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, the Office of Inspector General (OIG) at the Department of Transportation (DOT) initiated an audit to assess FAA’s policies and procedures for awarding and administering contracts in accordance with domestic content laws. Specifically, OIG evaluated FAA’s policies and procedures for implementing Buy American requirements and overseeing Buy American compliance.
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, OIG’s audit 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, OIG estimates 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. OIG found 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 U.S. economic and national security.
OIG made eight recommendations to improve FAA’s compliance and oversight for contracts subject to domestic content laws:
- 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.
- 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.
- 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.
- Revise AMS to include guidance and procedures on how to monitor postaward compliance with the BAA requirements, including actions to take when acquisition clauses—such as vendor certification requirements—are incomplete or erroneously omitted.
- 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.
- 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.
- Develop and implement procedures for collecting, tracking, analyzing, and reporting on FAA’s use of the BAP waivers and the BAA exceptions.
- 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.
FAA concurred with all eight recommendations.
In April, OIG initiated an audit of DOT’s tracking of imported aviation parts and components, following a request made by the Ranking Members of the House Committee on Transportation and Infrastructure and its Subcommittee on Aviation. Citing the significance of the aviation industry to the Nation’s economy, the Ranking Members asked OIG to assess how DOT, working with other federal agencies, tracks the amount of imported critical aircraft, aircraft engines, and other aviation parts and components.
The Executive Order 14017 on America’s Supply Chains reflects the Biden Administration’s increased interest in understanding and protecting supply chains for critical aviation parts in the United States. Accordingly, DOT-OIG initiated the audit to not only determine how DOT is tracking imported aviation products but also to identify potential impact on the U.S. aerospace industry if imported aviation products are unavailable in the future.