FTA Issues Guidance Letter on Buy America Small Purchase Waivers
On September 16, 2016, FTA’s Chief Counsel issued a policy letter to the industry clarifying the definition of “small purchases” for general public interest waivers from Buy America program requirements. The FAST Act set the small purchase waiver at $150,000 or less; that threshold will not increase with future adjustments made to the simplified acquisition threshold under the Federal Acquisition Regulation (FAR). Additionally, the small purchase waiver is now included in the Buy America statute at 49 USC 5323(j)(13) and applies to purchases, regardless of the size of the project.
FTA Issues Final Buy America Policy Guidance for Phased Increase of Domestic Content for Procurement of Transit Rolling Stock
On September 1, 2016, the Federal Transit Administration (FTA) issued final Buy America policy guidance advising transit agencies and transit vehicle manufacturers how to implement a phased increase in domestic content requirements for transit rolling stock procurements from 60 percent to more than 70 percent by fiscal year 2020. The phased increase is required by the Fixing America’s Surface Transportation (FAST) Act and is the first increase since 1991.
Under the FTA final policy guidance, the Buy America domestic content requirements for transit rolling stock procurements for railcars and buses will be based on the scheduled delivery date of the first production vehicle. The domestic content minimum for fiscal years 2016 and 2017 is more than 60 percent; for fiscal years 2018 and 2019, it is more than 65 percent; and for fiscal year 2020 and beyond it is more than 70 percent. FTA is also providing a limited public interest waiver for solicitations and contracts that were underway when the FAST Act was enacted in 2015.
Buy America Overview
FTA’s Buy America requirements prevent FTA from obligating an amount that may be appropriated to carry out its program for a project unless “the steel, iron, and manufactured goods used in the project are produced in the United States.” 49 U.S.C. § 5323(j)(1). FTA’s Buy America requirements apply to third-party procurements by FTA grant recipients. A Grantee must include in its bid or request for proposal (RFP) specification for procurement of steel, iron or manufactured goods (including rolling stock) an appropriate notice of the Buy America provision and require, as a condition of responsiveness, that the bidder or offeror submit with the bid or offer a completed Buy America certificate in accordance with 49 CFR §§661.6 or 661.12.
Under limited circumstances, FTA may waive Buy America if FTA finds that: (1) application of Buy America is inconsistent with the public interest; (2) the steel, iron, and goods produced in the U.S. are not produced in a sufficient and reasonably available amount or are not of a satisfactory quality; or (3) including domestic material will increase the cost of the overall project by more than 25 percent for rolling stock. The process for seeking a waiver is set forth in 49 CFR part 661. Grantees are encouraged to apply for a waiver as soon as possible and to provide detailed requests in order to expedite FTA’s review of waiver requests. FTA’s determination on waiver requests will be published in the Federal Register for notice and comment.
When procuring rolling stock, which includes train control, communication, traction power equipment, and rolling stock prototypes, the cost of the components and subcomponents produced in the U.S. must be more than:
- more than 60 percent for FY2016 and FY2017
- more than 65 percent for FY2018 and FY2019
- more than 70 percent for FY2020 and beyond
Final assembly for rolling stock also must occur in the U.S. Additionally, rolling stock procurements are subject to the pre-award and post-delivery Buy America audit provisions set forth in 49 U.S.C. § 5323(m) and 49 CFR part 663.
The phased increase in domestic content was included in the FAST Act. Please consult the Buy America FAST Act Fact Sheet for more information.
Unlike rolling stock, manufactured goods must be 100 percent produced in the U.S. A manufactured good is considered produced in the United States if: (1) All of the manufacturing processes for the product take place in the United States; and (2) All of the components of the product are of U.S. origin. A component is considered of U.S. origin if it is manufactured in the United States, regardless of the origin of its subcomponents. 49 CFR 661.5(d). FTA has issued a number of guidance letters discussing manufactured goods. See Buy America Guidance Letters.