Houston METRO / CAF / Parsons Transportation Group

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April 23, 2010


 

Frank J. Wilson

President and Chief Executive Officer

Metropolitan Transit Authority

of Harris County, Texas

P.O. Box 61429

Houston, Texas 77208-1429

 

Re:         Buy America Investigation

 

Dear Mr. Wilson:

 

I write to initiate a review of the Metropolitan Transit Authority of Harris County’s (METRO) compliance with the Federal Transit Administration’s (FTA) Buy America requirements under 49 CFR 661.15.  The basis for this investigation is my understanding that METRO, through contracts with its Facility Provider, Parsons Transportation Group (PTG), and Light Rail Vehicle (LRV) manufacturer, Construcciones y Auxiliar de Ferrocarriles (CAF), may be planning to produce pilot LRVs in Spain for use on the federally funded North and Southeast Corridor projects.

 

The Buy America requirements prohibit FTA from obligating funds for a project unless the steel, iron, and manufactured goods used in the project are produced in the United States.[1]  For rolling stock procurements, specifically, FTA’s Buy America requirement is twofold: (1) the cost of components and subcomponents produced in the United States must total more than 60 percent of the cost of all components of the rolling stock; and (2) final assembly of the rolling stock must occur in the United States.[2]

 

FTA’s process for ensuring compliance with the Buy America requirements is as follows:  FTA grantees must include a Buy America provision in their procurement documents.[3]  Such provision must require, as a condition of responsiveness, that the bidder or offeror submit with the bid or offer a completed Buy America certificate.[4]  By signing a Certificate of Compliance, a bidder or offeror “certifies that it will comply with the requirements of 49 U.S.C. § 4323(j), and the applicable regulations of 49 C.F.R. 661.11.”[5]  A bidder or offeror “is not permitted to change its certification after bid opening or submission of a final offer.  FTA presumes that a bidder or offeror who has submitted the required Buy America certificate is complying with the Buy America provision.  If information indicates that the presumption has been overcome, FTA may initiate an investigation.[6]

 

I note prior communication from FTA to METRO regarding the Buy America requirements.  On February 26, 2008, FTA responded to an inquiry from a prospective supplier of LRVs that informed FTA that METRO, through its Facility Provider, had issued a procurement for LRVs that did not include the Buy America provision required by 49 C.F.R. 661.13; METRO received a copy of that response.  By letter dated March 6, 2008, FTA outlined several issues that could affect the progress of METRO’s North and Southeast Corridor projects, and explained, specifically, that METRO’s LRV procurement must comply with the Buy America requirements.  Finally, by letter dated April 14, 2009, FTA denied METRO’s request for a public interest waiver to allow final assembly of two pilot LRVs to take place in Spain.  In that letter, then-Acting Chief Counsel Scott Biehl found,

 

the two pilot LRVs are integral to CAF’s proposal on which it certified compliance with the Buy America requirements and won the competition for METRO’s procurement of LRVs.  Thus, for purposes of Buy America, the pilot LRVs cannot be separated from METRO’s contract with CAF for production and assembly of LRVs for use on the North and Southeast corridors.[7]

 

FTA has learned that METRO, PTG and CAF may be planning to assemble the two pilot LRVs in Spain.  Based on this information and in light of FTA’s letter of April 14, 2009, I hereby initiate this review to determine whether or not METRO is complying with the Buy America requirements for the entire North and Southeast Corridor projects, whether PTG is complying with Buy America on the entire Facility Provider contract, and whether CAF is complying on the LRV contract.  

 

FTA’s investigation procedures place the burden of proof on METRO to establish that it and its contractors and subcontractors, including but not limited to PTG and CAF, are complying with FTA’s Buy America requirements.[8]  Accordingly, please document METRO’s compliance with Buy America.  FTA must receive a reply to this inquiry no later than May 14, 2010.  PTG, CAF, and other contractors may communicate directly with FTA on this matter only if authorized to do so in writing by METRO.  

 


 

If you have any questions concerning this investigation please contact Jayme Blakesley of my staff at (202) 366-0304 or jayme.blakesley@dot.gov. 

 

Very truly yours,

 

 

 

Dorval R. Carter, Jr.

Chief Counsel



[1] 49 U.S.C. 5323(j)(1).

[2] 49 U.S.C. 5323(j)(2)(C).

[3] 49 C.F.R. 661.13(b).

[4] 49 C.F.R. 661.13(b)

[5] 49 C.F.R. 661.12.

[6] 49 C.F.R. 661.15.

[7] Letter dated April 14, 2009, from FTA Acting Chief Counsel Scott A. Biehl to Frank J. Wilson, General Manager and CEO of the Metropolitan Transit Authority of Harris County, Texas.

[8] 49 CFR § 661.15(d).