Foreign-Source Procurement Funded Through Federal Programs by States and Organizations

ID-79-1: Published: Nov 30, 1978. Publicly Released: Nov 30, 1978.

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Twenty-seven states and the District of Columbia restrict the use of foreign materials in public works projects either through legislation or procurement regulations. Recent legislation enacted at state and federal levels expanded buy-national preferences to U.S. firms competing for federally financed procurement, including making buy-national preferences mandatory for federally funded transportation grant programs.

Buy-national restrictions have been contested, and state courts have come to varying conclusions as to their constitutionality and as to whether they violated state competitive bidding statutes. Foreign source procurements by states and organizations for federally assisted programs, many involving construction projects, were identified. These represented a relatively small percentage of total project costs. This can be attributed to federal and state buy-national preferences and to the fact that many significant cost elements of construction projects are not subject to foreign competition. The urban mass transportation program involves a greater incidence of foreign-source procurement. Five of eight grantee awards for railcars from January 1, 1976, to November 15, 1978, went to foreign firms. On some contracts, no U.S. companies competed because they did not have the capacity to produce the required equipment. Amtrak spent 4.2 percent of the $1.4 billion expended for materials on foreign-source materials, mostly on the basis of sole-source procurement or unavailability in the United States.

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