April 02, 2012
701 NW 1st Court
Miami, Florida 33136
Subject: Buy America Determination of Compliance
Dear Ms. Llort:
I write in response to Michael Doleman's letter dated February 25, 2011, in which he asked the Federal Transit Administration (FTA) to determine whether the process proposed by AnsaldoBreda S.P.A. (AnsaldoBreda) for producing Heavy Rail Vehicles (HRV) for Miami-Dade Transit (MDT) would comply with FT A's Buy America rules for final assembly.
Before discussing the substance of MDT's request, I note that FTA's decision has been delayed by a bid protest, and subsequent appeal, filed by CAF USA, Inc. (CAF), a competitor to AnsaldoBreda. FTA decided CAF's appeal by letter dated November 23, 2011. The result of the appeal was in CAF's favor and required MDT to reevaluate Best and Final Offers using only evaluation factors that were disclosed to the offerors. I understand from MDT attorney Bruce Libhaber that MDT has completed this process and intends to award a contract to AnsaldoBreda. Mr. Libhaber assured me that, aside from the delay resulting from CAF's appeal, the facts underlying your February 25, 2011 request for a letter of interpretation remain unchanged.
According to Mr. Doleman's letter, MDT intends to award a $313,832,000 contract to AlsaldoBreda for the production of 136 new HRV s. During the pre-award audit conducted by MDT in accordance with FT A regulations, AnsaldoBreda outlined its plans for producing and assembling the HRVs. It proposed to split production and final assembly activities between its plants in Italy (Reggio Calabria, Pistoia, and Naples) and the United States (Pittsburg, California; and Miami, Florida). The chart on the following page identifies the location where AnsaldoBreda intends to perform various production related activities, including design, manufacturing, testing, and final assembly.
Because AnsaldoBreda plans to perform certain design and engineering activities in Italy, MDT asked FTA to determine whether its approach to producing the subject rail vehicles conforms to the minimum final assembly requirements outlined at Appendix D to 49 C.F .R. 661.11. In particular, MDT has asked whether AnsaldoBreda's approach meets the requirement that in-plant testing ofthe stationary product take place in the United States.
The following chart identifies where AnsaldoBreda will perform various production activities:
For railcars and all "rolling stock," FTA's Buy America requirements are twofold:
- Domestic Content. At least 60% of the components of each railcar must be manufactured in the United States.
- Final Assembly. The final assembly of each railcar must take place in the United States. [FN1]
FTA's minimum requirements for final assembly are outlined at Appendix D to 49 CFR 661.11. "In the case of the manufacture of a new rail car, final assembly would typically include, as a minimum, the following operations:
- Installation and interconnection of propulsion control equipments, propulsion cooling equipment, brake equipment, energy sources for auxiliaries and controls, heating and air conditioning, communications equipment, motors, wheels and axles, suspensions and frames;
- The inspection and verification of all installation and interconnection work; and
- The in-plant testing of the stationary product to verify all functions.
If a recipient of FT A funds or a manufacturer has questions about-the requirements for final assembly, they may ask FTA to make a determination of compliance. [FN2]
MDT asked FTA to determine whether its approach to producing railcars for MDT conforms to the minimum final assembly requirements outlined at Appendix D to 49 C.F .R. 661.11. In particular, MDT asked whether AnsaldoBreda's approach meets the requirement that in-plant testing of the stationary product take place in the United States.
This letter does not assess AnsaldoBreda domestic content. It is limited in scope to the question asked by MDT-whether AnsaldoBreda's production approach is acceptable as it relates to the final assembly requirement only.
The following is a summary of the approach outlined by AnsaldoBreda and MDT in its February 25, 2011letter to FTA, and in the Pre-Award Purchaser's Requirement report and Pre-Award final assembly documents that you enclosed therein:
- MDT and AnsaldoBreda confirm that all HRV's will meet domestic content requirement. At least 60% of the components of each HRV will be produced in the United States.
- Of the 19 HRVs it will provide to MDT, AnsaldoBreda will conduct final assembly in two locations-final assembly of six pilot cars and their trucks will take place in Pittsburg, California, and final assembly of 13 series cars and trucks in Miami, Florida.
- AnsaldoBreda will conduct the following in-plant testing in Italy: climatic chamber, structural fatigue, crash, anechoic chamber, vibration test, and combined electrical component.
FTA's engineers have reviewed the approach outlined by MDT and AnsaldoBreda and found that it complies with PTA's Buy America "final assembly" requirements. FTA notes that component and climate room testing are excluded from the minimum final assembly activities outlined in Appendix D to CFR 661.11. Therefore, these tests may occur in Italy and conform to PTA's minimum requirements for final assembly.
Based on the forgoing, I hereby determine that the approach outlined by AnsaldoBreda for final assembly of the stated vehicles will comply with the Buy America minimum final assembly requirements outlined at Appendix D to 49 C.F .R. 661.11.
Please note that this decision is limited to PTA's review of the final assembly requirement only. It is my expectation and understanding that all19 HRVs produced by AnsaldoBreda for MDT will be produced in accordance with PTA's Buy America requirements of 49 U.S.C. § 53230), as implemented at 49 C.P.R. Part 661, including the Buy America domestic content requirement, with component classifications consistent with FTA guidelines, the requirement of full and open competition, and the prohibition against expressing a local hiring preference.
Feel free to contact Jayme Blakesley at email@example.com with any further questions.
Dorval R. Carter, Jr.
FN1. 49 U.S. C. 5323G)(2)(C), as implemented at 49 CFR 661.11.
FN2. Paragraph (c) of appendix D to 49 CFR 661.11.