Foreign Source Procurement in the Federal-Aid Highway Program and Possible Violations of the Program's "Buy American" Provision

GAO examined the Federal-Aid Highway Program to determine the extent of foreign source procurement.

Twenty-nine States and two territories reported some foreign steel purchases on Federal-aid highway projects during the period January 1979 through December 1981. Foreign steel purchases represented about 4 percent of the total steel used on Federal-aid highway projects. A Buy American provision of the program allows States to purchase foreign structural steel for Federal-aid highway projects if: (1) the estimated cost is less than $450,000; or (2) the use of foreign structural steel reduces the total project cost by at least 10 percent. Further, a State may request a waiver of the Buy American provision if such a waiver is determined to be in the public's best interest or if the required material is not available domestically. GAO identified six Federal-aid highway projects, each exceeding $450,000, for which contractors purchased foreign structural steel without demonstrating that each purchase reduced the total project cost by at least 10 percent and without obtaining a waiver. State officials were uncertain why the foreign steel purchases in question were not identified and challenged by State employees. GAO stated that the Federal Highway Administration may wish to consider recovering the funds which have been expended improperly to purchase the foreign structural steel, or it may wish to consider the feasibility of waiving the Buy American restrictions in these cases.