What Contractors Should Know
Understand the requirements for projects funded by ARRA
Funds from the American Recovery and Reinvestment Act of
2009 (ARRA), the $787 billion economic stimulus package
enacted and signed into law in February 2009, are now being
disbursed. According to http://www.recovery.gov, the government’s
official ARRA spending website, of the $25 billion in ARRA funds
that had been awarded, only $18 billion has been disbursed.
A significant portion of ARRA funds is earmarked to 28 federal
agencies to finance contracts, grants and loans around the country.
This translates into construction jobs being financed through the
federal agencies. If your company is involved in the construction
industry, it is important that you understand the “strings” attached
to these funds. Although many restrictions are technical, keep in
mind these pointers to better understand how the fire and life safety
systems market fits into the scope.
How is Funding Directed?
There are three main avenues through which a project can receive
funding from federal agencies. Because much of the funding went
directly to state and local governments, the first opportunities are
state/local government projects.
Other possibilities include current federal program initiatives or
open and new solicitations/grants from the federal agency. The point
to remember is that any project is a potential recipient of ARRA money.
Make sure you find out from your customer whether it has received
ARRA money, and which ARRA requirements apply to the project.
The requirements create challenges for building contractors and
suppliers that hope to work on ARRA-funded projects.
Reporting. Because the act promised accountability and
transparency in how money would be spent, it requires quarterly
reporting from two types of ARRA recipients: direct-grant recipients
and prime contractors to a federal agency. While it is unlikely that a fire
and life safety system contractor would grant money, it will still have to
submit some routine administrative information to the grant recipient,
such as name and address of the business and its DUNS number.
If a fire and life safety contractor is a prime contractor to a federal
government agency, it will need to do full ARRA reporting. Prime
contractors also must report certain information on their first-tier
subcontractors. Reporting is done through the online reporting tool
available at http://www.FederalReporting.gov, where the contractor must
register in advance.
Prevailing wages. All construction projects that receive ARRA
funds must pay Davis-Bacon wages; all standard Davis-Bacon
requirements apply. This is true whenever the project receives
any funding, in whole or in part, from ARRA. This is a significant
expansion of the reach of the Davis-Bacon Act, as it formerly applied
only to projects owned by federal government agencies.
If you have ever worked on a project for a federal government
agency, you are already familiar with Davis-Bacon requirements.
If not, a good place to start is the website of the Wage and Hour
Division of the Department of Labor at http://www.dol.gov/whd/
Buy-American provisions. One of ARRA’s more complicated
provisions is the Buy-American requirements. On its face, it sounds
simple: All iron, steel and manufactured products used in ARRAfunded
projects must be manufactured in the United States. In reality,
applying this to an individual project is complicated. The key point
to remember is: Don’t assume a product can’t be used just because it
isn’t made in the United States. Numerous conditions and exceptions
may allow the use of foreign-made products. Your supplier sales
representative should be able to help you determine the products that
can be used.
To start, it is important to know that the Buy-American
requirements apply to manufactured goods; Each manufactured item
must be manufactured in the United States. Importantly, there is no
requirement for the origin of the components. A manufactured good
is compliant if it is manufactured in the United States, even if all of its
components are foreign.
What is a manufactured good? It is anything that is brought to
a project site for installation into the project. This is an important
point for fire alarm panels. If a panel can be assembled off-site, then brought to the site and installed as a single
item, it is probably compliant. Remember,
there is no requirement for the origin of its
Here are some guidelines to follow: First,
the Buy American requirements apply only
to projects for public works or buildings. If
your project is on a commercial or private
building rather than a government-owned
building, the requirements may not apply.
Ask your customer.
Next, if a product is not available from a
U.S. source, it may qualify for an unavailability
exception. In most cases, though, these must
be requested before a contract is awarded. If
the product you are considering is not made
in the United States, ask your supplier sales
representative for help on this.
In addition, if the total project value is
more than $7.8 million, the project owner
might be required to follow U.S. trade
agreements and allow products from certain
countries, notably Mexico, Canada and most
European countries. Ask your customer
whether any trade agreements apply. If they
are unsure, your supplier sales representative
might be able to help.
There also is an exception that applies
when the use of U.S. products would increase
the cost of the overall project by 25 percent
or more. This would be unlikely in most
projects, but if the project scope is primarily
a life safety system, it could happen.
Coordinate this with the project owner to
find out if it might apply.
If the project owner is a federal agency,
there is an important caveat to the rules.
The Federal Acquisition Regulation treats
an entire life safety system as a single
product, no matter how the individual
components or devices are brought to the
project site. That means that when a project
is ARRA-funded, the system is automatically
compliant because the components can
come from anywhere. (This works only for
an ARRA-funded project owned by a federal
agency. For non-ARRA-funded projects, the
traditional Buy-American Act applies, and it
has a component test.)
In short, you can’t disqualify a product
just because it is made outside the United
States. In fact, because of the many rules
and exceptions, a non-U.S. product might be
compliant on one project but not on another.
Never assume that the answer on one project
will be the same on the next.
There are other ARRA requirements that
the project owner will be required to insert
in all contracts. These include audit and
oversight; central contractor registration;
whistleblower protection; and mandatory
Although ARRA-funded projects include
many provisions, being prepared for the
numerous restrictions will enable contractors
to better understand expectations and make
informed decisions on pursuing ARRA funded
jobs. Your supplier sales representative
will likely have access to resources to help in
analyzing ARRA requirements. Don’t hesitate
to ask for assistance if you are unsure about
This article originally appeared in the March 2011 issue of Security Today.