correct BAP blanket waiver was being applied.

                    During our audit, we determined that 7 of the 31 BA-applicable contracts in our
                    sample used FAA-specific blanket waivers. In four of the seven contracts,
                    however, the COs applied the waiver unnecessarily or inappropriately. For
                    example, one CO purchased test equipment for use by technicians in the field, as
                    well as students in classroom and lab environments. The CO applied the National
                    Airspace System Blanket (NAS) waiver to this item based on its proprietary
                    configuration. However, the product did not appear to be made abroad. After we
                    questioned the use of the waiver, an FAA official contacted the vendor, which
                    said the product was domestically made, confirming that the waiver was
                    unnecessary.

                    Another contract purchased six German-made, high-speed cameras for
                    documenting crash-test experiments. In writing this contract, the CO included
                    BAP clauses related to the purchase of a manufactured product, as well as the
                    required certification language. The contractor returned the form, certifying that
                    the manufactured products had been made in Germany, not the United States.
                    However, the CO did not recognize or document that the information technology
                    blanket waiver could have been used for the purchase of this foreign-made
                    product.

                    Insufficient guidance is not the only reason Agency COs are using waivers
                    incorrectly or not applying and documenting waivers when applicable. This also
                    occurs due to the lack of BAA- or BAP-specific training for acquisition
                    professionals at FAA, as we discuss below. If Agency COs do not understand how
                    to correctly apply the waivers, FAA cannot fully assess 48 its compliance with the
                    Buy American Laws or the related impact on domestic jobs and manufacturing.



                FAA Provides Limited AMS Training on
                the Buy American Laws for Its COs and
                Other Acquisition Staff
                    AMS states that all FAA employees with delegated contracting authority must
                    demonstrate the appropriate knowledge and experience to execute this authority
                    on behalf of the Government. 49 Yet FAA’s training program has limited content
                    on how to execute Buy American requirements, BAA exceptions, BAP waivers, or
                    any related AMS procedures for implementing this complex domestic content



48   Such assessments were previously required by EO 13788 and are still required by EO 14005.
49   AMS 3.1.4, Contracting Authority.


ZA2021026                                                                                           15
                     framework. Instead, FAA relies predominantly on Federal Acquisition Regulation
                     (FAR)–based classes that cover a broad range of acquisition topics. While these
                     classes may provide an overview of the Governmentwide BAA requirements, they
                     do not cover the AMS and the BAP requirements that apply only to FAA.

                     We interviewed all 28 COs and contracting officer representatives (COR) who
                     worked on our sample of BAA- and BAP-applicable contracts; topics included
                     opportunities for training on domestic content requirements. Twenty-six of the
                     28 provided comments regarding their training: 12 said they had received “no
                     training;” 3 COs said their training was “poor” or “insufficient;” 9 said their
                     training was “ok” or “sufficient;” and 2 COs said their training was “good” and
                     “excellent,” respectively. Several of the interviewees also noted that FAA does not
                     provide formal or consistent training on the Buy American Laws. For example:

                          •   One FAA contracting manager stated: “FAA does not have a methodology
                              in place to ensure that all contracting personnel obtain applicable BA [Buy
                              American] contracting training. Currently, BA training classes are not
                              mandatory for CO/CORs or any other contracting personnel. If someone
                              would like to learn the procurement details behind BA, a couple of
                              ‘ad-hoc’ classes can be found in ELMS [FAA’s Electronic Learning
                              Management System]. Brownbag meetings are also used by FAA to
                              inform its contracting personnel on different details about BA and its
                              procurement needs.”

                          •   “I do not recall receiving any formal training,” stated one CO. Another
                              said, “I only received brief training on the Buy American subject until FAA
                              training presented [a session] during monthly leadership/training [via]
                              VTC in April 2018. This training presented more depth than any training I
                              received prior.”

                          •   “I would rate the training I received on BA/DP [Buy American/domestic
                              preference] pre- or post-award requirements as poor,” said yet another
                              CO. “I followed the BA guidance in [AMS]…It truly upsets me that myself
                              and other COs are unclear on certain requirements. Adequate training is
                              not the…only culprit…BA guidance…should incorporate all the compliance
                              needs so COs will have ONE place to reference requirements.”

                     In addition, 70 of the 81 people who responded to our survey said they had some
                     type of previous training on domestic content laws. Forty-three (61 percent) of
                     those 70 individuals described the training they received as less than sufficient. 50
                     One CO stated that in his 12 years in the position, he only received a half-day
                     training session on domestic content laws. Some COs said their only instruction
                     did not cover AMS or FAA-specific domestic content requirements and waivers. In


50   “Less than sufficient” includes survey responses of “somewhat sufficient” and “insufficient.”


ZA2021026                                                                                              16
                 addition, 61 of the 81 survey respondents said they had received some type of
                 training on waivers. Thirty-six (59 percent) of those 61 51 survey respondents said
                 that while they had received some training on how to apply waivers, it was less
                 than sufficient. One CO said, “No real formal training [on waivers] has ever
                 happened,” while another stated, “I don't remember receiving BA[-related]
                 training since coming to the FAA.” A third CO stated, “CORs need more training
                 on the Buy American Act and how it applies to contracts.”

                 The COs’ lack of knowledge regarding Buy American requirements is a possible
                 contributing factor in FAA’s inability to fully ensure compliance.



             COs Do Not Always File Required
             Documents in FAA’s Official Contract File
             System
                 According to AMS, any contract actions that occur on or after October 1, 2013,
                 must be created in electronic format and maintained in FAA’s repository for
                 paperless contract files, known as Electronic Document Storage (eDocS). 52 COs
                 must ensure documents stored in eDocS are complete, legible, accurately labeled,
                 and filed promptly in the appropriate contract folder. 53 They are also required to
                 identify the location of contract files stored elsewhere—whether in paper or
                 electronic form—in the eDocS “Annotations” section. 54

                 We found, however, that the eDocS system did not contain the required
                 documents for 11 of the 29 contracts in our sample. (The Buy American Laws
                 applied to 31 contracts in our sample, but 2 of these contracts were awarded
                 before eDocS was required.) While AMS describes how to properly document a
                 complete and official contract file in eDocS, COs and contract managers could
                 not always give us supporting documentation for their Buy American–applicable
                 contracts. Our review revealed that Buy American–relevant documents—such as
                 base contracts with clauses, Buy American certifications, and BAP waivers—were
                 frequently misplaced, mislabeled, or missing from eDocS. We also found that in
                 some cases COs did not know which contract documents were required; in
                 others, the COs could not find their predecessors’ contract documents. Some of
                 these issues may be due to the lack of instructions for COs, such as when to
                 obtain a completed vendor certification and what to maintain in the contract files.




51 The other 20 respondents did not take any Buy American–related training.
52 AMS Electronic Commerce in Contracting, T3.1.9.A.4a.
53 AMS T3.1.9.A.4.a (2).

54 AMS T3.1.9.A.4.a (3).




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                 We identified two 2017 NAEP reports that noted that file issues arose when the
                 transfer of contracting responsibilities from one CO to another did not proceed
                 smoothly. Specifically, the NAEP reports noted the lack of coordination in
                 contract transfers as one of the reasons COs found it challenging to provide
                 complete contract documentation. As a result, successor COs had difficulty
                 performing post-award administrative functions as they did not have sufficient
                 knowledge of the contract history. At the time, the NAEP evaluators
                 recommended that FAA establish general guidance at the division level to ensure
                 that there is a consistent, comprehensive, and smooth transition of work between
                 COs that is monitored and enforced by management. As of the date of this
                 report, FAA has not developed this guidance.

                 This is not the first time we have addressed the lack of adequate documentation
                 in the eDocS files. A 2013 Office of Inspector General (OIG) report noted that FAA
                 was not consistently maintaining, updating, and organizing the contract files for
                 ATCOTS, its air traffic controller training program. 55 In response to that report,
                 FAA developed an eDocS user’s guide and implemented a new internal email
                 system that—according to the ATCOTS CO—improved the Agency’s electronic
                 file maintenance. However, despite these actions, inadequate contract
                 documentation—such as omissions of Buy American clauses and certifications—
                 remains a problem, preventing FAA from administering its contracts in a timely,
                 effective manner and in accordance with the law.

                 The lack of Agency-specific guidance and training significantly impacts FAA’s
                 ability to ensure the proper application of BAA and BAP requirements,
                 exceptions, and waivers in its acquisition contracts.




FAA Does Not Adequately Oversee Buy American
Compliance When Administering Contracts
                 FAA does not have guidance to support or adequately document post-award Buy
                 American compliance activities. The Agency also does not have an adequate
                 system for identifying Buy American–applicable contracts or tracking how many
                 waivers and exceptions FAA uses, as required by law.




55FAA Needs To Improve ATCOTS Contract Management To Achieve Its Air Traffic Controller Training Goals (OIG
Report No. ZA-2014-018), December 18, 2013. OIG reports are available on our website: https://www.oig.dot.gov/.
ATCOTS stands for Air Traffic Control Optimum Training Solution.


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             FAA’s Monitoring of Post-Award Buy
             American Compliance Is Insufficient
                  The Agency neither provides staff with guidance on post-award compliance nor
                  monitors their efforts in this area.

                  FAA Lacks Guidance on How To Monitor Post-Award
                  Compliance

                  Executive Order 13788 56 directed Federal agencies, including FAA, to scrupulously
                  monitor, enforce, and comply with the Buy American Laws. 57 Yet the Agency does
                  not have policies or procedures to guide COs on how to validate compliance
                  after the contract is awarded. This, in turn, has encouraged COs to use
                  inconsistent approaches to conduct surveillance, when it does occur. For instance,
                  one official said monitoring may take place in various ways—by reviewing
                  deliverables, invoices, quality assurance plans, and program management
                  activities; consulting with quality reliability officers; or regularly communicating
                  with CORs and contractors. Nevertheless, many of the 28 Agency COs and CORs
                  we interviewed explained that they do not conduct post-award compliance
                  checks because AMS does not require them to do so. 58 Fifty-seven (70 percent) of
                  the 81 respondents to our survey stated that they did not know how to monitor
                  Buy American compliance throughout the acquisition lifecycle.

                  Even so, we did encounter an example of staff vigilance. Despite the lack of
                  relevant policies or procedures, one CO discovered that a product a vendor had
                  certified as Buy American compliant was contained in boxes labeled as made in a
                  foreign country, so the CO rejected the boxes. 59 However, noncompliance may
                  not always be so easy to identify, particularly without structured controls—such
                  as policies and procedures on verifying post-award compliance. Such controls
                  can enhance FAA’s ability to ensure domestic products are delivered according to
                  BAA requirements and contract specifications. COs who do not know how to
                  verify that the Agency and its vendors have met domestic content
                  requirements—or who do not think this is required by AMS—cannot provide
                  assurance that the end product delivered was compliant with domestic content
                  laws.



56 EO 13788 § 3.
57 Similarly, EO 14005 provides that the U.S. Government should maximize the use of goods, products, and materials
produced, and services offered, in the United States. It also requires agencies to report on the implementation of and
compliance with Made in American Laws.
58 One option available to FAA is to fill this gap by modifying the NAEP reviews to include post-award monitoring,

especially on contracts deemed to be high risk.
59 The information provided by this example came from our anonymous survey; therefore, we could not determine

whether there were any consequences for the vendor or if FAA took any corrective actions.


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                 During the course of our audit, we looked at DoD for best practices in post-award
                 compliance verification. DoD, for example, uses a contractor purchasing system
                 review (CPSR), in accordance with Federal acquisition regulations, to validate
                 post-award compliance. 60 During the CPSR, DoD contracting officials look for Buy
                 American clauses in prime contracts, whose requirements can be met by the
                 awarding of subcontracts. If they find the clauses, they review a sample of awards.
                 If they identify foreign suppliers within that sample, they check to ensure the
                 contract files contain the required Buy American certifications. FAA officials noted
                 that CPSRs are performed by the Defense Contract Management Agency (DCMA)
                 on larger contracts Governmentwide and that some of FAA’s contracts are
                 included in these reviews. However, they also recognize that these reviews tend
                 to only look at the larger contracts and may not examine FAA-specific, BAP-
                 compliance issues. Nevertheless, FAA could implement a practice similar to the
                 CPSRs by sampling contracts of various sizes to assess compliance with the Buy
                 American Laws, as well as other contract requirements.

                 FAA Conducts Limited Monitoring of Internal Compliance
                 With the Buy American Requirements

                 As mentioned above, Executive Order 13788 directed Federal agencies, including
                 FAA, to scrupulously monitor their compliance with the Buy American Laws. 61
                 According to FAA senior officials, the Agency uses NAEP procurement reviews as
                 its primary internal control tool for ensuring that staff are monitoring compliance.
                 However, while AMS refers to monitoring the implementation of procurement
                 requirements in general, it makes no mention of ensuring COs monitor
                 compliance with the Buy American requirements. Moreover, while NAEP reviews
                 are intended to cover the full lifecycle of a contract, we found that NAEP
                 evaluators mainly focus on the pre-award process and do not thoroughly
                 document the results of Buy American-compliance checks.

                 To understand how FAA uses this internal monitoring control, we reviewed NAEP
                 reports from 2016 and 2017. Buy American compliance was not included as a
                 separate checklist item on the 2016 and 2017 NAEP evaluation forms, but
                 evaluators could communicate review results by entering remarks in the form’s
                 comment box. Yet none of the reports we reviewed (75 from 2016 and 56 from
                 2017) contained comments related to the FAA staff’s Buy American compliance—
                 positive or negative. When questioned about this issue, FAA officials said that,



60 The CPSR should be conducted in accordance with the CPSR Guidebook, DCMA instruction 109, the FAR subpart
44.3, and the DFARS 244.3. A CPSR is conducted when a contractor’s annual sales to the Government are expected to
exceed $50 million in a 12-month period. These sales include all contracts/subcontracts minus those that are
competitively awarded, firm-fixed-price; competitively awarded, fixed-price with economic price adjustment; or sales
pursuant to part 12, which pertains to the acquisition of commercial items.
61 Similarly, since EO 14005 requires agencies to biannually report on implementation of and compliance with Made in

America Laws, internal agency monitoring remains relevant.


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            despite the lack of comments, NAEP staff still “may” have evaluated compliance
            when conducting their reviews. Similarly, the NAEP evaluators told us that they
            did look for Buy American compliance. Although the NAEP’s main purpose is to
            monitor acquisition offices’ implementation of procurement requirements and
            processes, FAA officials told us the evaluations can be used as a Buy American–
            compliance check. Still, neither FAA officials nor NAEP staff provided any
            documentation to support these statements or to show that the evaluators
            record the results of their domestic content compliance reviews.

            One reason for the lack of documentation is that AMS provides limited guidance
            on verifying post-award Buy American compliance. Moreover, based on our
            review of the NAEP evaluation forms for 2016 and 2017, we found that neither
            covered pre- or post-award compliance. Agency officials said they added
            assessment of domestic content compliance to the 2018 NAEP evaluation form in
            order to meet the requirements of Executive Order 13788. As such, although our
            audit covered fiscal year 2017, we looked at the 2018 NAEP reviews to confirm
            that FAA had updated the form. The revised form bundles Buy American
            compliance with 7 other requirements—consisting of almost 80 clauses—and has
            a checkbox that evaluators can mark to indicate “appropriate clause used.”
            However, the form only focuses on pre-award Buy American compliance and
            does not encourage NAEP staff to provide sufficient details about their
            assessments. We found, for example, that 16 of the 110 (15 percent) NAEP
            reports completed in 2018 included comments on the Buy American
            requirements somewhere on the forms. Yet the comments only discussed such
            pre-award compliance issues as:

               •   “Buy American Act waiver—$3K or less was incorrectly used.”

               •   “Appropriate Buy American clauses were in the Screening Information
                   Requests.”

            Currently, NAEP evaluator reviews are not structured to include adequate
            documentation or details that might prompt FAA officials to conduct
            comprehensive post-award follow-up checks. Without policies and procedures
            that include assessing post-award Buy American compliance as an action item on
            the NAEP checklist, FAA cannot depend on NAEP evaluations as an effective
            control for monitoring post-award compliance.




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             FAA’s Reports on Buy American Contracts
             and Associated Waivers and Exceptions
             Are Inaccurate
                  Executive Order 13788 also required Federal agencies to assess and report on
                  Buy American compliance. 62 OMB Memorandum M-17-27 provides additional
                  guidance to agencies to maximize Executive Order 13788 policy and the statutory
                  mandate for domestically manufactured products in contracts and grants and
                  minimize use of exceptions and waivers. 63 According to an FAA official, the
                  Agency uses its Data Procurement Quality 64 report—which validates the accuracy
                  of the FPDS-NG data input by Agency COs—as a means for assessing Buy
                  American compliance. FPDS-NG allows agencies to code the “place of
                  manufacture” field to indicate—in accordance with the Buy American Act—
                  whether the procured end products are manufactured inside or outside the
                  United States and whether any exceptions or waivers apply. Specifically, FPDS-NG
                  lists 10 active codes for identifying place of manufacture in the database,
                  including foreign products acquired for resale, used outside the United States, or
                  obtained under trade agreements (see exhibit E). However, we found that even
                  though the system is equipped to track contracts with the Buy American
                  requirements, FAA does not make full use of FPDS-NG. The Agency mainly uses
                  only two of the codes—to identify that the item either (1) was manufactured in
                  the United States or (2) is not a manufactured product but a service or research
                  and development work. By using primarily these two FPDS-NG codes, FAA
                  provides only limited transparency into how it applies the BAP blanket waivers
                  when it purchases foreign-made products. In fact, we found that FAA uses the
                  other applicable codes—i.e., “foreign end products predominantly commercial
                  information technology” or “domestic preference would be inconsistent with the
                  public interest”—less than 1 percent of the time to identify Buy American
                  exceptions on contracts.

                  When we asked FAA officials how they measure and report on their Buy American
                  compliance, they pointed to the information obtained from the FPDS-NG place of
                  manufacture data field. In 2017, they reported to the Office of the Secretary that
                  these data were over 85 percent accurate. 65 Yet, even though FAA performs



62 EO 14005 now requires agencies to biannually report on the implementation of, and compliance with, Made in
America Laws.
63 OMB, Memorandum M-17-27, Assessment and Enforcement of Domestic Preferences in Accordance with Buy

American Laws, June 30, 2017.
64 The Office of Federal Procurement Policy (OFPP) requires Federal agencies to submit an annual report that certifies

the completeness and accuracy of their FPDS-NG data. The report consists of the amount of an agency’s total
procurement obligation. OFPP, Improving Acquisition Data Quality for Fiscal Years 2009 and 2019, October 7, 2009.
65 FY17 Agency Procurement Data Quality Report, Exhibit 1.




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                  quality checks of the relevant data fields, we found significant accuracy problems
                  with the data associated with the Buy American requirements. Based on our
                  analysis of our sampled contracts from 2017, we found a much lower accuracy
                  rate—only 55 percent. Specifically, 34 of 76 of our sampled contracts contained
                  the wrong place of manufacture codes. Of these 34 contracts, FAA incorrectly
                  reported the place of manufacture for 21 contracts (valued at over $82 million)
                  that were subject to domestic content laws. Similarly, the Agency also
                  misreported the place of manufacture for the remaining 13 contracts (valued at
                  more than $256 million) that were not Buy American applicable. Overall, this
                  equates to 34 contracts with a combined value of nearly $339 million that the
                  Agency reported incorrectly. (See table 2 for our assessment of FAA’s reported
                  data on Buy American compliance.) Thus, given the data accuracy issues we
                  found, as well as the Agency’s limited use of the FPDS-NG codes, FAA cannot be
                  certain that it is giving key stakeholders (e.g., Congress, OMB, and the Secretary
                  of Commerce) accurate reports on its Buy American–applicable contracts or its
                  use of the associated exceptions and waivers.


Table 2. OIG Assessment of Accuracy in FAA’s 2017 FPDS-NG Data on
Buy American Compliance
                          Place of                        Place of
 Domestic              Manufacture          Dollars   Manufacture          Dollars
 Content                    Coded         Correctly        Coded       Incorrectly       Total
 Applicability           Correctly        Reported     Incorrectly       Reported    Contracts    Total Dollars

 BA                            10       $4,190,152             21     $82,450,769          31      $86,640,921

 Non-BA                        32    $1,158,253,961            13    $256,139,823          45    $1,414,393,784

 Total                         42    $1,162,444,113            34    $338,590,592          76    $1,501,034,705

Source: OIG analysis

                  A 2016 NAEP report provides a further illustration of FAA’s history of data
                  inaccuracy. The evaluators who wrote the report noted the inconsistent way in
                  which the COs enter data in FPDS-NG. They recommended that FAA train COs
                  how to use FPDS-NG and require managers to review how the data are collected,
                  entered, and presented to senior Agency officials and OMB. According to FAA, in
                  December 2016, guidance was provided to COs on entering data into FPDS-NG
                  as well as setting up different types of contracts—base contracts, blank purchase
                  agreements, indefinite delivery/indefinite quantity, and purchase orders.

                  Based on our review, FAA may be over- or under-reporting its Buy American–
                  applicable contracts. Thus, the Agency cannot be certain that it is maximizing its
                  use of American goods and services and thus stimulating the U.S. economy, in
                  accordance with the law, recent Executive Order, and OMB guidance.


ZA2021026                                                                                                   23
                  Furthermore, inaccurate information on place of manufacture can have
                  implications beyond FAA’s compliance with the Buy American requirements. In
                  2018, Congress enacted legislation 66 to enhance supply chain security by
                  prohibiting agencies from acquiring certain telecommunications and video
                  surveillance equipment from covered firms and foreign countries. Moreover, in
                  2019, the President issued Executive Order 13873, which prohibits any acquisition
                  if the transaction involves information or communication technology supplied by
                  persons subject to the direction of a foreign adversary and poses an
                  unacceptable risk to the United States. 67 Finally, AMS requirements 68 prohibit
                  agencies “from entering into…or extending or renewing a contract with an entity
                  that uses…covered telecommunications equipment.” Given the importance of
                  securing the Nation’s telecommunications supply chain, it is essential for COs to
                  have the necessary processes, guidance, and training to adequately document
                  the country of origin when they procure applicable technology and services.
                  While securing the telecommunications supply chain is distinct from domestic
                  content laws, the mandates described above demonstrate that accepting
                  materials of unknown origin not only subverts the Buy American Laws, it poses a
                  security risk. We did not audit FAA’s efforts in this area, which was beyond the
                  scope of our review.



              FAA’s Oversight of Its BAP Waivers Is
              Insufficient
                  FAA does not follow Federal requirements for tracking waiver usage and provides
                  limited information to the public on its direct contract waivers.

                  FAA Does Not Track Waiver Usage

                  Executive Order 13788 directed Federal agencies to minimize the use of waivers
                  and make judicious use of public interest waivers of the Buy American Laws. 69
                  However, FAA’s contract writing system currently does not track the use of



66 John S. McCain National Defense Authorization Act for Fiscal Year 2019, Pub. L. 115-232, Title VIII, § 889 (August 13,
2018).
67 EO 13873, Securing the Information and Communications Technology and Services Supply Chain, § 1.(a)(ii)(A) and

(C), May 15, 2019.
68 AMS T3.6.4.A.16.b.(1).

69 EO 13788, §§ 3 and 4. It also defines “waiver” as “exemptions from or waivers of Buy American Laws, or the

procedures and conditions used by an executive department or agency (agency) in granting exemptions from or
waivers of Buy American Laws.” EO 14005, § 2(c) contains similar language, defining “waiver” to mean an exception
from or waiver of Made in America Laws, or the procedures and conditions used by an agency in granting exception
from or waiver of Made in America Laws. As previously stated, it also directs agencies to “maximize the use of goods,
products, and materials produced in, and services offered in, the United States” and to biannually report on the use of
waivers.


ZA2021026                                                                                                             24
                waivers, and the Agency has indicated that this could be a time-consuming
                process. FAA’s rationale for using BAP blanket waivers is to make the Agency’s
                procurements more streamlined, timely, and efficient.

                However, all Federal agencies use FPDS-NG to report contract information. In
                fact, OMB recommends that agencies strengthen their implementation of the Buy
                American Laws by adding instructions on coding such procurements to their
                FPDS-NG-focused user manuals, data dictionaries, and training modules. 70 Yet, as
                noted previously, FAA uses FPDS-NG in a very limited capacity and does not use
                it to track waivers, especially its three blanket, public interest waivers (see table 1).
                The system’s existing codes potentially could be adapted to help fulfill this
                function—an action also encouraged by OMB. In response to our inquiry about
                enhancing its use of FPDS-NG to track waiver use, FAA recently told us it is in the
                process of modifying its contract writing system (PRISM) to allow COs to
                document waivers. However, this capability has not yet been implemented, and
                we were unable to review it as part of this audit. Without an effective waiver
                tracking system in place, FAA cannot fulfill the Executive Order’s direction to
                assess and minimize its use of public interest waivers.

                FAA Provides Limited Public Information on BAP Waiver
                Usage for Direct Contracts

                In accordance with the 2018 FAA Reauthorization Act, the Secretary shall, at least
                10 days before a BAP waiver takes effect, (1) make a detailed written justification
                of the waiver determination publicly available on a DOT website and (2) provide
                an informal public notice and comment opportunity on the waiver determination.
                In addition, the Secretary must submit a report to Congress on the BAP waivers
                FAA issues in each fiscal year. However, as previously noted, the reauthorization
                language refers only to new waivers and not to those previously issued—such as
                the Agency’s four existing blanket BAP waivers that were executed prior to 2018
                for an indefinite period and which remain in use today. As such, FAA has not
                made any detailed written justification of BAP waivers publicly available on a DOT
                website or submitted any reports to Congress pursuant to this requirement.

                In contrast, FAA’s website posts information on all of the financial assistance
                waivers 71 issued in connection with Airport Improvement Program (AIP) grants
                under the BAP. Since 2009, FAA has posted a total of 1,186 waivers for different
                financial assistance projects. Given that the Agency clearly sees the advantages of
                posting new and existing AIP grant waivers online, FAA could derive similar
                benefits by posting comparable information about the BAP waivers for its direct




70 OMB, Memorandum M-17-27, Assessment and Enforcement of Domestic Preferences in Accordance with Buy
American Laws, June 30, 2017.
71 AIP Handbook: X-5, National Buy American Waiver, February 26, 2019.




ZA2021026                                                                                               25
            procurements. Furthermore, such an effort could provide more consistency and
            transparency to FAA’s implementation of the BAP.

            Beyond the reporting requirements for newly issued BAP waivers, the 2018 FAA
            Reauthorization Act does not require the Secretary to report to the public or to
            Congress on FAA’s actual ongoing usage of BAP waivers to purchase foreign
            goods (see exhibit G). In comparison, for acquisitions subject to BAA, the
            reauthorization does require the Secretary to annually report to Congress and
            make publicly available a summary of the procurement funds spent on goods
            manufactured in the United States versus goods manufactured outside of the
            United States, as well as the total dollar value of foreign goods purchased by
            FAA.

            The above discussion references the BAP waiver public information and reporting
            requirements that were in effect during our audit. However, the recently issued
            Executive Order 14005 now requires agencies to submit proposed waiver
            descriptions with detailed justifications to OMB and the General Services
            Administration to include information on all proposed and granted waivers on a
            public website. Additionally, as previously mentioned, Executive Order 14005 now
            requires Federal agencies to report biannually on goods, products, materials, and
            services not subject to Made in America Laws or where those requirements have
            been waived.

            While it is early in the implementation process, it appears that the new Executive
            Order applies equally to the BAA and the BAP. Given that we found the FAA does
            not publish or report on its use of BAP waivers for its procurements and does not
            currently track its waiver use, the Agency may be challenged to comply with
            Executive Order 14005.




Conclusion
            FAA expends significant taxpayer dollars to support its mission to provide the
            safest, most efficient airspace system in the world. Moreover, while FAA seeks to
            procure state-of-the-art systems, high-quality goods, and first-rate services, it is
            also required to comply with Buy American and domestic preference laws that
            have been enacted to promote American jobs and the U.S. economy. Yet gaps in
            its acquisition policies and procedures impede the Agency’s ability to comply
            with these important domestic content requirements. FAA has opportunities to
            improve upon its oversight by providing its staff with adequate policies,
            procedures, and training to ensure compliance with Made in America
            requirements. Until it takes steps to close these gaps in its Buy American
            compliance and oversight, FAA cannot assure Congress and the public that it is




ZA2021026                                                                                     26
            spending taxpayer dollars on U.S.-made supplies and products in accordance
            with the law.




Recommendations
            To improve compliance and oversight for contracts subject to the Buy American
            Act (BAA) and the FAA-specific Buy American Preference (BAP) provisions, we
            recommend that the Federal Aviation Administrator:

               1. Revise the Acquisition Management System (AMS) to include policy and
                  guidance covering the BAA and BAP laws and requirements, specifically
                  on the application of clauses, exceptions, and waivers, as well as when to
                  obtain contractor certifications. Implementing this recommendation could
                  put $127 million to better use by reducing the risk of FAA improperly
                  procuring foreign-made supplies and products.

               2. Develop and implement formal training that focuses on the application of
                  FAA’s BAA and BAP requirements, contract clauses, and waivers, as well as
                  on obtaining and retaining required vendor certifications.

               3. Revise AMS to include policy and guidance for FAA’s Electronic Document
                  Storage record-keeping system to include the retention of BAA and BAP
                  documents in the official contract file.

               4. Revise AMS to include guidance and procedures on how to monitor post-
                  award compliance with the BAA requirements, including actions to take
                  when acquisition clauses—such as vendor certification requirements—are
                  incomplete or erroneously omitted.

               5. Revise the National Acquisition Evaluation Program evaluation form and
                  procedures to require evaluators to review and document Buy American
                  compliance, e.g., by listing the categories of Buy American clauses as
                  separate entries and including procedures that show evaluators how to
                  test and document compliance.

               6. Enhance existing quality control procedures to require acquisition
                  personnel to enter FAA domestic content data (i.e., place of manufacture
                  codes) accurately in the Federal Procurement Data System–Next
                  Generation.

               7. Develop and implement procedures for collecting, tracking, analyzing, and
                  reporting on FAA’s use of the BAP waivers and the BAA exceptions.




ZA2021026                                                                                27
               8. Develop and implement procedures to ensure FAA posts information on
                  its existing use of BAP blanket waivers, as well as any newly executed
                  waivers, for direct contracts on a public website.




Agency Comments and OIG Response
            We provided FAA with our draft report on March 16, 2021, and received its
            response on April 15, 2021, which is included as an appendix to this report. FAA
            concurred with recommendations 2 through 8 as written and provided
            appropriate planned actions and completion dates. FAA partially concurred with
            recommendation 1.

            In its official response, FAA agreed to implement recommendation 1 by updating
            its policy and guidance on the application of clauses, exceptions, waivers, and
            vendor certifications by January 31, 2022. However, FAA disagreed with our
            conclusion that this action could put $127 million to better use. According to the
            Agency, (1) OIG did not provide evidence that the contracts identified with
            missing certifications were awarded contrary to BAA requirements or that
            noncompliant products had been delivered to FAA and (2) OIG did not identify
            any instances of waste or show that FAA’s mission was not fully supported by the
            products received.

            We would like to make a few clarifying points with respect to FAA’s partial non-
            concurrence with recommendation 1. First, some of the 12 contracts in our
            sample that lacked certifications were not solely BAA-applicable; in fact,
            9 pertained to the BAP. Moreover, one BAP-applicable contract involved the
            improper procurement of more than $500,000 in foreign-manufactured test
            equipment. After we reviewed this example with Agency officials and offered
            them an opportunity to provide us with evidence to the contrary, FAA
            acknowledged this was an improper BAP procurement. Thus, our audit does
            include evidence that an improper foreign procurement resulted when the
            Agency did not obtain the required contractor certification.

            Second, these same 12 contracts formed the basis for our finding that FAA could
            put a projected $127 million to better use by updating AMS policy and guidance
            regarding when to obtain vendor certifications. Our projection serves as an
            estimate of the funds at risk from having certifications missing within the entire
            universe of BAA and BAP contracts. Vendor certifications are a critical tool for
            enforcing Buy American compliance—such as assisting contracting officials on
            whether a waiver applies. FAA’s failure to ensure contractors submit complete
            certifications limits the Agency’s ability to hold them accountable if they do not
            meet Buy American requirements. In particular, vendor certifications provide




ZA2021026                                                                                   28
            crucial evidence if FAA decides to pursue false claims or suspension and
            debarment for noncompliance.

            Finally, FAA’s response indicates that the Agency does not fully understand what
            our funds put to better use recommendation represents. FAA states that it
            disagrees with our finding because it does not represent an actual waste of funds
            or that the contracts in question did not support the Agency’s mission. Yet our
            funds put to better use determination is not intended to reflect waste or failure
            to support FAA’s mission. Rather, it represents an estimate of funds that could be
            used more efficiently if management takes the steps necessary to implement our
            recommendation. Overall, it is our position that FAA’s failure to implement
            vendor certification requirements risks the unnecessary spending of public funds
            for the procurement of foreign supplies and manufactured goods. These actions
            undercut the very basis of domestic content laws, which seek to promote the
            expenditure of public funds on U.S. manufactured goods and products in order
            to support American industries and strengthen national security.




Actions Required
            We consider all recommendations resolved but open pending completion of the
            planned actions.




ZA2021026                                                                                  29
Exhibit A. Scope and Methodology
            We conducted this performance audit between September 2018 and February
            2021 in accordance with generally accepted Government auditing standards as
            prescribed by the Comptroller General of the United States. We believe that the
            evidence obtained provides a reasonable basis for our findings and conclusions
            based on our audit objectives, regarding FAA’s policies and procedures for
            awarding and administering contracts in accordance with domestic content laws.
            Specifically, we evaluated FAA’s compliance with and oversight of the BAA and
            Agency-specific BAP requirements.

            To conduct our audit, we assessed FAA’s contracting policies and procedures for
            awarding and administering contracts in accordance with the Buy American Laws
            and other relevant Federal laws and regulations. We interviewed FAA senior
            acquisition management and program officials about the Agency’s training on
            the Buy American requirements and methods for measuring compliance. We also
            reached out to DoD-OIG for best practices on conducting Buy American audits
            and the Government Accountability Office to determine if there would be any
            overlap with its work. In January 2021, during the course of our audit, the White
            House issued Executive Order 14005, which revoked Executive Order 13788—the
            applicable criteria for the FAA contracts reviewed. This change in policy did not
            affect our audit findings or recommendations.

            Although grants are also governed by the Buy American Laws, we did not include
            them within the scope of our audit. Our review included only direct contract
            actions. To select our sample, we used FPDS-NG to extract a universe of all of
            FAA’s potential direct contract actions for fiscal year 2017. We focused on fiscal
            year 2017 when selecting our sample since this was the first complete year of
            contracts available to us following the congressional request. The extraction
            contained 20,272 contract actions. We combined the current contract values for
            these actions using the Procurement Instrument Identifier (PIID) data field, which
            resulted in 6,959 contracts. We deleted 957 contract actions that had either
            negatives, zeros, or blanks as values so that our universe consisted of 6,002 PIIDs
            with a total current contract value of $4 billion. We stratified this universe into
            3 strata and selected a statistical sample of 76 PIIDs with a total contract value of
            $1.5 billion (37.3 percent) of the $4 billion in our universe. We used these data to
            evaluate FAA’s compliance with domestic content laws and the Agency’s own
            guidance.

               •   Stratum 1 was a census of all nine PIIDs with a current contract value
                   greater than $50 million.




Exhibit A. Scope and Methodology                                                              30
               •   Stratum 2 was a probability proportional to size with replacement
                   sample of 4 of 348 PIIDs with current contract values between $1 million
                   and $50 million where size was the current contract value.

               •   Stratum 3 was a probability proportional to size sample of 63 of
                   5,645 PIIDs with current contract values under $1 million.

            This sampling methodology was selected because it is widely used and accepted
            in the accounting industry and government auditing. Our sampling design
            allowed us to project our findings to the universe. In addition, we used our
            sample to check the accuracy of the information we downloaded from FPDS-NG.
            To test the completeness of our universe we asked five Agency COs to provide a
            list of open contracts they managed during fiscal year 2017. We received
            113 open contract numbers and found 8 that did not appear in our universe,
            which showed that the universe we obtained from FPDS-NG was not complete.
            However, this universe was the best information available since each Federal
            department annually certifies that data contained in FPDS-NG are complete. Even
            though our universe was incomplete, we deemed it sufficiently reliable for the
            purpose of this audit.

            To obtain an understanding of how FAA monitors Buy American compliance, we
            interviewed 28 of the 29 COs and CORs associated with the 76 contracts in our
            sample. We did not interview the 29th contracting officer because that individual
            no longer works for the Agency.

            To assess how FAA uses NAEP as an internal monitoring control for Buy American
            compliance, we reviewed 3 years of NAEP reviews—for 2016, 2017, and 2018. To
            obtain a broader view of BAA compliance and training, we surveyed all of FAA’s
            current COs and contracting specialists. We developed the survey’s 12 questions
            and tested them internally and externally in accordance with the Council of the
            Inspectors General on Integrity and Efficiency’s Guide on the Inspector General
            Empowerment Act’s Exemption to the Paperwork Reduction Act. We used
            SurveyMonkey to administer our survey. We sent a survey link to 236 COs and
            contracting specialists and received 81 responses for a response rate of
            34 percent. We did not require respondents to answer all the questions and
            consolidated some responses, so our response rates varied by question.




Exhibit A. Scope and Methodology                                                           31
Exhibit B. Organizations Visited or Contacted

          Department of Transportation Facilities
             Office of the Secretary

                •   Acquisition Policy Oversight and Business Strategies Division

             Federal Aviation Administration

                •   Headquarters, Washington, DC

                •   Mike Monroney Aeronautical Center, Oklahoma City, OK

                •   Regional Office, Burlington, MA

                •   Regional Office, College Park, GA

                •   Regional Office, Des Moines, WA

                •   Regional Office, Fort Worth, TX

                •   William J. Hughes Technical Center, Atlantic City, NJ



          Other Organizations
             Department of Defense, Office of Inspector General

             Government Accountability Office




Exhibit B. Organizations Visited or Contacted                                       32
Exhibit C. List of Acronyms
             AIP              Airport Improvement Program
             AMS              Acquisition Management System
             ATCOTS           Air Traffic Control Optimum Training Solution
             BA               Buy American
             BAA              Buy American Act
             BAP              Buy American Preference
             CFR              Code of Federal Regulations
             CO               Contracting Officer
             COR              Contracting Officer Representative
             CPSR             Contractor Purchasing System Review
             DCMA             Defense Contract Management Agency
             DFARS            Defense Federal Acquisition Regulation Supplement
             DoD              Department of Defense
             DOT              Department of Transportation
             eDocS            Electronic Document Storage
             ELMS             Electronic Learning Management System
             FAA              Federal Aviation Administration
             FAE              FAA Acquisition Executive
             FAR              Federal Acquisition Regulation
             FPDS-NG          Federal Procurement Data System-Next Generation
             FY               Fiscal Year
             NAEP             National Acquisition Evaluation Program
             NAFTA            North American Free Trade Agreement
             NAS              National Airspace System
             OIG              Office of Inspector General
             OLC              Office of Legal Counsel
             OMB              Office of Management and Budget
             PIID             Procurement Instrument Identifier
             PRISM            Procurement Information System for Management
             U.S.C.           United States Code


Exhibit C. List of Acronyms                                                       33
Exhibit D. Summary of AMS Guidance on
Implementing the Buy American Laws
Table D1. AMS Guidance on BAA Exceptions for Supplies
 AMS Guidance             Exceptions apply when:

 T3.6.4.A.2 – Supplies    A supply purchase is valued at the micro-purchase threshold or less

                          Domestic preference is not in the public interest

                          Supplies will be used outside the United States

                          Purchase of domestic supplies would be unreasonable in terms of cost

                          Domestic end items are not produced in sufficient and reasonably available commercial
                          quantities and are not of a satisfactory quality

                          Supplies are commercially available information technology

Source: FAA and 41 U.S.C. §§ 8301–8305


Table D2. AMS Guidance on BAA Exceptions for Construction
 AMS Guidance             Exceptions apply when use of a particular domestic construction material:

 T3.6.4.A.3 –             Would unreasonably increase the cost
 Construction Materials

                          Would be impractical

                          Is not mined, produced, or manufactured in sufficient and reasonably available
                          commercial quantities, or of a satisfactory quality

                          Valued at the micro-purchase threshold or less

                          The Administrator, in written non-delegable determination, states applying the Buy
                          American Act to a construction material is not in the public interest

                          For construction contracts with an estimated acquisition value of $10,441,216 or more,
                          Canadian and Mexican construction materials may be treated as domestic for purposes
                          of BAA restrictions, pursuant to the NAFTA Implementation Act*

                          The BAA restrictions do not apply to information technology that is a commercial item

* The United States-Mexico-Canada Agreement Implementation Act (codified at 19 U.S.C., chapter
29) replaced NAFTA and took effect in July 2020.

Source: FAA and 41 U.S.C. §§ 8301–8305




Exhibit D. Summary of AMS Guidance on Implementing the Buy American Laws                                           34
Table D3. AMS Guidance on BAP Exceptions for Steel & Manufactured Products
 AMS Guidance              Exceptions apply when:

 T3.6.A.4(a) – Steel and
 Manufactured              Domestic product preference is inconsistent with public interest
 Products

                           United States goods are not produced in a sufficient and reasonably available amount or
                           quality

                           Facilities and equipment acquisitions under the Airport and Airway Improvement Act of
                           1982 include domestically produced components/subcomponents that are more than
                           60 percent of the cost of all components with final assembly in the United States

                           Domestic materials will increase the cost of the overall project contract by more than 25
                           percent

Source: FAA-specific Buy American provisions and 49 U.S.C. § 50101, Buy American Preferences




Exhibit D. Summary of AMS Guidance on Implementing the Buy American Laws                                           35
Exhibit E. FPDS-NG Place of Manufacture Codes
 FPDS-NG                                                                          Current Use by     Percent Used
 Code        Description                                                          FAA                by FAA

 A           The action is for (i) A foreign end product that is                  No longer valid    N/A
             manufactured in the United States but still determined to be         as of October 1,
             foreign because 50 percent or more of the cost of its                2006
             components is not mined, produced, or manufactured inside
             the United States or inside qualifying countries; or (ii) Services
             performed in the United States by a foreign concern.

 B           The action is for (i) Any other foreign end product; or (ii)         No longer valid    N/A
             Services performed outside the United States by a foreign            as of October 1,
             concern.                                                             2006

 C           Not a manufactured end product action.                               Used by FAA        54 percent

 D           The action is predominantly for acquisition of manufactured          Used by FAA        42 percent
             end products that are manufactured in the United States.

 E           The foreign manufactured end products acquired are                   Used by FAA        Less than 1
             predominantly for use outside the United States (FAR 25.100).                           percent

 F           The foreign manufactured end products acquired are                   Used by FAA        Less than 1
             predominantly for resale (FAR 25.103(d).                                                percent

 G           The foreign manufactured end products are predominantly              Used by FAA        Less than 1
             eligible products acquired under Trade Agreements (FAR                                  percent
             25.402(a)(1)).

 H           The foreign manufactured end products are predominantly              Used by FAA        Less than 1
             commercial information technology items (FAR 25.103(e)).                                percent

 I           The head of the agency has made a determination that                 Not used by        N/A
             domestic preferences would be inconsistent with the public           FAA
             interest (FAR 25.103(a)).

 J           The foreign manufactured end products were predominantly             Used by FAA        Less than 1
             not domestically available as shown by one of the following: (i)                        percent
             The item is listed at FAR 25.104 (FAR 25.103(b)(1). (ii) The
             agency did an individual determination (FAR 25.103(b)(2)). (iii)
             No offer of a domestic end product was received, even
             though the acquisition was synopsized and conducted
             through full and open competition (FAR 25.103(b)(3).

 K           The cost of the offered domestic end products was                    Not used by        N/A
             unreasonable (FAR 25.103(c), 25.105, and Subpart 25.5).              FAA

 L           The foreign manufactured end products are predominantly              For DoD use        N/A
             qualifying country end products (DFARS 225.003 and                   only
             225.872-1).

Note: AMS does have language similar to the FAR for codes E, and G through K.

Source: GSA FPDS-NG Data Element Dictionary




Exhibit E. FPDS-NG Place of Manufacture Codes                                                                       36
Exhibit F. Complexities Associated With
Determining BAP and BAA Usage

     Is this a contract:
     •     For ground transportation demonstration projects?
     •     For air traffic controller performance research?
     •     Funded by airway science curriculum grants?
     •     For civil aviation security research and development? Or
     • Relating to facilities for advanced training of maintenance technicians for air carrier aircraft?


                           No




                                                                                                           Yes
       Are you acquiring steel or manufactured goods?
                                                                     No


                           Yes




       Source: OIG analysis




Exhibit F. Complexities Associated With Determining BAP and BAA Usage                                            37
Exhibit G. Buy American Reporting Requirements
 Requirement            Reporting to     BAP                                         BAA

 FAA Reauthorization    Congress         Annual Report—For each fiscal year, the     Does not apply.
 Act of 2018, § 167                      Secretary shall submit to the appropriate
                                         committees of Congress a report on
                                         waivers issued under [BAP], during the
                                         fiscal year.
                                         Applies only to new waivers issued each
                                         fiscal year.

 FAA Reauthorization    Congress         Does not apply.                             For all acquisitions subject to BAA
 of 2018, § 544/49                                                                   above the micro-purchase threshold,
 U.S.C. § 40110(d)(5)                                                                FAA must report (i) the dollar value of
                                                                                     any articles, materials, or supplies
                                                                                     purchases that were manufactured
                                                                                     outside the United States; and (ii) a
                                                                                     summary of the total procurements
                                                                                     funds spent on goods manufactured in
                                                                                     the United States versus funds spent on
                                                                                     good manufactured outside the United
                                                                                     States.

 Executive Order        Department of    § 3 required all agencies to report to the Director of OMB and the Secretary of
 13788 (revoked         Commerce and     Commerce on their findings, analysis, and recommendations with respect to Buy
 January 25, 2021)      OMB              American Laws (BAA and BAP).

 OMB Memorandum         Department of    OMB Memo M-17-27 requires all agencies to report to the Director of OMB and
 M-17-27                Commerce and     the Secretary of Commerce on their findings, analysis, and recommendations with
                        OMB              respect to Buy American Laws.

 Executive Order        OMB, Made in     § 11 requires agencies to submit an initial report to the Made in America Director
 14005 (issued          America Office   on: implementation of, and compliance with Made in American Laws; any
 January 25, 2021)                       longstanding or nationwide waivers; and recommendations on how to further the
                                         policy in Executive Order 14005.
                                         § 12 requires agencies to submit biannual reports to the Made in America Director
                                         on: implementation of, and compliance with Made in American Laws; analysis of
                                         agency’s use of products not subject to Made in America Laws or where
                                         requirements were waived; the agency’s spending as a result of waivers issued
                                         pursuant to the Trade Agreements Act; and recommendations on how to further
                                         the policy in Executive Order 14005.

Source: FAA Reauthorization Act of 2018, EO 13788, EO 14005, and OMB M-17-27




Exhibit G. Buy American Reporting Requirements                                                                  38
Exhibit H. Major Contributors to This Report
             DARREN MURPHY                     PROGRAM DIRECTOR
             KENNETH PRATHER                   PROGRAM DIRECTOR
             ANN WRIGHT                        PROJECT MANAGER
             ALLISON CLEVELAND                 SENIOR AUDITOR
             PAUL STARK                        SENIOR ANALYST
             DANIEL FOX                        SENIOR ANALYST
             KYLE STANLEY                      ANALYST
             DIANA RAFANELLO                   ANALYST
             CELESTE BORJAS                    ATTORNEY ADVISOR
             JANE LUSAKA                       SENIOR WRITER-EDITOR
             GEORGE ZIPF                       SUPERVISORY MATHEMATICAL
                                               STATISTICIAN
             PETRA SWARTZLANDER                SENIOR STATISTICIAN
             MAKESI ORMAND                     STATISTICIAN
             WILLIAM SAVAGE                    IT SPECIALIST




Exhibit H. Major Contributors to This Report                              39
Appendix. Agency Comments

                         Federal Aviation
                         Administration

   Memorandum
 Date:        April 14, 2021
 To:          Mary Kay Langan-Feirson, Assistant Inspector General for Acquisition and
              Procurement Audits
 From:        H. Clayton Foushee, Director, Office of Audit and Evaluation, AAE-1
 Subject:     Federal Aviation Administration’s (FAA) Response to Office of Inspector General
              (OIG) Draft Report: Gaps in Guidance, Training, and Oversight Impede FAA’s
              Ability To Comply With Buy American Laws


 FAA is committed to maximizing the purchase of products, materials, and services produced
 and/or offered in the United States to enhance the prosperity of American businesses and foster
 job creation for American citizens. FAA intends to augment its “Buy American” policy by
 expanding existing training to address unique FAA requirements, enhancing current systems to
 address compliance and transparency, and by expanding oversight of Buy American Act
 requirements. These revisions to policy and process will also facilitate compliance and
 demonstrate FAA’s commitment with Executive Order 14005 of January 25, 2021, Ensuring the
 Future Is Made in All of America by All of America’s Workers.

 Since OIG’s audit focused FAA’s Buy American Act actions for Fiscal Year (FY) 2017, it did
 not fully consider actions taken and implemented by FAA in FY 2018 – 2021 to address FAA’s
 implementation of Buy American Laws, accountability requirements established through the
 FAA Reauthorization Act of 2018, and Executive Orders issued to maximize the use of
 American-Made goods, products and materials. FAA has taken the following actions since FY
 2018 to enhance its compliance with Buy American Laws:
         •   FAA transitioned to the Federal Procurement Data System–Next Generation in FY
             2017/FY 2018, enabling FAA to better leverage the standardization, controls, and
             reporting capabilities already employed across the Federal Government. This allowed
             the Agency to enhance its oversight of Buy American activities, improve consistency in
             the reporting of contract activity and waiver usage, and leverage resources and training
             established for the Executive Branch.
         •   The Agency implemented a new version of its contract writing system within its
             Procurement Information System for Management in FY 2017/FY 2018 to consolidate
             and standardize clause management and solicitation formation into a single system.

Appendix. Agency Comments                                                                40
                                                                                                    2


           Contracting Officers now have an enterprise solution that will help ensure appropriate
           clauses (including those for Buy American) are included in FAA solicitations for products,
           materials, and services.
       •   FAA’s National Acquisition Evaluation Program expanded its review of awards subjectto
           the Buy American Act and preference standards in FY 2018 and revised its review
           checklists to better include Buy American policies and considerations in its evaluationsof
           agency activity.

The Agency has reviewed the draft report and concurs with recommendations 2-8, as written. The
FAA plans to complete actions to implement recommendations 2-4 by January 31, 2022, andcomplete
actions for recommendations 5-8 by September 30, 2021. While we agree to implement
recommendation 1 by January 31, 2022, we disagree with OIG’s conclusion that implementing the
recommendation could put $127 million to better use because (1) OIG did not provide evidence that
the contracts identified with missing certifications were awarded contrary to BAA requirements and
noncompliant products were delivered to FAA and (2) OIG did not identify any instances of waste or
that FAA mission was not fully supported by the products received.

We appreciate this opportunity to respond to the OIG draft report. Please contact H. Clayton
Foushee at Clay.Foushee@faa.gov if you have any questions or require additional information
about these comments.




Appendix. Agency Comments                                                                      41
             Our Mission
 OIG conducts audits and investigations on
behalf of the American public to improve the
performance and integrity of DOT’s programs
   to ensure a safe, efficient, and effective
       national transportation system.