During the height of the Great Depression, President Roosevelt and Congress passed a number of measures designed to spur the national economy. Part of Washington’s “New Deal” package was the Buy American Act; a law that required the federal government to prefer American made goods in its purchases.
Later, the Buy American law was supplemented by the Buy America Act in 1983. That law requires large mass transit procurements funded by the Federal Highway Administration to be American made. A third law passed in 2009 supplemented the original Buy American law which remains on the books today. The American Recovery and Reinvestment Act requires projects funded with federal stimulus monies to use American made steel.
Why the Buy American laws? Congress says the laws are meant to preserve and create jobs, promote economic recovery, assist those impacted by the recession and invest in transportation and our ailing infrastructure. Buying Chinese steel for a federal building or federally funded bridge project might save a few bucks but it doesn’t create jobs and doesn’t help American families.
Lately we have been hearing of some contractors and their suppliers violating the Buy American and other similar laws. They are using Chinese steel and other supplies on important taxpayer funded projects.
A recent Wall Street Journal article discussed how the Verrazano Narrows bridge and the San Francisco Oakland Bay Bridge are using Chinese steel in their repairs or construction. At least in the case of the Verrazano Narrows Bridge, thats legal since no federal monies are being used. Toll dollars are funding the repairs.
Whether or not you agree with Buy American, enforcement of the law is crucial both for public safety and to keep a level playing field among construction companies.
If a contractor uses inferior foreign made steel and labels it as American, no one knows if the steel is up to spec. Engineers and designers factor into their load limits the particular qualities of the steel. Absent melting and testing every piece of steel, engineers rely on the certification that comes with each load of steel. If something else is substituted, problems can occur. (Recall the bolts and epoxy that failed in 2006 during Boston’s “Big Dig” tunnel project causing a 3 ton cement ceiling section to fall and kill a passing motorist. Ultimately, prosecutors determined the fastener system did not meet specs.)
When a vendor lies about the origin of steel, legitimate bidders are hurt too. Because Chinese steel is much less expensive, vendors breaking the law and mislabeling foreign steel can underbid honest contractors who are trying to follow the law.
What can be done? Probably the hardest job is finding someone on the inside willing to come forward and report the violation. Fortunately, the federal false claims act – whistleblower law – allows whistleblowers with inside information to come forward and receive an award of up to 30% of whatever is collected by the government. With triple damages available to the government, a vendor that even cheats on a small million dollar steel order could see an assessment of $3 million. That makes for a nice payday for the whistleblower.
Obviously, most bridge construction contractors follow the law and use American steel. Recently we heard from an engineer complaining that a vendor on a Minnesota bridge project might be using Chinese steel. If you are a present or former employee or vendor of a company illegally using foreign goods on a government funded bridge or transportation project, let us know.
Buy America, Buy American and the stimulus laws all contain important protections for American businesses. These laws only work, however, when people step forward and report wrongdoing. If you have knowledge of a violation of one of these laws, call us. We help whistleblowers receive the maximum awards possible for their valuable information.
For more information, contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct). All inquiries are protected by the attorney – client privilege and kept in strict confidence.
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Minneapolis, Minnesota; Portland, Maine and San Francisco, California. Services available in many jurisdictions.
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Post by Brian Mahany