TMCnews Featured Article

June 30, 2009

Recovery Act Update: NTIA Nixes Buy America Provisions Supporting Cisco's Request

By Barlow Keener, Attorney

On Friday, June 26, 2009, the NTIA (National Telecommunications and Information Administration) granted a “limited waiver” for the Buy America restriction in the Recovery Act covering certain types of equipment that may be required for broadband projects.

The NTIA is responsible for overseeing the process of delivering $4.7 billion in stimulus funding for broadband projects and is administrating the broadband grants through the BTOP (Broadband Technology Opportunities Program).

One of the general requirements of the Recovery Act was the “Buy America” provision requiring grant recipients to purchase “manufactured goods” used in the product from approved U.S. vendors. The Buy America provision gave the agencies broad authority to waive the requirement if certain conditions were met, one of which is if the Buy America requirement is not in the “public interest” in a particular industry.

The Buy America provision was opposed by the two of largest internet and telecommunications equipment vendors, Cisco (News - Alert) and Alcatel-Lucent, and supported by the Communications Workers of America (CWA). See a discussion at in this post.  Bloomberg News reported on the Buy America dispute on June 15, 2009.
The June 26, 2009 NTIA public announcement explained that the limited waiver would be granted based on the “public interest” exception. The NTIA waiver explained:

“[I]t would be difficult, if not impossible, for a BTOP applicant to have certain knowledge of the manufacturing origins of each component of a broadband network and the requirement to do so would be so overwhelmingly burdensome as to deter participation in the program. Requiring a BTOP applicant to request a waiver on a case-by-case basis also would be such an administrative burden on the applicant as to discourage participation in the program and would increase the agency’s time and costs for processing BTOP applications for broadband infrastructure projects.”

The NTIA, however, did not grant a complete waiver. The Buy America provision will continue to apply to “fiber optic cables, coaxial cables, cell towers, and other facilities” that are produced in the United States in sufficient quantities to be reasonably available as end products. The list excluded from the Buy America requirement includes equipment for “Broadband Switching,” “Broadband Routing,” “Broadband Transport,” “Broadband Access” for last mile connections, “Broadband Customer Premises Equipment and End-User Devices,” and “Billing/Operations Systems.”

There are many equipment vendors that produce telecom equipment in the U.S., such as Adtran. These U.S. companies will not now, after the NTIA limited waiver, have an advantage over companies manufacturing their equipment outside the U.S.

What is interesting about the NTIA limited waiver is that it did not discuss the Buy America OMB (Office of Management and Budget) guidelines which provided that as long as the equipment was “manufactured” in one of 51 allowed countries, the subcomponents were not subject to the Buy America limitations.  The April 3, 2009 OMB Buy America guidelines stated:

“There is no requirement with regard to the origin of components or subcomponents in manufactured goods used in the project, as long as the manufacturing occurs in the United States. (page 136)”

By addressing the Buy America provision, it appears that the NTIA is on schedule to deliver its Notice of Availability of Funds by the end of June (tomorrow).

The Recovery Act schedule, found at indicates that NTIA stimulus funds will begin stimulating recovery starting in January 2010.

Checks for the first round of grant proposals will be issued on December 31, 2009.

TMCnet publishes expert commentary on various telecommunications, IT, call center, CRM and other technology-related topics. Are you an expert in one of these fields, and interested in having your perspective published on a site that gets several million unique visitors each month? Get in touch.

Edited by Patrick Barnard