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DE RUEHFR #0898 1821518
ZNR UUUUU ZZH
R 011518Z JUL 09
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC 6623
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHAAA/WHITE HOUSE WASHDC
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS PARIS 000898 
 
WHITE HOUSE PASS USTR 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EINV ENRG ECON ETRD EIND PREL FR
SUBJECT: BUY AMERICAN BLOCKS BELL LABS 
 
REF: STATE 15625 
 
 
¶1.  (SBU) Alcatel-Lucent Board Chairman Philippe Camus told EMIN 
recently that Alcatel-Lucent and its Bell Labs research subsidiary 
had been blocked by from submitting proposals to be funded under the 
American Reinvestment and Recovery Act by the new Advanced Research 
Projects Agency - Energy.  We expressed some surprise in light of 
the assurances we have provided over recent months on the 
limitations on the Buy American provisions.  However, further 
investigation confirms the extremely limited eligibility of foreign 
owned companies to participate in this USD 150 million in initial 
funding for transformational energy technologies. 
 
¶2. (U) DOE Funding Opportunity Announcement DE-FOA-0000065 requires 
that "....foreign entities (entities that are directly or indirectly 
owned or controlled by a foreign company or government) may only 
participate as part of a collaboration, consortium, or other teaming 
arrangement, and may not lead the team.   A minimum of 90% of the 
work, as defined by total project costs, must be performed on U.S. 
soil, which includes the United States proper and its 
territories.....If a foreign entity participates in the proposed R&D 
project, no more than 25 percent of the ARPA-E funds may be expended 
by the combination of all foreign entities on the project (excluding 
equipment that is not available in the United States). This 
restriction applies to the combined performance of the foreign 
entities, regardless of whether the work is performed in the United 
States or a foreign location. 
 
¶3.  (U) This provision effectively eliminates Alcatel-Lucent, 
including Bell Labs, from seeking ARPA-E funds.  Alcatel-Lucent was 
formed by the 2006 merger of Alcatel and Lucent Technologies.  While 
the merged entity has the majority of its employees in the U.S. and 
does the largest portion of its there, it is headquartered in France 
and is deemed to be a foreign entity per para 2 above. 
 
¶4.  (U) Alcatel-Lucent Chairman Camus and other senior officials 
also point out that the Buy American provisions of numerous other 
ARRA programs severely constrain the availability of these funds for 
key investments in information and communications technology due to 
the very high foreign content of most ICT hardware.  While the 
domestic labor portion of technology infrastructure investment is 
this largest cost in these programs, little of the hardware needed 
is of U.S. origin, even that which is manufactured and sold by 
American companies. 
 
¶5. (U) In addition to our conversations with Alcatel-Lucent, we are 
following fairly extensive coverage of the Buy American issue in the 
French business press.   Much of that coverage is centered on the 
U.S. Canada economic relationship, but the press has also picked up 
on the ICT issues and the impact on French companies in the United 
States. 
 
¶6.  (SBU) Embassy recommends that Washington agencies review 
application of Buy American provisions to key federally-funded 
programs to ensure that application of these rules is not more 
stringent than legislatively necessary.  On the face of it, the 
ARPA-E restrictions on foreign entities appear to contradict our 
long-established position on national treatment.  Reftel guidance 
from February predated implementation of most ARRA funded programs. 
Embassy further requests updated guidance on the application of Buy 
American provisions in practice and USG intentions regarding 
managing application of these provisions. 
 
PEKALA