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[Federal Register Volume 78, Number 155 (Monday, August 12, 2013)]
[Notices]
[Pages 48864-48865]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-19477]

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DEPARTMENT OF ENERGY

Office of Energy Efficiency and Renewable Energy

Limited Public Interest Waiver Under the American Recovery and 
Reinvestment Act of 2009 (Recovery Act)

AGENCY: Office of Energy Efficiency and Renewable Energy, U.S. 
Department of Energy (DOE).

ACTION: Notice of Limited Waiver.

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SUMMARY: The U.S. Department of Energy (DOE) is hereby granting a 
determination of inapplicability (unreasonable cost waiver) of section 
1605 of the American Reinvestment and Recovery Act of 2009 (Recovery 
Act Buy American provisions) to the California Energy Commission, 
recipient of EECBG grant EE0000905, for the installation of a heating, 
ventilation, and air conditioning (HVAC) system at the City of La 
Ca[ntilde]ada Flintridge City Hall building.
    This waiver applies only to this project.

DATES: Effective Date: September 12, 2012.

FOR FURTHER INFORMATION CONTACT: Christine Platt-Patrick, 
Weatherization and Intergovernmental Program, Office of Energy 
Efficiency and Renewable Energy (EERE), (202) 287-1553, 
buyamerican@ee.doe.gov, Department of Energy, 1000 Independence Avenue 
SW., Mailstop EE-2K, Washington, DC 20585.

SUPPLEMENTARY INFORMATION: Under the authority of the Recovery Act, 
section 1605(b)(3), the head of a Federal department or agency may 
issue a ``determination of inapplicability'' (a waiver of the Buy 
American provisions) if the application of section 1605 would represent 
an `unreasonable cost'. The authority of the Secretary of Energy to 
make all inapplicability determinations was re-delegated to the 
Assistant Secretary for Energy Efficiency and Renewable Energy (EERE), 
for EERE projects under the Recovery Act, in Redelegation Order No. 00-
002.01E, dated April 25, 2011, for EERE Recovery Act projects.
    Pursuant to this delegation, the Assistant Secretary has determined 
that application of section 1605 restrictions represents an 
`unreasonable cost' for the project described herein.
    Specifically, this unreasonable cost determination waives the Buy 
American requirements to the California Energy Commission, recipient of 
EECBG grant EE0000905, for the installation of a heating, ventilation, 
and air conditioning (HVAC) system at the at the City of La 
Ca[ntilde]ada Flintridge City Hall building.
    EERE has developed a robust process to ascertain in a systematic 
and expedient manner whether or not there is domestic manufacturing 
capacity for the items submitted for a waiver of the Recovery Act Buy 
American provision. This process involves a close collaboration with 
the United States Department of Commerce National Institute of 
Standards and Technology (NIST) Manufacturing Extension Partnership 
(MEP), in order to scour the domestic manufacturing landscape in search 
of producers before making any nonavailability or unreasonable cost 
determinations.
    The NIST MEP has 59 regional centers with substantial knowledge of, 
and connections to, the domestic manufacturing sector. MEP uses their 
regional centers to `scout' for current or potential manufacturers of 
the product(s) submitted in a waiver request. In the course of this 
interagency collaboration, MEP has been able to find exact or partial 
matches for manufactured goods that EERE grantees had been unable to 
locate. As a result, in those cases, EERE was able to work with the 
grantees to procure American-made products rather than granting a 
waiver.
    Upon receipt of completed waiver requests for the product in the 
current waiver, EERE reviewed the information provided and submitted 
the relevant technical information to the NIST MEP. The MEP then used 
their network of nationwide centers to scout for domestic 
manufacturers.
    In addition to the MEP collaboration outlined above, the EERE Buy 
American Team worked with labor unions, trade associations and other 
manufacturing stakeholders to scout for domestic manufacturing capacity 
or an equivalent product for the HVAC components contained in this 
waiver. EERE also conducted significant amounts of independent research 
to supplement MEP's scouting efforts.
    As a result of EERE's efforts and MEP's scouting process, it was 
determined that if the described HVAC system was manufactured 
domestically, it will increase the total project cost by more than 25%.
    The subject HVAC Replacement Project entails the replacement of 
eight (8) package rooftop units (gasheat/electric cool) at the City of 
La Ca[ntilde]ada Flintridge City Hall building. Units are in the range 
of 2\1/2\ to 5 tons in cooling capacity. New package units shall be 
equipped with air-side economizers and new roof curbs. The City 
solicited bid proposals for the project through a public bid process.
    Contract drawings and specifications were created based on a 
Carrier design (Model 48ES Series) which at the time of document 
preparation was believed to be manufactured in the United States. A 
``Product Bulletin'' (dated July 26, 2010) from Carrier indicated that 
the Carrier unit (Model 48ES) was indeed manufactured in America not 
long ago. Specifically, the subject HVAC unit (48ES) was manufactured 
at Carrier's plant in Tyler, TX, before recently moving its operation 
to Mexico.
    The primary reason that Carrier (Model 48ES) was used as the basis 
of design for this project was because the existing units presently 
serving the City Hall building are also made by Carrier. In an effort 
to reduce project complexity and installation costs, it was understood 
that the proposed units shall have equal (or near equal) dimensions as 
the existing units. The sure way this would be accomplished is through 
use of new Carrier units. While other manufacturers may have equal 
performance characteristics, dimensional data may be significantly 
different. This includes but is not limited to (a) Unit base 
dimensions/footprint, (b) unit height, (c) supply/return duct openings 
and dimensions, (d) electrical and natural gas line connection 
locations and clearances, all of which could impact the project's 
complexity and costs. The grant recipient provided a mechanical unit 
schedule (from the Contract Drawings) in the application for a waiver, 
which includes a comparison of existing and proposed HVAC unit 
dimensions.
    City and Contractor then conducted a survey of the market to find 
HVAC Packaged Units that meet both the technical specs and the Buy 
American requirements. Four manufacturers were identified by the City, 
one was

[[Page 48865]]

identified by MEP. Accordingly, the City asked the Contractor to 
provide a price proposal for a change order that would accommodate the 
domestic units.
    In order to accommodate the domestic unit significant work would 
need to be done to the roof and ductwork. This work would include:

``equipment curbs will be re-leveled using sloped 4x lumber to match 
the original rooftop duct work bottom layout and be attached to the 
building structure. 4 of the units will need to be set back to allow 
for the hookup and transition to the existing duct work. The roof 
portion from where the existing equipment curb was will be properly 
re-roofed. Some of the existing roof ductwork will be demolished and 
disposed of properly to allow for the hook up of new duct. All 8 
units will get new rooftop duct transitions, duct, fittings and duct 
supports to accommodate the termination from the existing roof duct 
work to the new HVAC units and economizers. All utilities will be 
extended to terminate on the new equipment. The existing condensate 
system will be reconfigured to terminate to the new equipment. A/C 
3 will have to have the existing stub ups for the high & 
low voltage relocated from the underside to accommodate the new 
equipment curb location and roofed in on completion.'' (Contractor's 
estimate, April 24, 2012)

    The total cost of this additional work would be approximately 
$29,770.00. The total cost of the manufactured goods would remain 
the same, $52,350.00. The additional cost represents a 56.9% 
increase in total project costs.
    Section 176.110 of Title 2 of the Code of Federal Regulations, 
entitled ``Evaluating proposals of foreign iron, steel, and/or 
manufactured goods'', states that if ``the award official receives a 
request for an exception based on the cost of certain domestic iron, 
steel, and/or manufactured goods being unreasonable, in accordance 
with Sec.  176.80, then the award official shall apply evaluation 
factors to the proposal to use such foreign iron, steel, and/or 
manufactured goods.''

    Per that section, the total evaluated cost = project cost estimate 
+ (.25 x project cost estimate). The total cost of the project 
including the foreign manufactured HVAC is $52,350. The total evaluated 
cost is $52,350 + (.25 x $52,350) or $65,437.50
    The minimum cost for the project with US products is $82,120, a 
cost increase of 56%. In light of the foregoing, and under the 
authority of section 1605(b)(3) of Public Law No. 111-5 and the Re-
delegation Order dated April 25, 2011, with respect to Recovery Act 
projects funded by EERE, on October 24, 2011, the Acting Assistant 
Secretary issued a determination of inapplicability (unreasonable cost 
waiver) of section 1605 of the American Reinvestment and Recovery Act 
of 2009 (Recovery Act Buy American provisions) to the California Energy 
Commission, recipient of EECBG grant EE0000905, for the installation of 
a heating, ventilation, and air conditioning (HVAC) system at the at 
the City of La Ca[ntilde]ada Flintridge City Hall building. This waiver 
applies only to this project.
    This waiver determination was made pursuant to the delegation of 
authority by the Secretary of Energy to the Assistant Secretary for 
Energy Efficiency and Renewable Energy with respect to expenditures 
within the purview of his responsibility. Consequently, this waiver 
applies only to EERE projects carried out under the Recovery Act; and 
only to this project specifically, waiver requests, even for the same 
or similar items, will be handled individually, because individual 
factors apply to each project.

    Authority: Public Law 111-5, section 1605.

    Issued in Washington, DC on September 12, 2012.
David T. Danielson,
Assistant Secretary, Energy Efficiency and Renewable Energy, U.S. 
Department of Energy.

    Editorial Note: This document was received at the Office of the 
Federal Register August 7, 2013.
[FR Doc. 2013-19477 Filed 8-9-13; 8:45 am]
BILLING CODE 6450-01-P
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