Travels in Canada - Part Three: US Highway Infrastructure Spending — Follow the Money

Dateline: Ottawa, ON, April 23, 2015

Here in Washington, DC, leaders attending the National Governor’s Association gathering last February knew potholes would again be top of mind with many of their constituents. They took the opportunity to “hit the Hill” to urge Congress to speed the re-authorization of the US highway spending bill called “Moving Ahead for Progress in the 21st Century” — or MAP-21. The current version was passed in 2012 and will expire in May 2015. One can understand why the re-authorization is being closely watched in every state capitol building, but why is this important to Canadian businesses? A few key reasons:

1. These bills give permission to the US Department of Transportation (DOT) and its agencies to spend billions of federal dollars appropriated under a separate process and they generally cover projects over a multi-year time frame;
2. The re-authorization process will be high on a politician’s wish list given the potential amounts spent in their districts, and so its legislative path may gain speed in Congress; and
3. Most importantly, many Canadian firms sell to US state highway projects funded by the DOT.

All good so far, right? Not yet. As most everything else in DC, the funding and re-authorization process for this massive pot of money will have to be scrutinized for those darn devils in the details. Once they settle the debate over how much should be appropriated, and for which projects in which states, Congress may turn its attention to other sections of the bill, including the “Buy America” provisions. For example, during the 2012 process, Congress amended the Buy America statute by adding a new requirement to apply Buy America to all contracts involved in a highway construction project that are subject to an environmental impact review. This expansion included non-federal aid projects if at least one of the contracts involved in the project used any amount of federal aid. The addition became part of the highway authorization bill at the time and contractors have been subject to the new requirement since then. See what I mean?

By now, the reader may be asking what his or her company should be doing while Congress does what it will on the issue and before federally funded projects receive their allocations. I have three recommendations:

1. Stay up to speed on developments here in Washington. Sign up for our Arent Fox legal alerts and postings here.
2. Provide training to the sales team on what Buy America is — and what it is not. We can help you on this front, including which states are under US trade obligations such as the NAFTA and the WTO Agreement on Government Procurement.
3. Be proactive with potential US customers before they make critical and long-term purchasing decisions by providing them with accurate information rather than being vulnerable to misinformation or anecdotal hearsay.

The Arent Fox team can help Canadian businesses with the strategic analysis of how changes in Buy America content requirements may affect their manufacturing and assembly operations. We also provide assistance in helping these companies seek appropriate waivers from the Buy America requirements. In addition, when negotiations are successfully concluded with US customers, we can help with government contract drafting and advice.

Spring is coming. We can help pave the way for a company’s fair access to US procurement opportunities.

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These short briefs are designed to share with our Canadian readers what she is hearing from businesses “on the ground” and their issues in regard to the US marketplace.

For our clients, the US marketplace remains an important destination — some industry sectors have particular challenges while various regions in Canada have differing border infrastructure needs. Following each trip, Birgit hopes to report on the regional issues of the day and how the US Administration and the new Congress might address those needs and challenges. We hope these alerts are of interest to clients across Canada and across industry sectors.