Telephonics

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Mr. Joseph J. Battaglia
President
Telephonics
815 Broad Hollow Road
Farmingdale, New York 11735

Dear Mr. Battaglia:

Thank you for your June 4, 2003, letter following up on our May 30 meeting here in Washington, D.C. I too thought the discussion made a positive contribution to our mutual understanding of the issues you have raised about the New York City Transit (NYCT) Public Address/Customer Information Screen (PA/CIS) procurement. Let me address those issues in turn.

First, you request that the Federal Transit Administration (FTA) reverse its position with respect to application of the Buy America requirements in the Federal transit laws (49 U.S.C. § 5323(j)(2)(C)) and its implementing regulations (49 CFR Part 661). Those regulations set forth a manufactured product standard and a rolling stock standard. You suggest that the manufactured product standard is appropriate for the acquisition of communication equipment.

Consistent with the statute, in which rolling stock includes communication equipment, and the regulation (section 661.11(u)), which defines communication equipment to include public address amplifiers and speakers, such as those being procured here, FTA has consistently upheld the application of the rolling stock standard to communication equipment. For example, in an April 9, 1991, letter concerning Matra Transit, Inc., FTA defined communication equipment as including "all forms of communication: telecommunications, CCTA, radio, telephone, and dynamic graphics . . . ."

To treat this procurement as subject to the manufactured product standard, as you suggest, would be inconsistent with our previous findings, with the treatment of such procurements throughout the transit industry, and, indeed, inconsistent with NYCTís conduct of this program. This procurement is the second phase of a multi-phase set of procurements on the NYCT system. NYCT applied the rolling stock standard to the first phase of this procurement program.

You also request that FTA investigate this procurement under the authority of section 661.15. In this second-phase procurement, NYCTís request for proposals failed, apparently through clerical error, to clearly state which Buy America standard applied. Discovery of that error apparently occurred late in the process, so the email notice to prospective offerors correcting the error, just two days before bid opening, came late. NYCT could have extended the deadline for submission of offers; however, it may well have concluded that since the first phase was governed by the rolling stock standard, and since the application of that standard to communication equipment is well established in the industry, an extension would have served no purpose. Moreover, NYCT tells us that it received no inquiries from prospective offerors in response to its emailed notice, nor did any offeror request an extension of time. Both Siemens and Telephonics certified compliance with the rolling stock standard.

In addition, as you know, best and final offers were not due for another nine months, during which an offeror could have re-sourced its contracts if necessary. Any such re-sourcing would, in this case, require a less demanding effort since the rolling stock standard is the more relaxed of the two, meaning that more, not fewer, sources would be available. NYCT tells us that it asked MTA auditors to examine the offers in this procurement. That audit revealed that both parties proposed more than 60 percent U.S. content and are, therefore, in compliance with the Buy America certificates they filed with their final offers. Based on an analysis of the documentation received from both parties, NYCT believes that each offer included more than 95 percent U.S. content; however, neither offered 100 percent domestic content. As a result, had the manufactured product standard applied in this case, both offerors would have had to certify noncompliance with the Buy America requirements.

It appears that no offeror was disadvantaged by the error in the NYCT request for proposals, that all offerors were treated the same, and that all were afforded the same opportunities to adjust their offers during the procurement process; accordingly, FTA will not initiate an investigation.

Please let me know if I can be of further help.


Very truly yours,


(Signed)
Gregory B. McBride
Deputy Chief Counsel

cc: Stanley Grill, New York City Transit
Letitia Thompson, Region 2 Administrator

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