Mr. Thomas Prendergast 
Chairman and Chief Executive Officer 
Metropolitan Transportation Authority 
347 Madison Avenue 
New York, NY 10017

Re: Buy America Investigation Decision: Second Avenue Subway Project's Water Mist Fire Suppression System - January 6, 2015

Dear Mr. Prendergast:

I write to follow up on my letter of July 25, 2014, regarding the Federal Transit Administration's Buy America investigation into the New York Metropolitan Transportation Authority's (MTA) water mist fire suppression systems needed for the Second Avenue Subway Project. This letter serves as FTA's Decision in the matter, and for the reasons set forth below, I find that a water mist fire suppression system is a "manufactured end product" for purposes of FTA's Buy America regulation at 49 C.F.R. part 661. Consequently, Marioff Corporation's HI-FOG® water mist fire suppression system, which consists of components manufactured in Finland, does not comply with FTA's Buy America requirements, and given FTA's financial participation in the Second A venue Subway Project, MTA must acquire water mist fire suppression systems that consist of components manufactured in the United States.

Background

On December 23, 2013, Securiplex, a manufacturer of water mist fire suppression systems, requested FTA to initiate a formal investigation into MTA's procurement of the water mist fire suppression systems needed for the Second Avenue Subway Project. Securiplex alleged that MTA procured HI-FOG® water mist fire suppression systems manufactured by the Marioff Corporation in Finland under contracts C-26011 and C-26012.

On June 23, 2014, MTA provided FTA with preliminary information regarding these procurements. MTA confirmed that these procurements were supported with FTA "New Starts" funds under Grant NY-03-0408 for work needed at the 72nd Street Station and 86th Street Station. MTA awarded contract C-26011 to Judlau Contracting, Inc. for station finishes, mechanical systems, electrical systems, plumbing systems, ancillary buildings, and entrances at the 72nd Street Station. The scope of work includes the acquisition and installation of a HI-FOG® water mist fire suppression system. Judlau has not yet acquired this system, but it provided MTA with a Buy America certificate of compliance. 

MTA awarded contract C-26012 to 86th Street Constructors Joint Venture for station finishes, mechanical systems, electrical systems, plumbing systems, ancillary buildings, and entrances at the 86th Street Station. The scope of work includes the acquisition and installation of a HI-FOG® water mist fire suppression system. 86th Street Constructors Joint Venture acquired this system, but it has not yet installed the system. It provided MTA with a Buy America certificate of compliance.

Pursuant to 49 C.F.R. § 661.15, FTA presumes that a bidder or offeror that submits a certificate of Buy America compliance with its bid or offer is, in fact, complying with FTA's Buy America requirements. In its request for investigation, Securiplex provided FTA with information suggesting that the manufacturing location of the components of Marioff's HI-FOG® water mist fire suppression system was in Finland, and this information overcame FTA's presumption of compliance. Consequently, on July 25, 2014, FTA formally initiated an investigation into MTA's procurement of the systems.

On August 14,2014, MTA responded to FTA's inquiry. MTA explained that, in 2011, it conducted a Buy America analysis for Marioff's HI-FOG® water mist fire suppression system for the Second Avenue Subway Project. MTA based its analysis on a December 7, 2010 letter from FTA issued in connection with MTA's East Side Access Project. In the 2010 letter, FTA analyzed whether an escalator is a manufactured end product or a component. FTA determined that the escalator was a component of the larger transit facility, and that the transit facility was the manufactured end product. For purposes of the Second Avenue Subway Project, MTA analogized Marioff's HI-FOG® water mist fire suppression system to an escalator and determined that the system was a component of the larger transit station, which was the manufactured end product. Each piece of the water mist fire suppression system, or "subcomponent," could be made abroad. MTA allegedly discussed this analysis with FTA and its Project Management Oversight Contractor (PMOC) in December 2011.

On September 2, 2014, Securiplex responded to MTA's submission, and reasserted its position that MTA was in violation of FTA's Buy America requirements. FTA reviewed all of the submissions in this matter, and this Decision follows.

Marioff's HI-FOG® Water Mist Fire Suppression System

Marioff's HI-FOG® water mist fire suppression system is a fire prevention system that controls, suppresses, and extinguishes fires by discharging fine water mist at high pressure. MTA is utilizing water mist systems throughout the Second Avenue Subway Project because of their effectiveness at safely controlling, suppressing, and extinguishing train undercarriage fires without resulting in electrocution.

According to Marioff, its HI-FOG® water mist fire suppression system consists of the following elements:

1. Pipe tubing manufactured in Italy and Finland; 
2. Pipe fitting manufactured in the United States; 
3. Pipe and tube support manufactured in the United States; 
4. Valves manufactured in Finland; 
5. A pump controller unit manufactured in the United States; 
6. Nozzles and fittings manufactured in Finland; 
7. Alarm devices manufactured in the United States; 
8. Pressure gauges manufactured in the United States; and 
9. Schedule 40 pipe manufactured in the United States. [1] 

MTA assembles the system on the site of the Second Avenue Subway Project in New York City.

Legal Framework for Buy America

Pursuant to FTA's authorizing statute at 49 U.S.C. § 5323(j)(1), FTA may not obligate funds for a project unless ''the steel, iron, and manufactured goods used in the project are produced in the United States." The purpose of this requirement is to preserve and create jobs in the United States by ensuring that taxpayer-funded projects promote domestic manufacturing.

FTA has promulgated regulations that implement this statutory requirement. Pursuant to those regulations at 49 C.F.R. § 661.5, all "manufactured end products" must be produced in the United States. For a manufactured end product to be produced in the United States, "[a]ll of the manufacturing processes for the product must take place in the United States," and "all of the components must be of U.S. origin." [2] FTA considers a component to be of U.S. origin "if it is manufactured in the United States, regardless of the origin of its subcomponents." [3]

FTA defines a manufactured "end product" as "any vehicle, structure, product, article, material, supply, or system, which directly incorporates constituent components at the final assembly location, that is acquired for public use under a federally-funded third-party contract, and which is ready to provide its intended end function or use without any further manufacturing or assembly change(s)." [4]

FTA defines "system" to mean "a machine, product, or device, or a combination of such equipment, consisting of individual components, whether separate or interconnected by piping, transmission devices, electrical cable or circuitry, or by other devices, which are intended to contribute together to a clearly defined function." [5] In determining whether a system constitutes a manufactured end product, FTA considers factors such as "[w]hether performance warranties apply to an integrated system (regardless of whether components are separately warranteed); whether products perform on an integrated basis with other products in a system, or are operated independently of associated products in the system; or whether transit agencies routinely procure a product separately (other than as replacement or spare parts)." [6]

FTA defines "component" as "any article, material, or supply, whether manufactured or unmanufactured, that is directly incorporated into the end product at the final assembly location." [7]

In 2005, FTA initiated a rulemaking to amend its Buy America regulations by adding a "representative list" of manufactured end products. In 2007, FTA issued its Final Rule. Pursuant to that Final Rule, the representative list "was not meant to be all-inclusive, instead describe[ed] general 'representative' categories of end products consistent with the legislation," which included several types of systems, such as fare collection systems, computer systems, information systems, security systems, and data processing systems that might be housed within a larger transit facility or structure. [8]

As a condition of recipient of FTA funds for the Second Avenue Subway Project, MTA agreed to be bound by these requirements through its execution of the project's Full Funding Grant Agreement and through Section 16 of FTA's Master Agreement.

Buy America Application to Marioff's HI-FOG® Water Mist Fire Suppression System

The threshold issue in this case is whether a water mist fire suppression system is a manufactured end product. To be a manufactured end product, the good must be a product that directly incorporates constituent components at the final assembly location, it must be acquired for public use, and it must be ready to provide its intended use when assembled.

Marioff’s water mist fire suppression system is composed of nine main elements, which include pipe tubing, pipe fitting, pipe and tube support, valves, a pump controller unit, nozzles and fittings, alarm devices, pressure gauges, and Schedule 40 pipe. These elements typically are assembled together onsite, and after they are assembled, a transit agency may utilize the system to control, suppress, and extinguish fires in a public facility. In other words, after the components of the system are assembled, the system is ready to provide its intended purpose in the public domain.

Each of these elements of the system work together to perform a function, similar to the way in which the elements of other systems, or "manufactured end products," work together to perform various functions, such as fare collection systems, computer systems, information systems, security systems, and data processing systems that might be housed within a larger transit facility or structure. Moreover, this system functions independently of the physical structure, and it does not depend on the physical structure to operate. Each element of the system, by itself, has no utility. Moreover, Marioff markets this system as an independent product, similar to that of a fare collection system. [9] These characteristics of the water mist fire suppression system lend it to a classification of a "manufactured end product," rather than a component of a facility.

I understand that MTA may have acted in good faith when it conducted a Buy America analysis for the water mist fire suppression system using FTA's 2010 letter regarding escalators; however, that escalator letter was taken out of context. In the amendments to the Buy America Rule in 2007, FTA determined that a permanently affixed elevator is a feature of a facility that is interrelated to and incorporated into the physical structure of the facility, and therefore, functions more like a component of the facility rather than an independently manufactured end product. [10] FTA analogized a permanently affixed escalator to a permanently affixed elevator in its 2010 letter. These components serve as single fixtures of a larger facility, whereas the fire suppression system is a comprehensive system that functions more like a manufactured end product.

FTA recently discussed its position on systems as manufactured end products in a July 11, 2014 letter to McCarthy Building Companies, Inc. for the Bob Hope Airport's Regional Intermodal Transportation Center Project. In that letter, FTA explained that systems-such as electrical systems, fire alarm systems, and data systems-are manufactured end products and not components of a larger transit facility.

I also understand that MTA may have acted in good faith when it discussed its analysis with FTA's regional staff and PMOC. Notwithstanding any comments received at that time, only the Office of Chief Counsel has the authority to render decisions regarding the application of FTA's Buy America provisions.

For these reasons, I find that a water mist fire suppression system is a manufactured end product, and that each of its components—pipe tubing, pipe fitting, pipe and tube support, valves, a pump controller unit, nozzles and fittings, alarm devices, pressure gauges, and Schedule 40 pipe—must be manufactured in the United States.

Decision

Based upon the foregoing, I find that a water mist fire suppression system is a manufactured end product, and that each of its components—pipe tubing, pipe fitting, pipe and tube support, valves, a pump controller unit, nozzles and fittings, alarm devices, pressure gauges, and Schedule 40 pipe—must be manufactured in the United States. Given the fact that the pipe tubing, valves, nozzles, and fittings are manufactured in Finland, I find that Marioff’s HI-FOG® water mist fire suppression system does not comply with FTA's Buy America regulation at 49 C.F.R. part 661.

I understand that 86th Street Constructors Joint Venture has not yet acquired Marioff's HI-FOG® water mist fire suppression system for the Second Avenue Subway Project's 86th Street Station. For the Project to remain eligible for FTA funds, MTA must acquire a water mist fire suppression system that complies with 49 C.F.R. part 661 and is consistent with this Decision.

I also understand that Judlau acquired Marioff's HI-FOG® water mist fire suppression system for the Second Avenue Subway Project's 72nd Street Station, but has not yet installed the system. For the Project to remain eligible for FTA funds, MTA must either replace this system with, or otherwise obtain, a water mist fire suppression system that complies with 49 C.F.R. part 661 and is consistent with this Decision.

Pursuant to 49 C.F.R. § 661.15(o), a party involved in this matter may request FTA's reconsideration, based on matters of fact or points of law that were not known or available to the party during the investigation, within ten (10) business days after the date of this decision.

Thank you for your cooperation in this matter. If you have any questions or concerns, please do not hesitate to contact my Regional Counsel, Michael Culotta, by telephone at (212) 668-2178 or by electronic mail at Michael.Culotta@dot.gov.

Sincerely,

Dana C. Nifosi 
Acting Chief Counsel

cc: 
Jerome Page, Esq., MTA (Via Electronic Mail) 
Roberta Bender, Esq., MTA (Via Electronic Mail) 
Evan Eisland, Esq., MTA (Via Electronic Mail) 
Lewis Finkelman, Esq., MTA (Via Electronic Mail) 
Michael L. Culotta, Esq., FTA (Via Electronic Mail) 
Marilyn G. Shazor, FTA (Via Electronic Mail) 
Robert Hunter, Esq., Securiplex (Via Electronic Mail) 

[1] Marioff lists elements of its HI-FOG® water mist fire suppression on its website at http://www.marioff.com/fire-protection/hi-fogr-system-components.
[2] 49 C.F.R. § 66l.5(d).
[3] 49 C.F.R. § 66l.5(d)(2).
[4] 49 C.F.R. § 661.3 (emphasis added).
[5] Id.
[6] 49 C.F.R. § 661.3.
[7] Id.
[8] 72 Federal Register 53,693 (September 20, 2007).
[9] See Marioff's website at http://www.marioff.com.
[10] See 72 Federal Register 53,694.