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Wednesday, July 31, 2013

The Buy American Act in Brief: Preferences for “Domestic” Supplies and Construction Materials in Federal Procurements

Kate M. Manuel
Legislative Attorney

The Buy American Act of 1933 is the earliest and arguably the best known of various statutes regarding federal procurement of domestic products. Essentially, the act attempts to protect U.S. businesses and labor by restricting the acquisition and use of end products or construction materials that are not “domestic.” For purposes of the act, domestic end products and domestic construction materials include unmanufactured end products or construction materials mined or produced in the United States, as well as end products or construction materials manufactured in the United States, provided that (1) the cost of the components mined, produced, or manufactured in the United States exceeds 50% of the cost of all components, or (2) the product is a commercially available off-the-shelf item. Any end products or construction materials that do not qualify as domestic under these definitions are generally treated as foreign, and offers that supply foreign end products or construction materials are foreign offers, regardless of the offeror’s nationality. Purchases of services are generally not subject to the Buy American Act.

As implemented, the Buy American Act limits the purchase of foreign end products and the use of foreign construction materials by establishing price preferences for domestic offers. Specifically, the provisions of the Federal Acquisition Regulation (FAR) implementing the Buy American Act provide that, when a domestic offer is not the low offer, the procuring agency must add a certain percentage of the low offer’s price to that offer before determining which offer is the lowest priced or “best value” for the government. This percentage generally ranges from 6%, in cases where the lowest domestic offer is from a large business; to 12%, when the lowest domestic offer is from a small business; to 50%, for Department of Defense procurements, although agencies may adopt higher percentages by regulation. If the domestic offer is the lowest, or tied for lowest, after the application of this price preference, the agency must award the contract to the domestic offeror. However, if the foreign offer still has the lowest price, the agency is generally to award the contract to the foreign offeror pursuant to provisions of the Buy American Act permitting the purchase of foreign end products (and the use of foreign construction materials) when the costs of domestic ones are “unreasonable.”

There are also other “exceptions” to the Buy American Act, which would permit the purchase of foreign end products and the use of foreign construction material if (1) the procurement is below the micro-purchase threshold (generally $3,000); (2) the goods are for use outside the United States; (3) the procurement of domestic goods or the use of domestic construction materials would be inconsistent with the public interest; (4) domestic end products or construction materials are unavailable; (5) the agency is procuring information technology that is a commercial item; or (6) the goods are acquired specifically for commissary resale.

The Buy American Act is of perennial interest to Congress, which has periodically enacted or considered measures to expand the scope of domestic preferences in federal procurements or, more rarely, to narrow it. The act itself has seldom been amended. However, numerous statutory requirements like those of the Buy American Act have been enacted. See archived CRS Report R42501, Domestic Content Legislation: The Buy American Act and Complementary Little Buy American Provisions, by John R. Luckey. The act also interacts with various trade and other international agreements, many of which can result in eligible products (i.e., products substantially transformed in countries with which the United States has trade agreements) being treated as if they were domestic in certain procurements, although other international agreements establish preferences for U.S. goods for use outside the United States.

Date of Report: July 9, 2013
Number of Pages: 15
Order Number: R43140
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Monday, July 29, 2013

Federal Disaster Assistance after Hurricanes Katrina, Rita, Wilma, Gustav, and Ike

Bruce R. Lindsay, Coordinator
Analyst in American National Government

Jared Conrad Nagel, Coordinator
Information Research Specialist

This report provides information on federal financial assistance provided to the Gulf States after major disasters were declared in Alabama, Florida, Louisiana, Mississippi, and Texas in response to the widespread destruction that resulted from Hurricanes Katrina, Rita, and Wilma in 2005 and Hurricanes Gustav and Ike in 2008.

Congressional interest in Gulf Coast assistance has increased in recent years because of the significant amount of assistance provided to the region. Congress has also been interested in how the money has been spent, what resources have been provided to the region, and whether the money has reached the people and entities intended to receive the funds. The financial information is also useful for congressional oversight of the funds to identify the entities that have received the funds and to evaluate the overall effectiveness of the assistance. In addition, the information can help frame the congressional debate concerning federal assistance for current and future disasters.

The financial information for the 2005 and 2008 Gulf Coast storms is provided in two sections of this report:

1. Table 1 of Section I summarizes disaster assistance supplemental appropriations enacted into public law primarily for the needs associated with the five hurricanes, with the information categorized by federal department and agency; and

2. Section II contains information on the federal assistance provided to the five Gulf Coast states through the most significant federal programs, or categories of programs.

The financial findings in this report include:

• Congress has appropriated roughly $120.5 billion in hurricane relief for the 2005 and 2008 hurricanes in 10 supplemental appropriations statutes.

• The appropriated funds have been distributed among 11 departments, 3 independent agencies/entities, numerous sub-entities, and the federal judiciary.

• Congress appropriated almost half of the funds ($53 billion, or 44% of the total) to the Department of Homeland Security, most of which went to the Disaster Relief Fund (DRF) administered by the Federal Emergency Management Agency (FEMA).

• Congress targeted roughly 22% of the total appropriations (almost $27 billion) to the Department of Housing and Urban Development for community development and housing programs.

• Almost $25 billion was appropriated to Department of Defense entities: $15.6 billion for civil construction and engineering activities undertaken by the Army Corps of Engineers and $9.2 billion for military personnel, operations, and construction costs.

• FEMA has reported that roughly $5.9 billion has been obligated from the DRF after Hurricanes Katrina, Rita, and Wilma to save lives and property through mission assignments made to over 50 federal entities and the American Red Cross (see Table 19), $160.4 million after Hurricane Gustav through 32 federal entities (see Table 20), and $441 million after Hurricane Ike through 30 federal entities (see Table 21). In total, federal agencies obligated roughly $6.5 billion for mission assignments after the five hurricanes.

• The Small Business Administration approved almost 177,000 applications in the region for business, home, and economic injury loans, with a total loan value of almost $12 billion (Table 31 and Table 32).

• The Department of Education obligated roughly $1.8 billion to the five states for elementary, secondary, and higher education assistance (Table 12).

This report also includes a brief summary of each hurricane and a discussion concerning federal to state cost-shares. Federal assistance to states is triggered when the President issues a major disaster declaration. In general, once declared the federal share for disaster recovery is 75% while the state pays for 25% of recovery costs. However, in some cases the federal share can be adjusted upward when a sufficient amount of damage has occurred, or when altered by Congress (or both). In addition, how much federal assistance is provided to states for major disasters is influenced not only by the declaration, but also by the percentage the federal government pays for the assistance. This report includes a cost-share discussion because some of these incidents received adjusted cost-shares in certain areas.

Since 2005 Congress has been interested in not only the amount of funding that has been directed to the Gulf Coast after the 2005 and 2008 hurricanes, but also in the wide range of activities and programs brought to bear to help the Gulf Coast states recover and prepare for future storms. This report summarizes the funds Congress directed to the area as well as the federal activities and programs that were put to use in response to the 2005 and 2008 hurricanes.

Date of Report: July 5, 2013
Number of Pages: 93
Order Number: R43139
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The Impact of Sequestration on Unemployment Insurance Benefits: Frequently Asked Questions

Katelin P. Isaacs
Analyst in Income Security

Julie M. Whittaker
Specialist in Income Security

“Sequestration” refers to a process of automatic, largely across-the-board spending reductions under which budgetary resources are permanently canceled to enforce certain budget policy goals. Most recently, sequestration was triggered by the Budget Control Act of 2011 (BCA; P.L. 112-25) and implemented on March 1, 2013 (delayed by P.L. 112-240).

Some, but not all, types of unemployment insurance (UI) benefits are subject to reductions under the BCA sequester. Regular Unemployment Compensation (UC), Unemployment Compensation for Ex-Servicemembers (UCX), and Unemployment Compensation for Federal Employees (UCFE) benefits are specifically exempt from the sequester reductions. UI payments from the Extended Benefit (EB) and Emergency Unemployment Compensation (EUC08) programs, however, are subject to the sequester reductions. States administer all types of UI benefits. Therefore, states are responsible for carrying out the sequester reduction in UI benefit payments. The amount and method by which a UI recipient’s benefit is reduced varies by the state and by the date when the reduction begins.

This report provides brief answers to some frequently asked questions regarding sequestration and unemployment insurance benefits.

Additional information on UI programs and benefits is available in CRS Report RL33362, Unemployment Insurance: Programs and Benefits, by Julie M. Whittaker and Katelin P. Isaacs; and CRS Report R42444, Emergency Unemployment Compensation (EUC08): Current Status of Benefits, by Julie M. Whittaker and Katelin P. Isaacs.

Additional information on modifications to UI programs and benefits as a result of recent changes to state laws is available in CRS Report R41859, Unemployment Insurance: Consequences of Changes in State Unemployment Compensation Laws, by Katelin P. Isaacs.

More general information on the sequester is available in CRS Report R42050, Budget “Sequestration” and Selected Program Exemptions and Special Rules, coordinated by Karen Spar.

Date of Report: July 2, 2013
Number of Pages: 9
Order Number: R43133
Price: $19.95

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Tuesday, July 16, 2013

Points of Order in the Congressional Budget Process

James V. Saturno
Section Research Manager

The Congressional Budget Act of 1974 (Titles I-IX of P.L. 93-344, as amended) created a process that Congress uses each year to establish and enforce the parameters for budgetary legislation. Enforcement of budgetary decisions is accomplished through the use of points of order, and through the reconciliation process. Points of order are prohibitions against certain types of legislation or congressional actions. These prohibitions are enforced when a Member raises a point of order against legislation that may violate these rules when it is considered by the House or Senate.

This report summarizes the points of order currently in effect under the Congressional Budget Act of 1974, as amended, as well as related points of order established in various other measures that have a direct impact on budget enforcement. These related measures include the budget resolutions adopted by Congress in 2007 (S.Con.Res. 21, 110
th Congress), 2008 (S.Con.Res. 70, 110th Congress), and 2009 (S.Con.Res. 13, 111th Congress), as well as the Rules of the House for the 113th Congress, the budget resolution adopted by the House in 2013 and made enforceable in the House (H.Con.Res. 25, 113th Congress and H.Res. 243, 113th Congress), the Budget Enforcement Act of 1990 (P.L. 101-508), and the Statutory Pay-As-You-Go Act of 2010 (P.L. 111-139). In addition, the report describes how points of order are applied and the processes used for their waiver in the House and Senate.

Date of Report: July 11, 2013
Number of Pages: 16
Order Number: 97-865
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Friday, July 12, 2013

Independent Counsels, Special Prosecutors, Special Counsels, and the Role of Congress

Jack Maskell
Legislative Attorney

This report provides information on the procedure for the appointment of an “independent counsel,” a “special prosecutor,” or a “special counsel” to investigate and prosecute potential or possible violations of federal criminal law by officials in the executive branch of the federal government and in federal agencies. Specifically examined is the role or authority of Congress in requiring an independent or special counsel investigation of executive branch officials.

Under the Constitution and its separation of powers principles and structure, Congress has no direct role in federal law enforcement, nor in triggering or initiating the appointment of any prosecutor for any particular matter (other than the advice and consent role of the Senate regarding certain nominations made by the President). Congress, however, has recognized inherent authority to conduct oversight hearings and legislative investigations by its committees into misconduct, mismanagement, or any other malfeasance relating to the officers and agencies of the executive branch of government to assure the government’s proper functioning, to assure the proper expenditure of funds that Congress appropriates, and to explore the need for remedial legislation. Revelations from such investigations and oversight, in addition to providing information for remedial legislation, may contribute to the public pressure on the Administration or Department of Justice to appoint an “independent” counsel or prosecutor to investigate uncovered evidence or allegations of wrongdoing by persons in the Administration.

Congress may also have a legislative role in designing a statutory mechanism for the appointment of “independent counsels” or “special prosecutors,” as it did in title VI of the Ethics in Government Act of 1978. Under the provisions of that law relating to the appointment of “independent counsels” (called “special prosecutors” until 1983), the Attorney General was directed to petition a special three-judge panel of the U.S. Court of Appeals to name an independent counsel upon the receipt of credible allegations of criminal misconduct by certain high-level personnel in the executive branch of the federal government whose prosecution by the Administration might give rise to an appearance of a conflict of interest. In 1999, Congress allowed the “independent counsel” provisions of law to expire. Upon the expiration of the law in June of 1999, no new “independent counsels” or “special prosecutors” may be appointed by a three-judge panel upon the application of the Attorney General.

The Attorney General retains the general authority to designate or name individuals as “special counsels” to conduct investigations or prosecutions of particular matters or individuals on behalf of the United States. Under regulations issued by the Attorney General in 1999, the Attorney General may appoint a “special counsel” from outside of the Department of Justice who acts as a special employee of the Department of Justice under the direction of the Attorney General. The Attorney General, however, may also appoint an individual as a special counsel, and may invest that individual with a greater degree of independence and autonomy to conduct investigations and prosecutions, regardless of any “special counsel” regulations, as Attorneys General did in 1973, 1994, and 2003. In 1973, Attorney General Elliot Richardson named Archibald Cox to be the “special prosecutor” for the “Watergate” investigation; in 1994, during an earlier expiration of the independent counsel provisions of law, Attorney General Janet Reno named a “regulatory” independent counsel Robert Fisk to investigate allegations concerning the matter known as “Whitewater”; and in 2003, Attorney General Ashcroft recused himself from the investigation of the leak of the identity of a CIA agent, and Deputy Attorney General Comey named U.S. Attorney Patrick Fitzgerald to be special counsel “with all the authority of the Attorney General” to pursue that matter.

Date of Report: June 20, 2013
Number of Pages: 8
Order Number: R43112
Price: $19.95

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