Computer Sciences Corporation Financial Services Group (“FSG”), East Hartford, Connecticut; Notice of Negative Determination on Reconsideration

On January 5, 2004, the Department issued an Affirmative Determination Regarding Application for Reconsideration for the workers and former workers of the subject firm. The notice was published in the Federal Register on January 23, 2004 (69 FR 3391-3392).

Pursuant to 29 CFR 90.18(c) reconsideration may be granted under the following circumstances:

(1) If it appears on the basis of facts not previously considered that the determination complained of was erroneous;

(2) If it appears that the determination complained of was based on a mistake in the determination of facts not previously considered; or

(3) If in the opinion of the Certifying Officer, a mis-interpretation of facts or of the law justified reconsideration of the decision.

The TAA petition was filed on behalf of workers at Computer Sciences Corporation, Financial Services Group (“FSG”), East Hartford, Connecticut. The petition was denied because the petitioning workers did not produce an article within the meaning of section 222 of the Act.

In the request for reconsideration, the petitioner alleged that the petitioning worker group produced a product and that production (in the form of design, coding, testing and delivery of software) shifted to India.

Further contact with the company during reconsideration revealed that the petitioning workers did produce widely marketed software components on CD Rom and tapes, and thus did produce an article within the meaning of the Trade Act.

However, although the company did report that some “source coding” did shift to India in the relevant period, the subject firm does not import completed software on physical media that is like or directly competitive with that which was produced at the subject facility. Business development, design, testing, and packaging remain in the United States.

A National Import Specialist was contacted at the U.S. Customs Service to address whether software could be described as an import commodity. The Import Specialist confirmed that electronically transferred material is not a tangible commodity for U.S. Customs purposes. In cases where software is encoded on a medium (such as a CD Rom or floppy diskette), the software is given no import value, but rather evaluated exclusively on the value of the carrier medium. This standard is based on Treasury Decision 85-124 as issued on July 8, 1985, by the U.S. Customs Service. In conclusion, this decision states that “in determining the customs value of imported carrier media bearing data or instructions, only the cost or value of the carrier medium itself shall be taken into account. The customs value shall not, therefore, include the cost or value of the data or instructions, provided that this is distinguished from the cost or the value of the carrier medium.”

Finally, the North American Industry Classification System (NAICS), published by the U.S. Department of Commerce, designates all manner of custom software applications and software systems, including analysis, development, programming, and integration as “Services” (see NAICS #541511 and #541512.)

Conclusion

After review of the application and investigative findings, I conclude that there has been no error or misinterpretation of the law or of the facts which would justify reconsideration of the Department of Labor's prior decision. Accordingly, the application is denied.