United States Office of Water August 1980
Environmental Protection Program Operations (WH-547)
Agency Washington, DC 20460
Water
Program Requirements
Memoranda
Municipal Wastewater
Treatment Works
Construction Grants Program
MCD-02.10
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF WATER PROGRAM OPERATIONS
WASHINGTON, D.C. 20460
NOTICE TO ALL HOLDERS OF THE EPA
MUNICIPAL WASTEWATER TREATMENT WORKS
CONSTRUCTION GRANTS PROGRAM MANUAL OF REFERENCES (MCD-02)
Because the material contained in the "Manual of References" is
obsolete, further printing and distribution will cease. However, the
program policy documents incorporated in that manual, and subsequently
updated by the publication of supplemental issuances of new and revised
Program Requirements Memoranda (PRMs), will continue to be made available
to that segment of the public involved in various aspects of the
Construction Grants Program, Hence, holders of the MCD-02 will continue
to receive copies of Program Requirements Memoranda (MCD-02.00) as they
are printed. So that PRM recipients are kept apprised of the completeness
of their policy document library, a full index of PRMs issued will be
included with each printing.
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Municipal Wastewater Treatment Works
Construction Grants Program
PROGRAM REQUIREMENTS MEMORANDA
Table of Contents
Use of Revenue Sharing Funds for Waste
Treatment Projects
Experience Clauses for Equipment Suppliers
Waste Stabilization Ponds
Standardized Construction Contract Documents
Non-Restri cti ve Speci fi cations
Adequacy of Treatment Certification
Sewer System Evaluation and Rehabilitation
Flood Disaster Protection Act of 1973
Supplement to PG No. 25; Flood Disaster
Protection Act of 1973 (PL 93-234)
User Charges and Industrial Cost Recovery System
Approval of Reimbursement Projects Not
Previously Serviced by EPA
Obligation, Recovery and Reallotment of Contract
Authority Funds
Management of Construction Grants Funds
Grant Funds and Project Segmenting
Class Deviation—Use of Force Account Work
on Construction Grant Projects
Title II Regulations, Section 35.915(i)--
Reserve for Step 1 and Step 2 Projects
Construction of Pretreatment or Treatment
Facilities for Municipal Utilities
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PRM 75-18
PRM 75-19
PRM 75-20
PRM 75-21
PRM 75-22
PRM 75-23
PRM 75-24
PRM 75-25
PRM 75-25
PRM 75-27
PRM 75-28
PRM 75-29
PRM 75-30
PRM 75-31
PRM 75-32
PRM 75-33
PRM 75-34
PRM 75-35
PRM 75-36
Eligibility of Wastewater Treatment Facilities 9/17/74
at Municipally Owned Water Treatment Works for
Construction Grants
Cancelling PG-28 - User Charges and Industrial 7/9/74
Cost Recovery System
User Charge Systems 7/15/74
Overruns, Reserves and Priority Lists 10/16/74
Policy Re Retention of Payments 11/18/74
Escalation Clauses in Construction Grant 12/9/74
Projects
Large City Problems in State Priority Lists 1/9/75
Eligibility of Land Acquisition Costs for Land
Treatment Processes
Consideration of Secondary Environmental Effects 6/6/75
in the Construction Grants Process
Field Surveys to Identify Cultural Resources 7/2/75
Affected by EPA Construction Grants Projects
Flood Insurance Requirements Effective 7/8/75
July 1 , 1975
EPA Procedures in Initiating Debarment Actions 8/5/75
Against Grantee Contractors
Cost Control 9/8/75
Facilitating EIS Preparation with Joint 9/75
EIS/Assessments (Piggybacking)
Compliance with Title VI in the Construction 2/11/76
Grants Program
Discount Rate 8/11/75
Grants for Treatment and Control of Combined 12/16/75
Sewer Overflows and Stormwater Discharges
Allowable Costs for Construction of Treatment 12/29/75
Works that Jointly Serve Municipalities and
Federal Facilities
Value Engineering in the EPA Construction 1/20/76
Grants Program
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PRM 75-37
PRM 75-38
PRM 75-39
PRM 75-40
PRM 76-1
PRM 76-2
User Charge System: Plan and Schedule
Relationship Between 201 Facility Planning
and Water Quality Management (WQM) Planning
Eligibility of Land Acquisition Costs for the
Ultimate Disposal of Residues from Wastewater
Treatment Processes
Priority List Supplement to FY 1977
Construction Grants Guidance
Construction Grants Program Issuances
Cancellation of Certain Program Guidance
Memoranda (PGM)
3/17/76
2/9/76
4/2/75
5/7/76
7/25/76
7/26/76
MCD 02.2
PRM 76-3
PRM 76-4
PRM 76-5
Presentation of Local Government Costs of
Wastewater Treatment Works in Facility Plans
Coordination of Construction Grants Program
with EPA-Corps of Engineers Section 404/
Section 10 Permit Programs
Flood Insurance Requirements
8/16/76
10/14/76
8/16/76
MCD 02.3
PRM 77-1
PRM 77-2
PRM 77-3
PRM 77-4
PRM 77-5
Treatment Works for Recreational Parks, Industrial 11/23/76
Parks and Institutions
Grant Eligibility of Start-up Services 11/29/76
Plan of Operation for Municipal Wastewater 11/29/76
Treatment Facilities
Cost Allocations for Multiple Purpose Projects 12/3/76
Grant Eligibility of Land Acquisition by Lease- 12/15/76
holds or Easements for Use in Land Treatment
and Ultimate Disposal of Residues
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MCD 02.4
PRM 77-6 Easements
PRM 77-7 Management of State Project Priority Lists
PRM 77-8 Funding of Sewage Collection System Projects
MCD 02.6
PRM 77-9 Reallotment of Recovered Funds
PRM 78-1 Erosion and Sediment Control in the Construction
Grants Program
PRM 78-2 Discount Rate
PRM 78-3 Buy American
PRM 78-4 Grant Eligibility of Land Acquired for Storage
in Land Treatment Systems
PRM 78-5 Interim Management of FY 1978 State Priority
Lists Under the 1977 Amendments
PRM 78-6 Industrial Cost Recovery—Interim Guidance
PRM 78-7 Combined Step 2 and Step 3 Construction Grant
Awards (Step 2+3)
PRM 78-8 Rejection of All Bids: Guidance for EPA
Concurrence Function
PRM 78-9 Funding of Sewage Collection System Projects
PRM 78-10 Infiltration/Inflow Program Guidance
MCD 02.6
PRM 78-11 Toxicity of Chemical Grouts for Sewer
Rehabilitation
PRM 78-12 Preconstruction Lag Management
5/4/77
5/13/77
6/21/77
8/5/77
12/29/77
1/26/78
2/17/78
2/17/78
2/17/78
2/17/78
2/17/78
2/13/78
3/3/78
3/17/78
5/11/78
6/12/78
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MCD 02.7
PRM 78-13
PRM 79-1
PRM 79-2
PRM 79-3
PRM 79-4
PRM 79-5
PRM 79-6
Interim Priority List Guidance for the 6/29/78
Development and Management of FY 1979 State
Priority Lists
Safety Requirements for the Design and Operation 10/23/78
of Chlorination Facilities Using Gaseous Chlorine
Royalties for Use of or for Rights in Patents 11/13/78
Revision of Agency Guidance for Evaluation of 11/15/78
Land Treatment Alternatives Employing Surface
Appli cation
Discount Rates 11/17/78
Construction Incentive Program 12/28/78
Priority List Guidance for the Development 1/8/79
and Management of FY 1980 State Project
Priority Lists
MCD 02.8
PRM 79-7
PRM 79-8
PRM 79-9
Grant Funding of Projects Requiring Treatment
More Stringent than Secondary
Small Wastewater Systems
Outlay Management in the Construction Grants
Program
3/9/79
5/9/79
5/11/79
MCD 02.9
PRM 79-10
PRM 79-11
PRM 80-1
PRM 80-2
Qualification of Major Items of Equipment
Funding of Waste Load Allocations and Water
Quality Analyses for P0TW Decisions
Discount Rate
Step 2 and Step 3 Architect/Engineer Level of
Effort Study
7/12/79
9/6/79
11/26/79
12/20/79
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MCD 02.10
PRM 80-3
PRM 80-4
PRM 80-5
PRM 80-6
PRM 80-7
Management Reforms to Reduce the Time Interval 5/30/80
Between Step 3 Grant Award and Initiation of
Construction (Property Acquisition, Local Share
Funding, Service Agreements and Cultural Resource
Investigations)
Women's Business Enterprise Policy for the 8/1/80
Construction Grants Program
Buy American 7/9/80
Retroactive Application of Program Requirements 7/24/80
Grant Eligibility of Minority Business Enterprise
and Women's Business Enterprise Liaison Services 8/29/80
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DIS CUSS ION
Current Environmental Protection Agency (EPA) regulation 40 CFR
35.920-3(b)(2) requires, as part of a Step 2 grant application,
"Adequate information regarding availability of proposed site(s),
if relevant." PRM 77-6 expands on this point and requires the grantee
to perform preliminary easement related work concurrent with other
Step 2 work. PRM 77-6 also requires the regional office to consider the
need (on a case-by-case basis) for the grantees to undertake the actual
taking of easements and/or acquisition of sites during the Step 2 process.
EPA regulation 40 CFR 35.935-3(b)(3) requires the grantee to obtain all
property rights before the initiation of Step 3 construction. At the
present time, there is no EPA policy that clearly describes the action
that must be completed prior to Step 3 grant award. Consequently,
initiation of construction is delayed on many Step 3 projects until the
grantee has obtained the required property rights. This policy statement
is intended to establish procedures that would minimize this delay.
POLICY
It is EPA policy that all real property (including easements) be
obtained, or bonafide options taken, or formal condemnation proceedings
initiated, prior to Step 3 grant award, unless the action is prohibited
by State or other Federal Agency requirements.
The term "bonafide option" refers to an irrevocable commitment on
the part of the landowner to transfer to the grantee an interest in
land at a specified price. Such options should provide for an expiration
date, normally at least one year, and must be supported by adequate
consideration and include any other applicable requirements necessary to
make the option enforceable under State and local law.
IMPLEMENTATION
Effective October 1, 1980, no Step 3 grant is to be awarded until
the grantee has submitted assurances that all required property rights
as defined in 40 CFR 35.935-3(b) have been obtained, or bonafide options
taken, or formal condemnation proceedings initiated, except for those
situations noted below. This assurance can be in the form of a
certification or other documentation established by the Regional
Administrator.
The assurance requirement would exclude the acquisition of land to
be used for sludge disposal or land treatment, as the costs of such
acquisitions are eligible for Federal participation under a Step 3
grant, but would become unallowable if incurred prior to Step 3 grant
award (see PRM's 75-25, 75-39, 77-5, 78-4 and 40 CFR 35.940-3). However,
amendments to construction grant regulations published July 5, 1979,
authorize the Regional Administrator to use his discretion in permitting
grantees to proceed with the acquisition of eligible land after approval of
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the facilities plan in advance of the normal Step 3 award either by (1) award
of a Step 3 segment consisting only of purchase of eligible land, 40 CFR
35.920-3(c)(2) or (2) approval of the grantee's preaward cost for the
purchase of eligible land, 40 CFR 35.925-18(b). In the case of a Step 3
grant awarded solely for the acquisition of eligible land, compliance with
the requirements for approved user charge/industrial cost recovery systems,
operations and maintenance manuals and sewer use ordinances are deferred
until the award of the ensuing Step 3 assistance for the construction of
the facilities, 40 CFR 35.930-1 (a)(1). All grantees are encouraged to
make maximum use of the advance acquisition provisions. In addition,
the regional offices or delegated State agencies, should recommend
the use of the advance acquisitions provisions in situations where the
implementation of the procedures would accelerate the initiation of
construction. However, the review/approval provisions contained in
PRM 79-7 must be completed prior to the purchase of grant eligible land
for projects where treatment more stringent than secondary is anticipated.
In addition, the assurance requirement would exclude the acquiring
or taking of property rights, or bonafide options, or initiating formal
condemnation proceedings, if the action is prohibited by State or other
Federal Agency requirements. However, the grantee must complete all
site acquisition work required for the Step 3 grant that is not prohibited
by State or other Federal Agency requirements.
In the situation where the acquisition of property rights, or bonafide
options, or initiation of formal condemnation proceedings, prior to Step
3 grant award, is prohibited by EPA, State, or other Federal Agency
requirements, the grantee should submit the following information for
each property site excluded from the assurance requirement:
1. The appropriate designation (parcel number, reference code,
etc) for the property site.
2. The State or Federal requirement that prohibits the acquisition
of property rights, or bonafide options, or initiation of
formal condemnation proceedings, prior to Step 3 grant
award.
3. Future actions required to obtain the property or property
rights, and a schedule for these actions.
4. Assurance that all site acquisition work not prohibited by
State or Federal requirements has been completed.
Allowable project costs incurred in the implementation of the
procedures contained in this policy statement, e.g., costs incurred
under the Uniform Relocation Assistance and Real Property Acquisition
Policies Act of 1970, should be included in the Step 2 grant. If
necessary, the Step 2 grant should be amended to include these costs.
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REFERENCES
40 CFR 35.920-3(b)(2)
40 CFR 35.920-3(c)(2)
40 CFR 35.925-18(b)
40 CFR 35.930-1(a)(1)
40 CFR 35.935-3
40 CFR 35.945(g)
40 CFR Part 4
PRM 79-7, "Grant Funding of Projects Requiring Treatment More
Stringent than Secondary," March 9, 1979.
This policy statement supercedes PRM 77-6 issued May 4, 1977. PRM
77-6 is hereby cancelled.
SECTION B - LOCAL FUNDING REQUIREMENTS
PURPOSE
The purpose of this section of the memorandum is to establish
Agency policy to assure that the applicant has reasonable access to
funds required to finance the non-EPA share of the Step 3 project costs.
DISCUSSION
EPA requirements concerning the grantee's ability to finance the
non-EPA share of the construction costs is contained in 40 CFR 35.925-5,
35.935-1(c) and the assurance statement requirements of the "U.S.
Environmental Protection Agency Application for Federal Assistance
(Construction Grants)." In Part V of the application, the grantee
assures and certifies that it will have sufficient funds available to
meet the non-EPA share of the cost for construction projects. In Part
III, Section D, of the grant application, the applicant describes the
proposed method for financing the non-EPA share of the project. At the
present time there is no EPA requirement for the grantee to initiate
financial arrangements prior to Step 3 grant award. Consequently, many
Step 3 projects are delayed while the grantee is obtaining the necessary
funds. This policy statement is intended to establish procedures to
minimize this inherent delay.
POLICY
It is EPA policy that the grantee conduct preliminary financial
planning including structuring of the financing during the Step 1 phase
of the project. As much of the financial arrangements as possible shall
be performed during the Step 2 phase of the project. At the time of
Step 3 grant award, the financial arrangements shall have progressed to
the stage that the grantee can obtain the funds required to finance the
non-EPA share of construction cost within 90 days.
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The Regional Administrator can authorize additional time to complete
the necessary financial arrangements in situations where the State or
other Federal agencies impose requirements such that the non-EPA share
cannot be obtained within 90 days of Step 3 grant award. The authorization
and the amount of additional time authorized should be included in the grant
agreement.
IMPLEMENTATION
Effective October 1, 1980, no Step 3 grant is to be awarded until
the applicant has given assurances that he can obtain the funds necessary
to finance the non-EPA share of the project within 90 days of grant
award. This assurance can be in the form of a certification or other
documentation established by the Regional Administrator. However, the
grantee should exclude from the certification requirement sources of
funds that cannot be obtained within 90 days of Step 3 grant award
because of conflicting State or other Federal Agency requirements.
Effective October 1, 1980, every application for a Step 3 grant
must include the following information for each separate source of
funds required to finance the non-EPA share of Step 3 cost:
1. The source of the funds.
2. The amount of the funds.
3. The financial arrangements completed to date.
4. Future actions required to obtain the funds, and a schedule
for these actions.
For every source of funds excluded from the assurance requirement
the grantee should list:
1. Items 1-4 above.
2. The applicable State or Federal requirement that prohibits
obtaining these funds within 90 days of Step 3 grant award.
REFERENCES
EPA Form 5700-32 (Rev. 8-77)
40 CFR 35.925-5
40 CFR 35.935-1(c)
SECTION C - SERVICE AGREEMENTS
PURPOSE
The purpose of this section of the memorandum is to clarify EPA
regulations regarding the timing for the execution of service agreements
between the grantee and subscribers of the grantee, including major
Federal facilities.
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DISCUSSION
The Environmental Protection Agency (EPA) regulations published
September 27, 1978, include a requirement for the submission of all
intermunicipal agreements with a Step 2 application. Specifically,
40 CFR 35.920-3(b)(6) states that "Before the award of a grant or grant
amendment for a Step 2 project, the grantee must furnish ... Proposed or
executed (as determined appropriate by the Regional Administrator)
intermunicipal agreements necessary for the construction and operation
of the proposed treatment works, for any treatment works serving two or
more municipalities." EPA regulation 40 CFR 35.920-3(c)(1) states that
"final intermunicipal agreements must be furnished" with the Step 3
grant applications.
The term "executed" was used in the regulation governing Step 2
grant applications and the term "final" was used in the regulation
governing Step 3 grant applications. The use of two slightly different
terms to describe the same action could result in a minor misunder-
standing of the regulations. In addition, the regulations do not
specify the timing for the execution of service agreements between the
grantee and major Federal facilities. The intention of this policy
statement is to establish the time frame within the grant process when
service agreements must be executed and to define EPA requirements to
include service agreements between the grantee and major Federal facilities.
POLICY
It is EPA policy that the terms "final" and "executed" as used in
40 CFR 35.920-3(b)(6) and 40 CFR 35.920-3(c)(1) describe the same action
and can be used interchangeably.
It is EPA policy that all agreements necessary for the construction
and operation of a proposed treatment works serving a municipality and
one or more major Federal facilities must be executed prior to Step 3
grant award.
IMPLEMENTATION
This policy is effective October 1, 1980.
REFERENCES
40 CFR 35.920-3(b)(6)
40 CFR 35.920-3(c)(1)
40 CFR 35.925-16
PRM 75-35, Issued December 29, 1975, with attachment issued
February 20, 1976.
Memorandum on "Federal Facility Funding" dated December 18, 1978,
from John T. Rhett to Regional Administrators (I-X).
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SECTION D - CULTURAL RESOURCE INVESTIGATIONS
PURPOSE
The purpose of this section of the memorandum is to clarify agency
policy regarding the time frame within the grant process for the completion
of investigations required to identify cultural resources affected by
EPA construction grant projects.
DISCUSSION
EPA regulations 40 CFR Part 6, Subpart C, 40 CFR 6.507 and the
construction grants "Handbook of Procedures" state that cultural resource
investigations must be integrated with the environmental review and performed
during the facility planning process, however, there is currently no requirement
that specifies the time frame within the grant process for the completion of
these cultural resource investigations. Consequently, some investigations
are not being performed in a timely fashion and portions of the work are
still underway during the Step 3 phase of the project. This policy
statement is intended to eliminate this delay.
POLICY
All investigations required by 40 CFR Part 6, Subpart C and 40 CFR
6.507 should be initiated during the Step 1 phase of the project and be
completed prior to Step 3 grant award. However, nothing in this policy
statement precludes the funding of cultural resources investigations
performed during the Step 3 process, if the need for an investigation or
follow-up work is not identified until that time.
IMPLEMENTATION
This policy is effective October 1, 1980.
REFERENCES
PRM 75-27 issued July 2, 1975.
40 CFR Part 6.
EXEMPTIONS
It is not the intent of this PRM to burden the grantee with unnecessary
or restrictive requirements. The purpose of the PRM is to minimize the
delay in the preconstruction phase of a Step 3 project. However, it is
possible, especially during the initial implementation phase of this new
policy, that a provision of the PRM could place an undue hardship on a
grantee. If this is the case, an exemption to the requirement that is
causing the problem will be considered.
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All requests for exemptions should be submitted to:
Harold P. Cahill, Jr., Director
Municipal Construction Division WH-547
U.S. Environmental Protection Agency
401 M Street, S.W.
Washington, D.C. 20460
The exemption should contain, as a minimum:
(1) The name of the grantee and the grant identification number.
(2) Identification of the section of the PRM from which an
exemption is sought.
(3) An adequate description of the need for an exemption including
any pertinent background information which will contribute to
an understanding of the problem, including any extenuating
circumstances.
(4) A recommendation from the regional office.
ADDITIONAL REFERENCES
A. 40 CFR 35.935-9, Project Completion.
B. Memorandum to Regional Administrators from John T. Rhett,
"Construction Grants Projects Not Yet Under Construction,"
November 5, 1976.
C. Memorandum to Water Division Directors from John T. Rhett,
"Preconstruction Status Report," May 25, 1977.
D. POM 77-12, "Management of Preconstruction Phase of Step 3
Grants," June 21, 1977.
E. PRM 78-12, "Preconstruction Lag Management," June 12, 1978.
F. Memorandum to Regional Administrators from John T. Rhett,
"Step 3 Projects Not Under Construction," December 8, 1978.
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51490
Federal Register / Vol. 45, No. 150 / Friday, August 1, 1980 / Notices
ENVIRONMENTAL PROTECTION
AGENCY
IFRL 1540-2]
Women's Business Enterprise Policy
for the Construction Grants Program;
Final Program Requirements
Memorandum
agency: The Environmental Protection
Agency.
ACTION: Final Program Requirements
Memorandum.
SUMMARY: This Program Requirements
Memorandum (PRM) is to establish a
Women's Business Enterprise (WBE)
policy for the Environmental Protection
Agency's (EPA) Construction Grants
Program. The purpose of the final policy
is to increase participation of women-
owned businesses in the construction of
wastewater treatment works funded by
EPA.
DATES: Effective date: October 1,1980.
addresses: Comments will be accepted
on a continuing basis, and any
comments received will be considered in
reviewing program implementation.
Comments may be sent to:
Women's Business Enterprise Officer,
U.S. Environmental Protection
Agency, Office of Small and
Disadvantaged Business Utilization,
401 M Street S.W., Washington, D.C.
20460, or to the Office of Civil Rights
and Urban Affairs in each Region.
SUPPLEMENTARY INFORMATION: The
Program Requirements Memorandum
(PRM) set forth below is part of EPA's
implementation of the requirements of
Executive Order 12138 (May 18,1979;
see 44 FR 29637, May 22,1979) and
Section 13 of the Federal Water
Pollution Control Act Amendments of
1972 (33 U.S.C. § 1251 note). The PRM
will apply to EPA grantees and their
consultants and contractors under the
program of assistance for construction
of wastewater treatment works
authorized by Section 201 of the Clean
Water Act (33 U.S.C. 1281).
EPA has developed Women's
Business Enterprise (WBE) policies for
its direct contracting activities, and
these are being implemented separately.
EPA also intends to address utilization
of WBE under grants other than grants
for construction of wastewater
treatment works.
The first draft of the PRM was
circulated for comment to all EPA
regional offices and to interested
organizations, businesses, state and
local agencies, and individuals. Based
on comments received, the draft was
revised and published as a proposed
PRM at 45 FR 26934 (April 21.1980).
Public meetings were held in
Washington, D.C., Chicago, Illinois, and
Seattle, Washington, on April 25, May
13, and May 14, respectively, for
comment on the proposed PRM. In
addition, EPA representatives visited a
number of localities throughout the
country in order to increase public
participation in the development of the
PRM. Written comments were received
through June 30,1980.
During April, May, and fune, 1900,
EPA conducted a survey in order to
assess the number of women's
businesses available to participate in
projects under EPA's Construction
Grants Program. The survey results
served as one basis for EPA's
conclusion that a goal-oriented policy
for women-owned business
participation is appropriate. This study
also provided information to be used in
developing a source list of WBEs.
The public meetings, comments, and
survey addressed a number of aspects
of the PRM and the manner of its
implementation. Some commentors
objected to the PRM on the general
ground that these additional
requirements are burdensome and
interfere with the primary purpose of the
Construction Grants Program, that is,
treatment of municipal wastewater. The
need for such a policy was determined
by the Interagency Task Force on
Women Business Owners and reflected
in Executive Order 12138. The results of
EPA's survey and the comments of
WBEs, women's organizations, and
several state agencies further indicate
that such a policy is appropriate. EPA
has made every effort to implement
Executive Order 12138 as consistently as
possible with established industry
practice and in the least burdensome
manner possible.
Fully two-thirds of the written
comments, as well as the majority of
comments at the public meetings,
addressed the need for a goal. These
comments ranged from those stating that
WBEs are too few to warrant any goal
to those stating that a 20 or 25 percent
goal should be established. Often
commentors recommended goals
reflecting their perception of WBE
availability in their geographic area.
EPA has considered these comments in
light of the survey results. Although
those results revealed a greater number
of women-owned businesses with
apparent capability to participate in the
Construction Grants Program than
originally anticipated, and there is
increasing evidence of women entering
the architectural, engineering,
construction and related areas, EPA has
concluded that a national goal of two
percent (2%) of total contract dollars to
be awarded under EPA Construction
Grants is appropriate. EPA recognizes,
however, that a higher goal may better
reflect available WBEs in some areas,
and a lower goal may be appropriate in
other areas. Furthermore, since WBE
participation is to be calculated as the
amount of contract dollars to WBEs of
total prime contract dollars awarded,
the size and nature of projects are
significant factors in determining a
realistic goal. For these reasons, EPA
has concluded that the Regional
Administrators in each Region must set
a regional goal which may be equal to or
higher than the national goal. The
Region may also designate a goal for
each project, which may be equal to,
higher than, or lower than the regional
goal, depending upon the factors
outlined above. The goal will apply to
prime construction contracts of $500,000
and over and to all prime contracts for
architectural, engineering, and related
services of $10,000 and over.
Several local and state agencies as
well as businesses requested that the
responsibilities of EPA, the grantee, and
bidders/offerors be clarified. The PRM
has been revised to eliminate this
confusion. Primary responsibility for
ensuring that the policy requirements
are met rests with the grantee. Although
EPA will monitor compliance, the
grantee remains the primary
implementor of the PRM. This
responsibility will be included in the
grant agreement as a grant condition.
However, the primary implementation
responsibility of the grantee does not
diminish the obligation of bidders/
offerors to make positive efforts to
utilize women-owned businesses.
Part of the grantee's obligation is to
disseminate information regarding
available women-owned businesses. In
order to facilitate information collection
and distribution, EPA will compile a
source list to be maintained on a
computer in Headquarters and to be
available to the Regions and the public.
EPA will continue updating and
maintaining such a list until this service
is assumed by another, more
appropriate, agent or until deemed by
EPA as being relatively unnecessary.
This list will not represent the exclusive
source of WBE information, however,
nor will its use exhaust the obligations
of grantees, or consultants and
contractors under the PRM.
One additional area receiving
substantial comment is that of
certification of WBEs. EPA shares the
concern of commentors that only bono
fide women-owned businesses benefit
from the policy. After considering the
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51491
variety of recommendations for
assessing WBE authenticity, EPA
determined that WBEs will be deemed
bona fide based on self-certification
unless challenged and found unqualified
under the criteria in the PRM. A
challenge to a WBE's authenticity may
serve as grounds for protest pursuant to
EPA procedures at 40 CFR 35.839. It
should be noted that EPA's source list
does not serve as EPA certification of
the authenticity or competency of WBEs.
The grantee will have primary
responsibility to implement the PRM by
refusing to give credit towards the goal
for those firms failing to establish their
WBE qualifications.
Several women and trade
organizations noted the need for training
opportunities for women-owned
businesses. EPA is continuing to explore
avenues of training opportunities
currently provided by other federal
agencies and private organizations.
Training is but one area of special need
brought to EPA's attention. Problems
concerning insurance, bonding,
discriminatory building codes, and
financing are also noted and are
receiving attention by EPA and other
federal agencies.
EPA has revised the PRM with respect
to implementation of the definition of
"women-owned business." Because of
the difficulty in applying the
requirement that 51 percent of the
business be women-owned in states
with community property laws, those
laws will not be taken into
consideration for purposes of
determining ownership under this PRM.
If taken into consideration, community
property laws could have the effect of
disqualifying otherwise qualified WBEs
while technically qualifying businesses
that are at least 51 percent owned by
men. For these reasons, the effect of
these laws will not be considered under
this PRM.
Commentor8 again suggested that the
WBE policy be administered in
conjunction with EPA's Minority
Business Enterprise (MBE) Policy. Some
commentors preferred a single goal for
WBE and MBE participation rather than
establishment of separate goals. There
are a number of similarities between the
policies and, when possible, they will be
administered together. Our goal is to
issue by December 1,1980, additional
guidance in order to combine, to the
extent possible, procedures to
implement the WBE and MBE policies.
Questions such as the time to require
submission of documentation of positive
efforts, level of information required,
method of calculating WBE
participation, and others, will be
addressed at that time. In view of need
to implement the WBE and MBE
procedures simultaneously, applicability
of the policies and requirements of this
PRM shall apply to all projects for which
assistance is awarded after January 31,
1981. EPA will not combine th« WBE
and MBE goals, however. The purposes
of the two policies are distinct. In order
to provide maximum opportunities to the
beneficiaries of these policies, credit for
minority women-owned businesses must
apply toward one goal or the other. The
PRM provides that contractors and
consultants may apply part of a minority
WBE's contract dollars to MBE and part
to WBE for the purposes of calculating
MBE and WBE participation.
In the publication of the proposed
PRM, the possible transfer of oversight
responsibilities for WBE and MBE to the
Office of Small and Disadvantaged
Business Utilization (OSDBU) was
mentioned. This reorganization within
EPA will take place prior to the October
1,1980, effective date of the PRM. All
references to the Headquarters Office of
Civil Rights (OCR) in the proposed PRM
have therefore been changed to OSDBU
in the final document.
The effective date of the PRM is
October 1,1980. However, in recognition
of the need to allow sufficient lead time
for proper implementation and to avoid
problems of retroactivity, the policies
and requirements of this PRM shall
apply to all projects for which
assistance is awarded after January 31,
1981.
Dated: July 18,1980.
Barbara Blum,
Deputy Administrator.
Construction Grants Program
Requirements Memorandum PRM #80-4
July 17,1980.
To: Regional Administrators, Attn:
Office of Civil Rights and Urban Affairs
and Water Division Directors.
From: Barbara Blum, Deputy
Administrator.
Eckardt C. Beck II, Assistant
Administrator for Water and Waste
Management.
Subject: Implementation of Women's
Business Enterprise Support Program.
Purpose: To Establish Policies Related
To Use of Women-Owned Businesses.
Discussion: Executive Order 12138,
issued May 18,1979, requires EPA to
establish a program of appropriate
affirmative action in support of
Women's Business Enterprise (WBE)
and to prohibit actions or policies which
discriminate against women-owned
businesses on the basis of sex. Section
13 of the Federal Water Pollution
Control Amendments of 1972 (33 U.S.C.
§ 1251 note) prohibits discrimination on
the basis of sex in the distribution o/
benefits under or in the participation in
any program or activity receiving
funding under the Federal Water
Pollution Control Act.
Policy: The policy of EPA is to
encourage increased participation by
women-owned businesses in all
subagreements under EPA grants for
construction of wastewater treatment
works. This policy implements
Executive Order 12138 and Section 13 of
the Federal Water Pollution Control Act
Amendments of 1972. The policy is
intended to provide opportunities for
immediate participation of women-
owned firms in work performed under
the Construction Grants Program, and to
encourage the development and
participation of new women-owned
firms. Compliance with this policy, and
the requirements under
"implementation" below, shall be a
condition of all EPA grants for
construction of wastewater treatment
works, within the limits of the
"applicability" provision below.
Implementation
A. Applicability. The policies and
requirements of this PRM shall be
applicable to all projects for which
assistance is awarded after January 31,
1981. Nothing in this PRM precludes a
grantee, contractor, or consultant from
voluntarily implementing these or
similar policies for prior projects, and
EPA encourages such action.
B. What Constitutes a Women-Owned
Business. The term "women-owned
business," and its variations, means a
business which is at least 51 percent
owned by a woman or women who also
control and operate it. 1, Ownership.
Determination of whether a business is
at least 51 percent owned by a woman
or women shall be made without regard
to community property laws. For
example, an otherwise qualified WBE
which is 51 percent owned by a married
woman in a community property state
will not be disqualified because her
husband has a 50 percent interest in her
share. Similarly, a business which is 51
percent owned by a married man and 49
percent owned by an unmarried woman
will not become a qualified WBE by
virtue of his wife's 50 percent interest in
his share of the business.
2. Control and operation. "Control"
means exercising the power to make
policy decisions, and "operate" means
being actively ihvolved in day-to-day
management.
3. These are some of the factors to be
considered in determining whether the
requisite ownership and control exist: a.
The percentage of stock owned in a
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corporation or the proportion of capital
invested in a partnership.
b. Whether ownership is meaningful
(e.g., whether the woman's ownership
interest is such that the woman owner
can sell the business or liquidate at will,
or whether the woman owner's interest
is subject to a controlling lien on her
interest).
c. The provisions for sharing income
and losses.
d. Whether there is evidence that the
woman owner participates significantly
in business policy development and
decisions of importance to the business
(e.g., whether there are procedures
requiring her "sign-off" on significant
actions; or whether there is evidence of
substantial change in actions in
response to her comments).
e. Whether corporate history indicates
that the business is, in fact, woman
controlled (e.g., female ownership prior
to competition for a contract under this
policy would be a factor tending to
support validity; on the other hand,
further inquiry might be appropriate if
changes in ownership had occurred
within a few weeks or months prior to
competition, if a change in ownership
involved related persons, or if the
change involved the sqpie parties in
interest: i.e., a former female minority
stockholder in a family business who
suddenly becomes a majority
stockholder).
4. Self-certification, a. Women-owned
businesses shall furnish capability
statements and certification of
qualification as WBEs to the grantee.
b. EPA and its grantees reserve the
right to review the representation
(including the right to require other
evidence satisfactory to the grantee or
EPA).
c. Firms which are not bona fide
women-owned and controlled are not
entitled to benefit from the opportunities
under this policy. Those found not to
meet the definition are subject to
sanctions, which include a finding of
nonresponsibility and, in willful cases,
criminal prosecution under 18 U.S.C.
§1001.
5. Credit under this policy shall be
granted for WBEs performing a useful
business function according to custom
and practice of the Industry. No credit
will accrue for a WBE acting merely as a
passive conduit of funds to some other,
non-WBE, entity, where such activity U
unnecessary to accomplish the project
C, Coals for Use of Women-Owned
Firms. 1. National Goals. EPA has
established a national goal of two
percent (2 percent) of total prime
contract dollars awarded.
2. Regional Goals. Each Region shall
establish a regional goal equal to or
higher than the national goal. Each
Region shall establish regional goals no
later than February 1,1981. These goals
shall be based on the best available
information about current and potential
availability of women-owned
businesses. Until regional goals are
established, the national goal shall be
the applicable goal for the region. The
Region shall reassess the goals at least
annually.
3. Project Goals. The Region may
establish a goal higher or lower than the
regional goal for individual projects,
depending upon availability of WBEs
and the nature of the project
4. Application of Goal. All prime
construction contracts of $500,000 or
more and all prime contracts for
architectural, engineering, and related
services of $10,000 or more shall be
subject to the application of the goal.
5. Method of Calculating WBE
Participation. The percentage of contract
dollars awarded to women-owned
businesses of total contract dollars (as
defined in paragraph C.4.) awarded
under a grant shall represent the level of
WBE participation.
D. EPA Responsibilities.
1. Headquarters Responsibilities, a. The
Women's Business Enterprise Officer in
OSDBU with the assistance of the Office
of Water Program Operations will
compile and maintain a source list of
WBEs. This source list will lie available
to the Regions for distribution to
grantees, consultants, contractors, and
bidders/offerors. The source list will not
serve as EPA certification or recognition
of the authenticity or competency of any
WBE listed. The purpose of the source
list is to serve as one, but not the
exclusive, resource for locating WBEs.
b. The Women's Business Enterprise
Officer will provide assistance and
direction in support of the policy in this
memorandum, and, within the limits of
available resources, will coordinate an
outreach program to identify and inform
women-owned businesses which are
potential participants in the
Construction Grants Program.
2. Regional Responsibilities, a. Each
Regional Administrator shall ensure that
EPA regional responsibilities under this
memorandum are met. Each Regional
Administrator will make an effort to
ensure that a broad range of WBEs in a
variety of disciplines will be used to
meet the goals. Each Regional
Administrator is authorized to establish
and publish other criteria for
determining what constitutes a WBE
firm, if the requirements of local
business practices or state laws in a
region justify further means of ensuring
that the objectives of Executive Order
12138 are met.
b. Each Regional Administrator shall
establish a regional goal, with the
assistance of the Director of the Office
of Civil Rights and Urban Affairs
(OCRUA) and the Water Division
Director and with the advice of Regional
Counsel. The Region in consultation
with the grantee may establish project
goals. In establishing goals, the Region
shall consider views of women-owned
businesses, women's organizations,
reresentatives of construction and
engineering firms, technical and
professional organizations, women's
banks, affected public agencies, and the
public.
c. Promptly after establishing its
regional goal in accordance with
paragraph C.2. each Region shall
distribute a statement of its goals and
this policy to the affected States,
grantees, all potential grantees (i.e.,
those in the fundable portion of the
State's project priority list), women-
owned firms on the source lists grantees
have developed under paragraph E., and
other appropriate organizations and
individuals. This distribution shall be
repeated at regular intervals and
whenever goals change.
d. In administering this PRM, each
Region shall ensure that grantees and
their consultants and contractors do not
"double count" minority women for
purposes of the WBE and MBE goals.
The prime contractors and consultants
may choose the goal towards which the
minority WBE will apply. It will be
acceptable for the contractors and
consultants to divide the total credit
between the WBE and MBE goals. For
example, where a minority WBE will
perform six percent of the work, the
credit may be distributed in a number of
ways, including;
1.6% to WBE, 0% to MBE; or
2.0% to WBE, 6% to MBE; or
3. divided, for example 3% to WBE, 3%
to MBE.
e. Each Region shall review
solicitation inserts to ensure that this
policy is adequately reflected in all
solicitations for contracts and other
subagreements under grants. OCRUA
may assist in the review of solicitation
documents.
f. Each Region shall establish a
process of review and monitoring to
ensure that grantees and their
consultants and contractors make
positive efforts to use women-owned
businesses.
g. Each Region shall maintain records
on awards of contracts to WBE firms, to
be submitted quarterly to Headquarters
Office of Water Program Operations,
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51493
which in turn will apprise OSDBU of
regional performance.
h. Each Region shall assist the
Women's Business Enterprise Officer in
OSDBU in developing source lists of
WBE firms, in cooperation with
grantees, States, and interested persons
and organizations.
E. Grantee Responsibilities. The
grantee has primary responsibility for
taking positive actions to ensure
maximum feasible participation by
women-owned firms in Steps 1, 2, 3 and
2 + 3 projects. At a minimum, these
positive efforts shall include the
following: 1. Each grantee shall include
the project goal in each procurement
solicitation.
2. Each grantee must ensure that
procurement documents contain the
following information: a. Clear notice of
the applicable goal, including a number
or range of numbers, and the obligations
of the bidder/offeror under the policy.
b. The method by which positive
efforts of the bidder or offeror will be
evaluated.
c. A notice of federal and grantee
sanctions for failure to comply with the
positive efforts in the solicitation
documents.
d. A copy of this policy.
3. Each grantee shall cooperate with
the State and appropriate Regional
Office in developing and updating a
source list of women-owned businesses
which might be interested in seeking a
consultancy, contract, or other
subagreement under the EPA-assisted
project.
4. Each grantee shall provide a source
list of women-owned firms to all
prospective consultants and contractors,
and inform them of EPA policy on use of
women-owned businesses.
5. Each grantee shall ensure that
notification of prospective procurement
actions is provided to women-owned
firms in sufficient time to respond. This
responsibility includes ensuring that the
grantee's contractors, consultants, and
subcontractors, in their respective
procurement action, notify women-
owned firms in a timely fashion.
6. Each grantee shall verify that
women-owned businesses designated by
bidders or offerors are available to
participate in the project. This
verification will occur as part of the
determination of a bidder or offeror
responsibility.
7. Each grantee is encouraged to
provide liaison services between WBEs
and prospective bidders/offerors.
Note.—Reasonable costs of WBE liaison
services, as determined by the EPA Project
Officer, are allowable costs (liaison services
are the services of a grantee, staff person or
other entity which helps the grantee conduct
responsibilities related to this policy).
F. Responsibilities of Consulting
Firms and Contractors. All consulting
firms and contractors of the grantee,
including WBE firms, are expected to
make good faith positive efforts to
identify and use women-owned
businesses, in accordance with the
policy, goals, and requirements of this
memorandum. Appropriate positive
efforts should begin during negotiation
or bid preparation and continue
throughout the life of the contract. Such
efforts shall include, but not be limited
to, the following: 1. Extending
opportunities to women-owned
businesses for subcontracting, joint
ventures, and provision of equipment,
supplies, and services.
2. Notifying women-owned businesses
on a source list obtained from the
grantee, and other women-owned
businesses known to the contractor or
consultant, of goals and opportunities to
compete for or do business with the
contractor or consultant within
sufficient time to respond. Use of EPA's
source list does not, in and of itself,
satisfy the requirements to use positive
efforts.
3. Providing the grantee with adequate
documentation of positive efforts,
including nature and dollar amount of
work to be performed by WBEs, and, if
the goal will not be met according to the
estimates currently available,
documentation showing WBEs
contacted, WBE responses, and reasons
for non-selection of WBEs.
4. Maintaining records, to be available
to the grantee and EPA, of the efforts
under paragraphs 1., 2., and 3., and of
awards to women-owned firms.
5. Making positive efforts to
compensate for any changes in plans to
award subcontracts to women-owned
firms, and informing the grantee and
EPA of such actions.
6. Meeting the requirements of
paragraph (J) below.
G. What Women-Owned Firms
Should Do. Women-owned businesses
should become knowledgeable about
and involved in the State and local
project planning process under the
Construction Grants Program. Women-
owned firms should provide statements
as to the nature and scope of their
business and capability statements to
the Women's Business Enterprise
Officer in OSDBU for inclusion on the
source list, as well as to the EPA
Regional OCRUA, appropriate State and
local government agencies, and
contractors and consultants doing
business in the Construction Grants
Program. WBEs should make efforts to
establish contracts and rapport with
businesses recognized as potential
contractors and consultants.
H. Sanctions. 1. Responsibility
Determination. In the event a bidder or
offeror fails to objectively demonstrate
positive efforts the grantee shall request,
in writing, that the bidder or offeror
provide evidence of positive efforts
within 15 days of the request, or be held
nonresponsible. The Regional
Administrator may instruct the grantee
to request such documentation after the
Region reviews bid documents
submitted by the grantee or any other
available information. If the bidder or
offeror fails to comply adequately with
the request, the grantee shall determine
this bidder or offeror to be
nonresponsible, and shall so advise the
bidder or offeror promptly in writing
with an explanation of the basis for the
determination. A finding of
nonresponsibility on a contract shall not
prejudice the right of that bidder or
offeror to submit bids or proposals on
other EPA-funded projects. However, in
determining responsibility, the grantee
will consider any evidence it has
concerning performance in relation to
WBE obligations and goals under other
contracts.
2. Protests, a. If the bidder or offeror
disagrees with this determination of
nonresponsibility under paragraph H.l.
the bidder or offeror may then file a
protest under 40 CFR § 35.939.
b. A disappointed bidder, offeror or
listed WBE may also file a protest under
40 CFR § 35.939 to challenge a
determination that the apparent low
bidder or offeror fulfilled the positive
efforts requirements of this PRM.
3. Exceptions. Notwithstanding
paragraph 1., the grantee may award a
contract (with the approval of the
Regional Administrator) where the
bidder or offeror did not demonstrate
positive efforts, if (a) delay incident to
resolicitation would cause substantial
harm to the grantee, and (b) the contract
(i) requires specific positive efforts for
compliance with this policy (including
goals] during contract performance, and
(ii) includes appropriate sanctions for
failure to perform in accordance with
the contract. (e.g., termination or
liquidated damages).
4. Grantee's failure. If a grantee fails
to meet its obligations under paragraph
1. above, or fails to meet any other
requirement in this memorandum, EPA
may declare the grantee nonresponsible
under 40 CFR § 30.340, or deny, modify,
suspend, or terminate assistance in
accordance with 40 CFR Part 30,
Subpart H.
I. Grantee's Higher Goals. Nothing in
this policy prevents a grantee from
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setting higher goals for use of women-
owned firms on work under EPA grants.
J. Contractors' and Consultants'
Responsibilities After Award. If
requested, contractors and consultants
shall Bubmit to the grantee copies of, or
information concerning, awards to
women-owned firms, and lists of WBE
firms contacted and used. From time to
time (but not more often than quarterly),
the contractor or consultant will be
expected to comply with requests from
the grantee for information on the status
of compliance with the policy and
requirements in this memorandum. In
the event a consultant or contractor fails
to conform to its obligations under this
memorandum, the grantee will require
corrective efforts or, as appropriate,
modify, suspend or terminate the
contract or subagreement.
K. Reexamination of Policy. 1. Review
of the national goal will take place
annually.
2. By October 1,1983, the
Administrator will examine this policy
and its implementation and may modify
the policy as is appropriate.
[PR Doc. 80-23203 Filed 7-31-60, 8:45 am]
MUJNQ CODE 6560-01-M
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UNiTED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
¦y*.
¦"'i pqc^°
JUL <3 I960
OFFICE OF WATER
AND WASTE MANAGEMENT
Construction Grants
Interim Program Requirements Memorandum
PRM No. 80-5
FROM: Henry L. Longest, II, Deputy Assistant Adi
for Water Program Operations (WH 546)
SUBJECT: Buy American
TO
Regional Administrator
Regions I - X
I. PURPOSE
This PRM sets forth interim Agency policy and procedures
concerning the application of the Buy American provision of the
Clean Water Act of 1977 and the final regulations governing the
Construction Grants Program for municipal wastewater treatment works
published in the Federal Register of September 27, 1978 (Part III).
PRM 78-3 concerning the same subject is superceded, as well as the
temporary guidance document of January 9, 1979. This interim PRM
was developed because numerous requests were received from the
public for further clarification of the application of the Buy
American provision. This interim PRM is also being published in the
Federal Register with a 90-day period provided for comments and
suggestions. Issues which have come to the attention of EPA are
addressed. If there are others, EPA would appreciate being informed
of them, with suggested resolution.
II. DISCUSSION
Section 39 of the Clean Water Act of 1977 added a new section
215 to the Federal Water Pollution Control Act\ This new section
requires that only manufactured and unmanufactured materials and
supplies that have been rained, produced or manufactured in the
United States, and are substantially all From United States'
sources, shall be used in treatment works for which grant assistance
is provided by EPA. This is known as the Buy American provision and
it applies to any Step 3 grant for which application is made after
February 1, 1978.
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In the legislative history of the provision, Congress directed
that the Buy American regulations of other Federal departments and
agencies be followed, where applicable. These other regulations are
generally incorporated in the federal procurement regulations in the
Code of Federal Regulations which are generally based on the Buy
American Act of 1933 (42 U.S.C.A. 10a-d) and an Executive Order of
1933, with subsequent updates, which interpreted several aspects of
the Act. (See Executive Order 10582, December 17, 1954, as amended
by Executive Order No. 11051, September 27, 1962.).
EPA issued its own final provision for Buy American in the
Construction Grants regulations by adding a new paragraph (d) to
35.936-13 (Specifications) which requires that bidding documents and
construction contracts for affected projects include a Buy American
provision which requires use of domestic construction material,
substantially all from United States' sources, in preference to
foreign construction material. The regulations also establish those
circumstances under which the Agency may waive the provision.
Domestic construction material must be given preference if the
domestic material is priced no more than 6 percent higher than the
bid or offered price of foreign materials (including import
duties). The application of the Buy American provision normally
occurs after bids or price quotations have been received.
Appendix C-2 to Subpart E was also amended by adding a new
Clause 17 which implements the Buy American provision in construc-
tion contracts.
m. POLICY
In contracting for wastewater treatment works being assisted by
the EPA municipal wastewater treatment Construction Grants Program,
a price preference of up to 6 percent is required to be given to
construction materials that have total component costs of over
50 percent in value from domestic sources, when such materials are
in price competition with construction materials that have component
costs of 50 percent or more in value from nondomestic sources
(subject to waiver from the Regional Administrator, where
appropriate).
IV. IMPLEMENTATION
1. The Three-Procedure Buy American Process
In implementing the Clean Water Act Buy American provision,
there are three major procedures that take place:
First Procedure: Determination of the "construction material"
to which the Buy American provision applies.
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Second Procedure: Application of the "manufactured in United
States" and "50 perecent rule" to the construction materials so as
to classify as domestic or nondomestic material.
Third Procedure: Application by the prime construction
contractor of the 6 percent price preference for domestic materials
to the bids or price quotations where domestic and nondomestic
construction materials are in competition.
These procedures are discussed below and are also set forth in
an overall chart at the end of this Interim PRM. Because of the
complexities in applying the Buy American Act of 1933 and subsequent
Executive Orders, regulations, guidances and decisions, it i3 sug-
gested that the following description of the Buy American procedures
be read in conjunction with the simplifying chart.
First Procedure: Determination of the Construction Material to
Which the Buy American Provision Applies
EPA regulations and the Federal Procurement Regulations refer to
"construction materials" as subject to the Buy American provision.
The regulations define construction material as any article,
material or supply brought to the construction site for incorpora-
tion into the treatment works. Construction materials are sometimes
referred to as "end products." Installation and other services to
be performed after delivery are normally excluded. The Buy American
provision does not apply to material which a contractor utilizes for
construction but which the project specifications do not require to
be incorporated into the treatment works. Examples include
protective covers for building materials or building forms used in
construction, whether or not left in the ground.
In practice, construction materials are those items that are
referred to as separate distinct items or unit processes in the
specifications for the project. Normally, for example, there will
be only a limited number of separate items of equipment that are
listed in the specifications for both technical and bidding pur-
poses, such as a filter press, incinerator, aerator equipment, large
pump, etc. These are the types of equipment "end products" to which
the Buy American provision is applied. The grantee will normally be
best able to decide upon the appropriate classification of items.
If there are problems, the grantee may seek assistance from the EPA
Regional Office which may consult EPA Headquarters. The State
Agency should be notified by the grantee that this assistance is
being requested.
Construction materials are of two types—manufactured or un-
manufactured—and are of either domestic or nondomestic origin.
Construction materials may be made up of "components," A component
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la any article, material or supply which is directly incorporated
into a construction material. The 6 percent price preference, as
described in the Third Procedure, is applied to construction
materials and not components.
Unmanufactured Construction Materials
An unmanufactured construction material i3 a raw material that
is mined or grown. A unmanufactured construction material i3 a
"domestic construction material" if it has been mined or produced in
the United States. It should be relatively easy to identify raw
materials and their national origins. A raw material could be, for
example, gravel that in the case of municipalities on international
boundaries could come from either the United States or an adjacent
foreign country. If the domestic gravel is in price competition
with nondomestic gravel, the domestic gravel will receive a 6
percent price preference as explained later. If the gravel is
incorporated into concrete which is delivered to the site, then it
is a component of a manufactured construction material.
Manufactured Construction Materials
Manufactured construction materials, as applied to sewage treat-
ment facilities construction, refer to material such as pipe for
sewers, reinforcing steel or structural steel for erecting build-
ings, and equipment that is necessary for the project. These items
will usually be listed in the project specifications in separate
sections. In the case of equipment, construction materials could
include such items as incinerators, aerators, filter presses, large
pumps, etc., as separate, distinct items or unit processes. Usually
equipment that is identified as a construction material will be that
which will usually be supplied by one supplier or manufacturer, is
included within one section of the specifications, and is treated at
the construction site as a separate item of equipment.
Accordingly, an integrated equipment package that is normally
supplied by a single supplier as a trade practice could be
considered as one item of equipment if included as such in specifi-
cations. Also, equipment that is listed in the specifications as a
separate, distinct item will usually be treated as a single product
even though delivered to the construction site in a number of
separate components to be assembled and incorporated into the treat-
ment works.
The identification of a piece of equipment as a manufactured
material or a component of a manufactured material will sometimes
vary depending upon the particular situation. The same generator,
for example, may be a separate identifiable construction material in
one instance, and a component of a larger item, such as an incinera-
tor, in another instance. The particular circumstances have to be
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considered, but the item that is identified within a separate
section of the specifications and is treated at the construction
site as a distinct, complete item will normally determine that to
which the Buy American provision is to be applied.
A sewage treatment plant, a3 an entity, would normally not be
considered the end product.
Second Procedure: Application of the "Manufactured in United
States" Requirement and the 50 percent Rule to
Construction Materials
In the case of manufactured construction materials, the statute
and regulations create a preference for construction materials
"manufactured in the United States" that are "substantially all"
from materials, articles or supplies of domestic origin. Construc-
tion materials that meet this test are known as "domestic," those
that do not are "nondomestic."
Federal procurement regulations specify that to be "domestic," a
manufactured construction material must meet two tests: (1) it must
have been manufactured in the United States, and in addition, (2)
the cost of its components which are mined, produced, or
manufactured in the United States must exceed 50 percent of the cost
of all its components (termed "substantially all") from domestic
sources. If a construction material does not meet both of these two
tests, it is considered to be "nondomestic." Explanatory comments
on these two tests follow:
(1) Manufactured in the United States
The Buy American provision requires that to be domestic, con-
struction materials must be manufactured in the United States
(includes all jurisdictions defined as a "State" in Section 502(3)
of the Clean Water Act, 33 USC 1362(3)). A construction material
will not be considered domestic if it is manufactured entirely
outside the United States from domestic components. The
"manufactured in the U.S." test is applied very broadly. For
example, the Comptroller General has ruled that the mounting of
electric motors on an otherwise inoperable imported pump unit
constituted "manufacture" of the unit. However, the Comptroller
General has also ruled that the mere packaging of an item i3 not
manufacturing, nor are testing and evaluation of items considered
manufacturing.
The determination as to whether or not an item is manufactured
in the United States is not expected to be very difficult in the
ordinary run of cases. If there are problems, they will be resolved
by the grantee or the EPA Regional Office, with appropriate assist-
ance from EPA Headquarters.
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(2) The "Substantially All" (50 Percent) Test
Once the "manufactured in the United States" test has been
satisfied, a manufactured construction material must satisfy the
"substantially all" (50 percent) test. The rules for applying this
test have been established by the Comptroller General (46 Comp. Gen-
784).
This test provides that a manufactured construction material is
classified as domestic if the cost of its components which are
mined, produced, or manufactured in the United States exceeds 50
percent of the cost of all of its components. A component is an
item which actually becomes part of the construction material.
Manufacturing costs to assemble the components into the final
product are not considered in applying the 50 percent rule. For
purposes of determining the ratio of domestic component cost to
total component cost, items such a3 packaging, shipping, labor and
other production costs, testing and profit, are not considered (as
these are not components).
An example with an explanation of the application of the 50
percent rule follows:
¦
Shipping
Labor
Final manufacturing
i Testing
costs not considered
Profit
$12,000
in 50 percent
Other Production
Costs
Component Component
Component
Component
A B
C
D
Basis of 50 percent
Foreign Domestic
Domestic
Domestic*
cost determination
$20,000$4,000$6,000$8,000
* - Component made by
equipment manufacture
itself (priced as though
it were purchased from
another manufacturer or
supplier)
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In this illustration, there are four components that make up the
composition of a piece of equipment. Foreign component "A" costs
the manufacturer $20,000, Components "B" and "CM are purchased from
domestic manufacturers and total $10,000 together. Component "D" is
manufactured by the manufacturer itself and has a value, as though
it were purchased like the other domestic components, of $8,000.
The value assessed should be at the component rather than spare
parts level. To compute the 50 percent rule, the value of the
domestic components ($18,000) is compared to the value of the total
of all of the components ($20,000 + $4,000 + $6,000 + $8,000 =
$38,000). As the total value of all of the components is $38,000,
and the value of the domestic components ($18,000) constitutes 47.5
percent of the total value, the equipment is determined to be non-
domestic as the domestic value is not over 50 percent of che total
value. Note that the $12,000 in final manufacturing coats is not
permitted to enter into the computation. It is only the value of
the components that is considered (based on the 1967 GA0 decision).
Also note that the 6 percent cost preference rule is not applied
during this evaluation (by GAO decision) as it is used by the prime
contractor only in the evaluation of price quotations from suppliers
or manufacturers.
The 50 percent test does not require the contractor, subcon-
tractor or other lower tier supplier who might supply construction
materials to consider the national origin of the materials that have
been used in the manufacture of the components which make up the
construction material to be delivered. To have the cost of a com-
ponent be regarded as "domestic" for purposes of the 50 percent
test, it need only be established that the component was mined,
produced or manufactured in the United States. In other words, the
50 percent test is not applied to the composition of each component;
rather, the component is considered only as to where it was mined,
produced, or manufactured. 45 Comp. Gen. 658 (1966).
Third Procedure: Application of the 6 Percent Price Preference for
Domestic Construction Materials to 31ds or Price
Quotations
When domestic and nondomestic materials are in competition, the
prime construction contractor, as well as subcontractors, are
required to apply the Buy American provision to give preference to
domestic construction materials when the domestic material has a
delivered price of no more than 6 percent over the nondomestic
material.
The differential by which domestic construction material may be
given preference shall generally be the sum determined by computing
up to 6 percent of the bid or offered price of materials of foreign
origin including all costs of delivery to the construction site,
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including any applicable duty, whether or not assessed. Computa-
tions will normally be based on prices on the date of opening of
bids or the date of price quotations.
The contractor applies the Buy American provision at the time
that the identity of the material and its prices become known. For
example, the identity and the delivered price of a construction
material may be able to be determined at the time of bid submittal.
At other times it may be when shop drawings are submitted. If the
original selection is changed or a change order involves construc-
tion materials, then the contractor will have to reapply the Buy
American requirements.
If the prime contractor does, not properly comply with the Buy
American provision by providing a nondomestic material when a
domestic material should have been chosen, it may be required to
substitute the domestic material at no change in price. If the
material has been irrecoverably incorporated into the treatment
works, then the grantee may assess the contractor for the difference
in the costs of the domestic and nondomestic materials that were in
competition.
It should be noted here that a manufacturer or supplier of a
domestic material must have made a bid or price quotation on the
project at the appropriate time for doing 30. A manufacturer or
supplier cannot, after the fact, unilaterally secure use of its
domestic material by stating that it will supply it for a price
within the 6 percent variation.
V. WAIVERS
In accordance with the EPA Buy American statute, the Regional
Administrator may waive the Buy American provision based on those
factors deemed relevant, including:
(1) Inconsistency with the public interest, including multi-
lateral government procurement agreements.
(2) Unreasonable cost of the domestic material.
(3) Unavailability of the material from domestic sources in
sufficient and reasonably available commercial quantities
and of a satisfactory quality.
(4) Unavailability of Agency resources to carry out the
provisions.
These four provisions are summarized as follows:
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(1) Inconsistency with Public Interest, Including Multilateral
Government Procurement Agreements
The public interest waiver has traditionally been included in
Buy American regulations to cover unforeseen circumstances. For
example, it has been held that the determination that domestic
sources will be unable to satisfy the needs for material in a timely
manner will suffice a3 a basis for this waiver. In addition, the
Congress in December 1977 included the possibility of a waiver for
inconsistency with multilateral government procurement agreements.
This provision was included in the context of the multilateral trade
agreement which the White House was negotiating with other nations
to remove obstacles to world trade. The legislative history of the
Trade Agreements Act of 1979 specifically states that the Buy
American provisions in the Clean Water Act will not be affected by
the Trade Agreements Act. Therefore, no waivers will be made in
connection with that Act.
The Regional Administrator may make the public interest deter-
mination, but the Deputy Administrator must be consulted on any
waiver based on the multilateral government procurement agreement
clause.
(2) Unreasonable Cost of the Domestic Material
The cost of domestic material is considered to be unreasonable
when the delivered price of a domestic material exceeds the
delivered price of a nondomestic material by more than 6 percent.
Under these circumstances, the waiver is automatic, and no applica-
tion for a waiver needs to be made to the Regional Administrator.
(3) Unavailability of Domestic Materials
Where a construction material is not mined, produced, or
manufactured in the United States in sufficient and reasonably
available commercial quantities or satisfactory quality for the
particular project, a nondomestic source may be used. A component
that is domestically unavailable will be treated as a component
manufactured in the United States.
(4) Unavailability of Agency Resources to Implement the Buy American
Provision
The Congress provided EPA with the authority to waive the imple-
mentation of the Buy American provision if EPA resources are not
sufficient to carry out the provision. The Regional Administrator,
with the concurrence of the Deputy Administrator, may exercise this
authority. (The use of this waiver would be a policy decision of
some magnitude and is expected to be used only in extraordinary
circumstances.)
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In answer to several comments, consideration was given to
establishing a floor of $10,000 below which Buy American would be
waived but this was not found to be possible. Comments are, how-
ever, requested on the concept of a floor.
VI. REQUIRED STATEMENT IM BIDDING DOCUMENTS
EPA regulations (40 CFR 35•936—13(d)(4)) provide Buy American
provisions that must be included in the bidding documents (along
with the rest of 40 CFR 35.936, 35.938, and 35.939).
VII. REQUIRED STATEMENT IN STEP 3 CONTRACTS
Appendix C-2 of the Construction Grants Regulations provides the
3uy American provision for all construction contracts.
VIII. ACCESS TO RECORDS
A supplier or manufacturer is obligated to disclose upon
request, cost and price information to the Regional Administrator to
the extent necessary to determine compliance with the Buy American
requirement: However, confidential business data will be protected
from public disclosure by the Regional Administrator.
IX. PROTESTS
Any party with an adversely-affected direct financial interest
may protest an alleged violation of the Buy American provision in
accordance with 40 CFB 35.939 of the regulations for grants for
construction of treatment works.
The Regional Administrator may handle protests under the appro-
priate procedures of 40 CFR 35.939• In making determinations, the
Regional Administrator shall generally use the "Buy American"
procedures, regulations, precedents and requirements of other
Federal departments and agencies.
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?T?.ST ??OCSDOTE
30T AMERICAN ?HOCSDUHSS
SECOND PTOCSDPBE
THOD psocsmras
Identification of
construction Material
la vtiicb to apply 3uy
Afflo*ican.
Application of 5CJ rule
to determine if construc-
tion aaterial is domestic
or nondonastic (usually
dona ay sanufacturer).
Application of 6< ,-rics
preference fop domestic
construction aaterials,
(?ri=e Contractor)
DEFINITION 0? CONSraOCTXON
HATS3IAL
Any article, material or
supply brought to the
construction site for
incorporation into the •
treatment wortcs. Con-
struction saterials are
sitter zanufactured op-
unmanuf ac tared ..
yjUTOTACTUBED C3HS730CTIOH
MATERIAL
Specif!cations will
acraall7 identify Manu-
factured "end products"
that are to be delivered
to construction site;
e.g., steel beams.
dNMANPFACTOBED C0H5TTOC-
TIqm "ATSaiALS
Unmanufactured construc-
tion aatarials to be
delivered co construction
sita Casually ained cr
grown; e.g., gravel, are
ocrmally self-evident.
."jmo7A
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APPENDIX A
PROPOSED REQUIRED STATEMENTS OF MANUFACTURERS OR SUPPLIERS, AND
PRIME CONTRACTORS IN REFERENCE TO THE BUY AMERICAN PROVISION
A. Statement on Component Contents of a Construction Material
EPA is concerned that in applying the Buy American provision of
the Clean Water Act of 1977 and implementing regulations, the prime
contractor may not know when it is involved in dealing with a non-
domestic construction material so that it can apply the up to 6
percent price preference for domestic construction materials.
To assist the prime contractor for construction in applying Buy
American, a method is needed to inform the contractor when non-
domestic materials are involved. No problem is anticipated with
unmanufactured materials or foreign manufactured materials that are
identified as foreign in invoices or by markings on the material.
However, difficulties can occur when a domestic manufacturer
provides materials that have a 50 percent or more foreign content,
but there is no labeling or other information as to foreign content.
To remedy this problem, EPA is considering that a statement be
required from the manufacturers or suppliers of major equipment or
major materials, such as pipe, structural steel, or bulk materials,
as listed in the specifications. The statement would read that the
aggregate cost of the components, as determined according to the 50
percent method described in the PRM amounts to a construction
material that is domestic or nondomestic. A sample i3 as follows:
"The value of the components comprising the construction
material identified as in contract
number _____ for the sewage treatment project for
the municipality of is (or is not) over 50
percent from United States sources and is therefore
domestic (or not domestic) as described in EPA PRM
dated •
Manufacturers or suppliers that state that their product is
domestic must be prepared to substantiate these claims during future
audits or protest actions.
Comments are invited as to whether EPA should require such a
statement to accompany every bid or price quotation of every major
equipment or main materials item, or only upon request when a
protest occurs.
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B. Statement of Contractor on Nondomestic Construction Materials
To facilitate the application of the Buy American provision, EPA
is considering requiring that when nondomestic materials are chosen,
the prime contractor must provide the grantee with a statement that
(1) all material to be furnished is domestic, except for that shown
on an attached list displaying major nondomestic equipment or
materials chosen, for which the quoted delivered price of the
nearest competitive domestic equipment (if received) wa3 more than 6
percent over the quoted delivered price of the nondomestic equip-
ment, or (2) the equivalent domestic material is unavailable. The
contractor will maintain records to document the price differ-
entials, for possible audit verification of its compliance or for
other purposes. The statement itself will not require the listing
of prices.
Comments are invited on this provision which is substantially
required by at least one other Federal agency for direct government
procurement.
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.tfto ST4?.
^
o
* UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
i NGTON . D C
JUL 2 4 1980
V .0-0° WASHINGTON. DC. 20460
PRQ^
THE ADMINISTRATOR
Construction Grants
Program Requirements Memorandum
PRM No. 80-6
SUBJECT: Retroactive Application of Program Requirements
TO: Regional Administrators
PURPOSE
The purpose of this memorandum is to reaffirm and explain statements
made on behalf of the Agency regarding retroactive application of program
requirements. This PRM will serve as the primary Agency policy statement
concerning this issue.
DISCUSSION
A stable and efficient construction grants program is necessary for
timely progress toward meeting the pollution control goals of the Clean
Water Act. At the same time, Federal, State and local interests all
require a high level of quality in facility planning, design and
construction, and, at times, this may require retroactive application of
requirements. A requirement has retroactive application when it affects
a wastewater treatment project that has received one or more Step 1, 2 or
3 grants.
Some program delay and disruption is properly attributed to
retroactive requirements. We share the concern others express over these
impacts.
POLICY
The policy stated on past occasions which I now reaffirm is as
follows:
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2
No new program requirements will be applied to projects having
Step 3 grant assistance where construction is already underway
or likely to be underway within six months of the grant
award. EPA will avoid applying new requirements retroactively
to projects in Step 1 or Step 2 funding unless they are
essential to implement new laws or to correct serious
deficiencies in the program.
While this statement states our basic policy, several additional
elements must be addressed to complete the Agency position.
First, this policy is meant to deal with retroactivity in its
negative aspects, and does not prohibit the imposition of new
requirements at any stage of the grant process when EPA concludes it will
have no effect on the timely completion of the project. Also, the Agency
will continue to make certain new procedures available for optional use
on a retroactive basis (e.g., when the grantee determines its best
interests are served by use of the new procedure).
Second, there are two clear cases where new requirements must take
precedence over this policy: (1) when they are essential to the
implementation of new laws or presidential directives, or (2) to correct
serious program deficiencies. Examples of serious program deficiencies
are: questions of public health or safety hazard, or the potential for
substantial net cost savings in planning, design, construction, fiscal
management, or operation and maintenance in ongoing projects.
Third, I realize that EPA cannot anticipate all the varying
circumstances under which this policy may restrict necessary and
legitimate actions. It is fair to assume that there may be particular
instances where this policy will hurt rather than help the progress of
the program toward meeting the goals of the Clean Water Act. For these
reasons I reserve the right to deviate from this policy in individual
cases under rigorous standards for justification. That is, before taking
any such action EPA will assess the impacts of that action, and notify
affected interest groups in writing of our intentions, setting forth the
results of the assessment and the specific reasons why we feel this
action must be taken. If any such requirements are then issued, they
must be signed by me, the Deputy Administrator, or the Assistant
Administrator for the Office of Water and Waste Management.
I expect the Agency to follow both the letter and spirit of this
policy. In particular, documents circulated in draft form (i.e., which
are not interim or final) will not be applied to construction grant
projects.
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IMPLEMENTATION
EPA Headquarters and Regional Offices will implement this policy for
all requirements affecting the construction grants program.
. Costle
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
AUG 2 8 1980
OFFICE OF WATER
AND WASTE MANAGEMENT
Construction Grants
Program Requirements
Memorandum
PRM No. 80-7
Effective Date -
October 1, 1980
SUBJECT: ^ J J^j ~ *" "usiness Enterprise
Liaison Services
I. PURPOSE
The purpose of this memorandum is to define and set forth
guidelines for determining the grant eligibility of Minority
Business Enterprise (MBE) and Women's Business Enterprise
(WBE) liaison services performed during the process of
planning, designing and constructing a wastewater treatment
facility with Environmental Protection Agency (EPA) construc-
tion grant funds.
II. DISCUSSION
The Agency recognizes the need to immediately remedy the
under-utilization of MBEs and WBEs in the Construction
Grants Program. In order to provide the opportunity for
increased MBE and WBE participation, EPA has determined that
a goal oriented system of MBE and WBE participation must be a
clear-cut factor in the evaluation of procurements, bids or
proposals, as well as a condition for a grant award. One
method of affording the opportunity for increased MBE and WBE
participation is for grantees to establish or utilize MBE and
WBE liaison services. The costs to the grantees for such
services are eligible for EPA grant funding.
FROM:
Henry Longest, Deputy Jtesiufxant
for^ater>^bgr>am (
fffc&&rtJ77 Kltwr; Acting Director
Officye of Civil Rights (A-105)
ant Administrator
I (WH-516)
TO:
Regional Administrators, Regions I - X
ATTN: Water Division Directors
Office of Civil Rights Directors
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Such services will assist applicants/grantees to effectively
implement the goal-oriented EPA "Policy for Increased Use of
Minority Consultants and Construction Contractors", 43 Federal
Register 60221 (December 26, 1978), and the "Women's Business
Enterprise Policy for the Construction Grants Program," 45 Federal
Register 51490 (August 1, 1980). See also, 40 C.F.R. 35.936-7f
40 C.F.R.§35.937-12 (b)(2), Appendix C-l (para. 14), and
Appendix C-2 (para. 9). These policies require grantees,
consultants and contractors to take affirmative steps to
utilize minority-and women-owned businesses in providing
engineering and construction services and supplies.
Grantees may formally provide for such services by
selecting:
1. An MBE/WBE liaison officer from internal staff
(Additional staff may supplement internal staff
only if required by project size) or
2. A contractor to perform such services (Contract
services may be provided by either an MBE or WBE
specialist or by a capable consulting firm).
The MBE/WBE liaison officer/service would be responsible for
developing, implementing and managing the grantees MBE and WBE
programs as they relate to the specific EPA funded project.
Responsibilities include, but are not limited to: keeping
records, providing technical assistance to MBEs, disseminating
information on available business opportunities related to EPA
grant projects to ensure that MBEs are provided an equal oppor-
tunity to participate in EPA's Construction Grants Program.
In order to effectively carry out the aforementioned
responsibilities, the MBE/WBE liaison officer/service selected
should be:
a. Familiar with and capable of interpreting and
communicating the grantee's procurement procedures
and requirements as well as EPA's MBE/WBE policies,
b. Understanding of small, minority, and women's
business problems,
c. Capable of communicating effectively with women-
minority-and majority-owned businesses and manage-
ment,
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d. Able to maintain a good rapport with the minority
community,
f. Familiar with Federal, State and local resources
available to aid MBEs, WBEs and small business, and
e. Able to maintain a good rapport with the women's
business and community organizations.
III. POLICY
This PRM confirms EPA's policy that costs incurred by the
performance of appropriate and necessary MBE/WBE liaison
services, either by grantee staff or by contractor, which
are directly related to a particular EPA funded construction
project, are eligible for EPA grant participation.
IV. IMPLEMENTATION
Only necessary liaison services rendered in direct connection
with an EPA Construction Grants Project by the MBE/WBE
liaison officer/ service are grant eligible costs. While
the provision of MBE and WBE liaison services is an eligible
cost, it must be borne in mind that EPA will participate in
the costs for hiring additional staff only in municipalities
having ongoing and continuous EPA construction grants
projects, large enough to support the need for such staff.
Contracts for MBE/WBE liaison services which depart from
conventional industry practices and which constitute a
commercially unnecessary intermediate step between a grantee,
liaison officer, consultant or contractor shall be considered
ineligible.
Measures to achieve MBE and WBE program requirements should
be submitted as part of the Step 1, Step 2, Step 3, and Step
2+3 grant applications. State agencies and potential
grantees should be encouraged during the pre-plan-of-study
conferences to integrate planning for use of MBEs and WBEs
into each phase of the construction grant process and to
achieve designated goals. This enables the Agency to judge
before awarding financial assistance whether EPA funds are
likely to be used to achieve the objective of increasing MBE
and WBE participation.
The grantee must maintain complete records of MBE/WBE liaison
services. Such records must include:
a. A brief narrative summary of activities conducted.
b. Certified time and attendance records clearly
establishing relationship to EPA's MBE and WBE
programs.
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es. Bills/vouchers covering travel and other expenditures
incurred in fulfilling the grantee's responsibilities
under the MBE and WBE policies.
d. Documentation sufficient to constitute an audit trail
of all costs charged to a specific project.
GPO 1980 — 677 "094/1123
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