Pre-Award, Post-Delivery Audits of Rolling Stock Questions and Answers


Printer Friendly Number 57 FR 10834
03-31-92

DEPARTMENT OF TRANSPORTATION
Federal Transit Administration
AGENCY: Federal Transit Administration, DOT.
49 CFR Part 663

Pre-Award, Post-Delivery Audits of Rolling Stock Questions and Answers
57 FR 10834
March 31, 1992
ACTION: Disposition of inquires.

SUMMARY: This document publishes questions and answers regarding the Federal Transit Administration's (FTA) Pre-Award and Post-Delivery Audits of Rolling Stock Purchases, 49 CFR part 663. Since publication of that regulation, the FTA has received a number of inquiries from transit vehicle manufacturers and recipients of FTA funds about the level of information the regulation requires to be made available in connection with the audit certifications of Buy America content. The following questions and answers are published today to provide guidance on that issue to recipients of FTA funds, vehicle manufacturers, and other affected entities. This document does not amend or in any way affect the regulation, which remains in effect as published on September 24, 1991.

DATES: The rolling stock audit regulation, 49 CFR part 663, went into effect on October 24, 1991 (56 FR 48384, September 24, 1991).

FOR FURTHER INFORMATION CONTACT: James A. Archibald, Associate Administrator for Budget and Policy, room 9310, FTA, 400 Seventh Street SW., Washington, DC 20590, (202) 366-4050.

TEXT: SUPPLEMENTARY INFORMATION: The FTA regulation on pre-award and post-delivery audits of rolling stock implements section 319 of the Surface Transportation and Uniform Relocation Assistance Act of 1987 (the STURAA), which requires a pre-award and post-delivery audit of rolling stock purchased with FTA funds to assure compliance with, among other things, the FTA Buy America requirements at 49 CFR part 661.

Since publication of the final rule on September 24, 1991, FTA has received a number of questions about the level of detail required by 49 CFR part 663 in connection with the required Buy America certifications. In developing the following answers in response to these frequently asked questions, the FTA took into consideration legislative history accompanying the STURAA. Specifically, the bill's Conference Report states that "(i)t is the intent of the Conferees that any paperwork requirements imposed by this provision will not create a significant cost burden." (House Report 100-27, p. 231.) Accordingly, the following questions and answers are being published to provide guidance to affected parties, including recipients of FTA funds and transit vehicle manufacturers. This notice does not amend or in any way affect the regulation, which remains in effect as published in the Federal Register on September 24, 1991.

Level of Cost Data

1. Question: What level of cost data does the FTA require to meet the requirements of 49 CFR part 663?

Answer: The FTA will accept a level of documentation in which costs presented on the document comply with the definition presented in § 661.11(o)(1) of the Buy America regulation (49 CFR part 661):

The cost of a component or a subcomponent is the price that a bidder or offeror must pay to a subcontractor or supplier for the component or subcomponent. * * *

The cost used in the computation of domestic content may include appropriate fully allocated costs of the component or subcomponent, which would include overhead and profit allocations.

Percentage Format

2. Question: May cost information be presented in percentage format?

Answer: The information on cost can be presented in either dollar or percentage format. See the "Domestic Content Sample Worksheet" below for an example of how a percentage format would be calculated.

Domestic Content Sample Worksheet

ITEM

Cost

Percent domestic

One transit bus (ABC Bus Mfg. Co.)

$100

At least 60% of total cost.

How 60% Was Achieved

Component

Domestic content

(1) Engine (XYZ Engine Co)

$30.00 (30% of total bus cost).

(2) Transmisison (MNO Co.)

20.00 (20% of total bus cost).

(3) Wheels (DEF Wheel Co.)

15.00 (15% of total bus cost

Sub-total

65.00 (65% of total bus cost)

(5% more than required; no further

components need be identified)

Breakdown of Components re. Minimum Domestic Content

Sub-components

Domestic content

(1) Engine (total cost $30.00):
1.1 Valves (PRQ Valve Co.)

$12.00 (40% of cost of engine).

1.2 Block (GHI Block Co.)

10.50 (35% of cost of engine).

Sub-total

22.50 (75% of cost of engine).

(15% more than required; no further

sub-components need be identified)

(2) Transmission (total cost $20.00):
2.1 Gears (STV Gear Co.)

4.00 (20% of cost of transmission).

2.2 Housing (LMN Co.)

8.00 (40% of cost of transmission).

Sub-total

12.00 (60% of cost of transmission).

(minimum percentage achieved; no

further sub-components need be

identified)

(3) Wheels (total cost $15.00):
3.1 Castings (RST Foundry)

10.00 (66.6% of cost of wheels).

Sub-total

10.00 (66.6% of cost of wheels)

(6.6% more than required; no further

sub-components need be identified)

Pre-Award Calculations

3. Question: May the pre-award component and subcomponent information be presented as a commitment from the manufacturer that the domestic content information which is reported will be achieved?

Answer: The pre-award data may be based on estimates used in developing the bid for the equipment. The post-delivery review will demonstrate the compliance with the pre-award certification that Buy America requirements have been met and will require presentation of any changes which have occurred during the production process. The Buy America legislation does not require exact conformance on a component-by-component or subcomponent-by-subcomponent basis between the two audits, only that Buy America requirements be complied with, and the purpose of the post-delivery audit is to verify such compliance.

Extent of Review

4. Question: To what level of detail must the pre-award and post-delivery reviews be applied to confirm the veracity of the component and sub-component domestic content data?

Answer: The applicable regulatory language requires only that the grant recipient based its certification on its own satisfaction that compliance has occurred, based upon its own review of documentation provided by the manufacturer. The only information required to be reviewed by the recipient is a listing of the component and subcomponent parts, identified by manufacturer, country or origin and costs (as defined above), as well as the actual location of the final assembly point with a description of the final assembly activities and cost.

There is no requirement that the recipient perform a complete audit of detailed source documents to ascertain the veracity of the manufacturer's documentation.

Issued on: March 25, 1992.

Brian W. Clymer,

Administrator.

______________

This material is reprinted with the permission of LEXIS-NEXIS, a division of Reed Elsevier Inc. No copyright is claimed as to any part of the original work prepared by a government officer or employee as part of that person's official duties.