Airport projects are most frequently undertaken by local or regional airport authorities using federal funds provided under federal statutes which require specific levels of domestic content. The three most relevant federal statutes are:
The Federal Aviation Administration (FAA) controls funding for improvements at many local and regional airports throughout the United States. You may learn about scheduled airport funding on the FAA's Airport Improvement Program (AIP) webpage.
FAA is part of the Department of Transportation (DOT) and is responsible for administering the U.S. aviation system as well as for funding portions of the infrastructure of that system. Canadian companies will generally interact with the FAA in either a direct sale to the FAA or as a subcontractor on an FAA funded project.
The FAA also oversees compliance with federal laws that apply to the use of funds by airports. Implementation of these laws includes following Buy American preference clauses to be used in airport improvement contracts. Examples of standard clauses used in such contracts can be found at the FAA's Contract Writing Toolbox.
Procurement by the FAA (i.e., when the FAA purchases something for its own use) is covered by the North American Free Trade Agreement (NAFTA) Chapter 10. On purchases of covered goods or services Canadian firms will be treated as U.S. firms when the prime contract is worth more than US$25,000 for goods, US$77,494 for general services, and US$10,074,262 for construction services. For more information on Buy American provisions applicable to construction contracts visit our publication, Buy American Act and Construction Projects. The FAA generally encourages participation of Canadian firms in direct purchases. Be aware though that other programs, such as small business set asides, still may impede the participation of Canadian firms.
When the contract is less than the above noted dollar thresholds, or when the FAA is purchasing a good or service not covered by NAFTA Chapter 10, the Buy American Act (BAA) (41 USC 10a-d) applies.
The vast majority of sophisticated airport equipment (e.g. sensing devices, computer systems for other than air navigation, airport safety and security systems, baggage handling equipment, road graders, snow plows) is not purchased directly by the FAA. Similarly, contracts to expand airports, build runways, install ground communication equipment or terminal facilities, or to purchase maintenance equipment are most often managed by state or local government, or by private sector corporations that receive funds from the Department of Transportation. Typically, the FAA grants funds for these purchases to state and local airport authorities, and these funds have Buy American conditions attached. While not an outright prohibition, these requirements are a significant barrier.
The Aviation Safety and Capacity Expansion Act of 1990 provides that preference be given to steel and manufactured products produced in the United States when funds are expended pursuant to a grant issued under the Airport Improvement Program. The following terms apply:
The successful bidder will be required to assure that only domestic steel and manufactured products will be used by the contractor, subcontractors, and suppliers in the performance of this contract. Exceptions may be granted if:
If facilities and equipment are being acquired under the Airport and Airway Improvement Act of 1982 then no funds may be obligated unless:
The use of foreign materials in any project will not be permitted unless it is pursuant to one of the exceptions noted above.
Facilities include airport runways, taxiways, lighting and signage systems -- things a single airport would acquire or build.
Equipment might include a road grader used for airport road maintenance. The 60% content requirement would apply to the sum of all materials and products used to construct the airport movement area and sign systems. However, in the case of equipment, each individual road grader would need 60% U.S. material content, and the contracting officer would have to be satisfied that manufacturing of the equipment took place in the United States.
U.S. content includes only the value of materials used, not expenses for labour, overhead, marketing, or salaries. For an interpretation of questions (like how the value of software is counted), companies should speak to both the contracting officer handling the contract and the FAA office that provided the grant. Both of these officials want to ensure that the Buy American conditions of the project funding are met. If the Canadian components are to be part of a larger system, or will be combined with other products on a single prime contract, firms involved need to check with contract officials to find out how content and assembly requirements must be met.
Please contact your nearest Canadian Trade Commissioner - In Canada or Abroad, if you face difficulty with these provisions.
BAA does not apply to the acquisition of civil aircraft and related articles from countries, such as Canada, that are party to the Agreement on Civil Aircraft.