April 07, 2004
Mr. W. Alvin Jackson
Government & Alternative Fuel Sales
DaimlerChrysler Motors Company, LLC
800 Chrysler Drive
Auburn Hills, Michigan 48326-2757
Dear Mr. Jackson:
This responds to your letters of August 27, 2003, and February 23, 2004, in which DaimlerChrysler Motors Company (DCMC) requests a non-availability and public interest waiver of the Buy America requirements for the chassis and drive train used in the Dodge and Freightliner “Sprinter” cargo vans for a period of four years.
FTA's requirements concerning domestic preference for federally funded transit projects are set forth in 49 U.S.C. §5323(j). Section 5323(j)(2)(C) addresses the general requirements for the procurement of rolling stock. This section provides that all rolling stock procured with FTA funds must have a domestic content of at least 60 percent and must undergo final assembly in the U.S.
You request a waiver under 49 U.S.C. 5223(j)(2), which allows waivers for non-availability and public interest. 49 U.S.C. 5323(j)(2)(A) and (B). The regulation also notes that "[i]n determining whether the conditions exist to grant this public interest waiver, the [FTA] will consider all appropriate factors on a case-by-case basis." The implementing regulation also provides that public interest and non-availability waivers may be granted for a component of rolling stock, and in such cases, the component would be treated as domestic when calculating the overall component content of the vehicle.
49 C.F.R. 661.7(f).
DCMC Arguments in Support of Waiver Request
DCMC asserts that the Sprinter is an eight to ten passenger, state-of-the-art, diesel van with a lower propensity for rollover than a 15 passenger van. DCMC also argues that the Sprinter is well suited for wheelchair accessibility. Another superior feature of the Sprinter is the roof height inside the vehicle that allows passengers to stand up. With its turning circle, greater payload capacity, and full height rear doors that swing open 270 degrees, the Sprinter is better able to accommodate handicapped passengers.
DCMC argues that it is unable to meet the domestic content requirements of Buy America because most of its components are manufactured in Germany and the chassis and drive trains are not available from any domestic source. DCMC explains that it is not economically feasible to build a manufacturing facility in the U.S. at this time because of the limited sales of the Sprinter in the U.S. The majority of sales of this vehicle are overseas, so that is where DCMC manufactures the components.
According to the information submitted, a Ford or Chevrolet/GMC component could not be substituted in the Sprinter because Sprinter uses a five-cylinder diesel engine and the six and eight cylinder engines used in Ford and Chevrolet/GMC vans would not fit into a Sprinter engine compartment. Also, the Sprinter uses diesel technology while Ford and Chevrolet/GMC use gas engines, which would require extensive testing if used in the Sprinter. The advantages of the five-cylinder diesel engine, it is argued, are better fuel efficiency, longer engine life, extended maintenance intervals, and greater reliability than the other domestic vans.
Summary of Comments
FTA posted a request for comments on this matter on our website and received five comments: three in favor (though one of those was in favor of a shorter waiver period) and two against. We also got four comments in support of the request directly from DCMC as part of its application.
The Automotive Parts Manufacturers Association of Canada supported the request generally, but suggested that a two year-period would be more reasonable. Rock Island County Metropolitan Mass Transit District, Illinois, supported the request, noting that it is a good way to support new technology and allow DCMC time to improve the product and bring it to a U.S. manufacturing facility. The Iowa Department of Transportation supported the waiver because, it is argued, the Sprinter is less inclined to roll over than other vans produced in the U.S. The comment also explained that the Sprinter is easy to modify to satisfy the Americans with Disabilities Act requirements.
The comments submitted with the application included one from a transit authority, two private companies, and one state fleet group. One comment was from Montgomery Area Transit System, generally supporting the request. The second was from Midway Specialty Vehicles, a vehicle upfitter, who argued that the unique features of the Sprinter make it a desirable product. The National Conference of State Fleet Administrators (NCSFA) of Arizona expressed its support for a waiver, arguing that the full range of vehicles be available to fleet managers and administrators who are struggling to find a suitable vehicle to replace the 15 passenger van, which NCSFA says, has handling and liability problems. Stroops Freightliner commented on the superior aspects of the Sprinter van, including the operational costs and employee productivity.
The two comments against the waiver were from Allison Transmission and El Dorado National. The comment from Allison Transmission argued that DCMC may have to alter the vehicle design in order to accommodate a U.S. built engine and transmission, but that they could, and should, do so. They also noted that waivers were given to North American Bus Industries and New Flyer of America because there was no U.S. manufacturer of the articulated joint, not because there was one but it didn’t fit perfectly. El Dorado argued that DCMC has chosen not to produce these components in the U.S., and should not receive a waiver. El Dorado stated that 11 manufacturers produce variations of the bus/van body.
Our analysis shows that the Sprinter may have features that grantees find desirable. However, the waiver, as requested, would allow DCMC to certify compliance when bidding on FTA-funded contracts and thus influence competition in these procurements for four years. The individual grantee need for this vehicle should be addressed by each grantee. If a grantee determines that its needs are only satisfied by the Sprinter and a sole source can be justified, the grantee may request a non-availability waiver of the Buy America requirements under 49 C.F.R. 661.7(c)(2). If the grantee determines that it needs a brand name or equal, it should specify the salient physical and functional characteristics in its solicitation and if the facts alleged here are true, an individual non-availability waiver could be requested, by the grantee, under 49 C.F.R. 661.7(c)(1).
If you have any questions, please contact Meghan Ludtke at (202) 366-1936.
Very truly yours,
Gregory B. McBride
Deputy Chief Counsel