Regional Transportation Commission of Southern Nevada

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December 08, 2008


Jacob Snow
General Manager
Regional Transportation Commission of Southern Nevada
600 South Grand Central Parkway
Suite 350
Las Vegas, Nevada 89106-4512

Re: Request for Buy America Waiver

Dear Mr. Snow:

I write in response to your letter dated June 19, 2008, in which you ask the Federal Transit Administration (FTA) to waive its Buy America requirements for certain StreetCar vehicles to be manufactured by the Wright Group (Wright) in the United Kingdom. The basis for your request is that StreetCar vehicles like those specified in the Regional Transportation Commission of Southern Nevada’s (RTC) procurement documents are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality. After careful consideration, I have decided to waive FTA’s Buy America requirements.

Background

The source of this waiver request is a 2005-2006 “Rapid Transit Vehicle” procurement conducted by Nevada RTC to implement its Downtown Connector Project. The Request for Proposals (RFP) issued by the RTC in November 2005 was for fifty (50) Rapid Transit Vehicles, with two options, each for an additional fifty (50) vehicles. The RTC recounts the key points of the proposal and evaluation process as follows:

  1. Six (6) firms submitted proposals in response to the RFP: North American Bus Industries (NABI); Alexander Dennis, Ltd (ADL); New Flyer; Advanced Public Transport Systems, BV (APTS); Irisbus/Iveco; and Wright Group.
  2. NABI and ADL were found to not be “technically acceptable” because the vehicles proposed did not meet the design criteria in the RFP.
  3. New Flyer was found to be non-responsive because it failed to price the option vehicle portion of the order.
  4. No challenge or protest was filed regarding either the technical acceptability finding or the non-responsiveness finding.
  5. APTS, Irisbus, and Wright were found technically acceptable, and were evaluated and ranked under the criteria set forth in the RFP.
  6. A competitive range was established (in accordance with the RFP) consisting of the two highest ranked proposals, Irisbus and Wright. Those two firms were requested to submit Best and Final Offers (BAFOs).
  7. Following evaluation of the BAFOs, the RTC decided to divide the vehicle order between Irisbus and Wright (as permitted by the RFP). However, Irisbus subsequently elected not to proceed, and the RTC thereafter entered into a contract with Wright for the entire base order of fifty (50) vehicles, plus an option to purchase 50 additional vehicles.

Because the RTC structured the RFP as a locally-funded procurement, it “did not request, and did not receive the Buy America certification forms that are normally executed by proposers to indicate their compliance or non-compliance with the Buy America requirements for rolling stock.” A subsequent drop in sales tax revenues, the RTC’s local revenue source, has required RTC to utilize Federal funds and to seek a Buy America waiver for this vehicle procurement. This request comes after the RTC awarded a contract to Wright but before the award of an FTA grant to the RTC. The RTC has asked for a waiver on the dual bases of public interest and non-availability.

In its request, the RTC notes that “no responsive and responsible proposal was received offering a product produced in the United States.” Moreover, “although Wright is not providing a Buy America-compliant vehicle, it has developed and intends to implement a business plan to achieve compliance with the Buy America requirements.” The RTC also identifies several important elements of Wright’s business plan for achieving compliance with the Buy America requirements in the future, and asserts that while Wright is taking meaningful steps on the path toward compliance, “from a business point of view, achieving compliance with Buy America is a process that simply cannot be achieved in a single initial sale to a domestic purchaser. Relationships and business arrangements with suppliers must be developed to be able to meet the domestic content requirement, and more importantly, the capacity and means must be established (normally through a relationship with a third party) to be able to meet the requirements of final assembly in the U.S.”

Given the unique circumstances by which a prospective FTA grantee issued a request for proposals without the inclusion of the traditional Buy America clause, intending to fully underwrite the contract using exclusively local funding, FTA proceeded in an abundance of caution by publishing a notice in the Federal Register seeking comment from all interested parties in order to understand completely the facts surrounding the RTC’s request. Three parties commented on RTC’s request—ISE Corporation (ISE), New Flyer and the RTC.

ISE wrote to inform FTA that it manufactures in Poway, California, a fully integrated hybrid-electric drive system that will be used in the Wright StreetCar. According to ISE, its “hybrid-electric drive system is uniquely configured to propel the StreetCar by its center axle, a capability not currently supported by other buses sold in the U.S. In addition, transit buses utilizing ISE hybrid-electric drive systems are more fuel efficient and environmentally friendly than conventional transit buses.”

New Flyer submitted two letters. Initially, by letter dated November 12, 2008, New Flyer urged FTA to deny RTC’s request. By subsequent letter dated November 21, 2008, New Flyer withdrew its objection to the eligibility of a non-availability waiver for RTC’s base order of fifty vehicles. New Flyer urged FTA “to consider the remainder of [RTC’s] waiver request (covering two 50-vehicle options) in light of the availability of alternatives for foreign manufacturers who have not invested in U.S. operations to introduce their designs into the U.S. market consistent with Buy America requirements.”

On November 20, 2008, RTC responded to New Flyer’s letter dated November 12, 2008, arguing, among other things, that New Flyer did not provide factual support for many of its assertions, including its claims that additional firms would have competed for the vehicle procurement if they had known that the Buy America requirements would apply and that New Flyer was capable of providing a Buy America compliant vehicle meeting the RTC’s technical requirements.

Legal Standard

With certain exceptions, FTA’s “Buy America” requirements prevent FTA from obligating an amount that may be appropriated to carry out its program for a project unless “the steel, iron, and manufactured goods used in the project are produced in the United States.” 49 U.S.C. 5323(j)(1). One such exception is if “the steel, iron, and goods produced in the United States are not produced in a sufficient and reasonably available amount or are not of a satisfactory quality.” 49 U.S.C. 5323(j)(2)(B). Another exception is if applying the Buy America requirements “would be inconsistent with the public interest.” 49 U.S.C. 5323(j)(2)(A).

“In determining whether the conditions exist to grant a post-award non-availability waiver, [FTA] will consider all appropriate factors on a case-by-case basis.” 49 CFR 661.7(c)(3). Such factors will include “the status of other bidders or offerors who are Buy America compliant and can furnish domestic material or products on an FTA-funded project,” 72 Fed. Reg. 53,691 (Sept. 20, 2007), and “may include project schedule and budget.” 71 Fed. Reg. 69, 415 (Nov. 30, 2006). In addition, FTA will look to “existing precedents in public contracting law and practice.” 71 Fed. Reg. 69,416 (Nov, 30, 2006).

Decision

In arguing for a post-award waiver, the RTC asserts that “there is no statutory restriction on FTA’s authority and discretion to grant a Buy America waiver on a post-award basis, and the granting of a post-award waiver is a reasonable interpretation of the applicable statute and the implementing regulations.” Specifically, the RTC states, “the statutory Buy America language in 49 U.S.C. 5323 is a condition on the granting of Federal funds. Thus, as long as the Buy America requirements are met before grant award, the statute is satisfied.”

While FTA appreciates RTC’s arguments for a post-award Buy America waiver, FTA cannot consider a public interest post-award waiver under these circumstances. Only recently has FTA been given the statutory authority to issue post-award waivers as a result of section 3023(i)(5)(C) of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) (Pub. Law 109-59). Congress, however, precluded post-award waivers on the basis of public interest, specifying that the only basis for post-award waivers was for non-availability. Consequently, the only post-award waivers granted to date have been on the basis of non-availability.

RTC has demonstrated the basis for a limited post-award non-availability waiver by demonstrating that “no responsive and responsible proposal was received offering a product produced in the United States.” FTA is satisfied that RTC acted in good faith when it initially sought to fund this procurement with local sales tax revenues. It is only due to an unexpected drop in sales tax revenues that RTC has needed to use Federal funds to fulfill its contractual obligations to Wright. Moreover, FTA appreciates the fact that, despite not being able to provide a Buy America compliant vehicle in this instance, Wright has developed and intends to implement a business plan to achieve compliance with the Buy America requirements.

Based on the information above, I hereby grant RTC a post-award non-availability waiver for fifty (50) Rapid Transit Vehicles. Because RTC is not obligated to exercise the two options, each for an additional fifty (50) vehicles, this waiver will apply to the base order of fifty (50) vehicles only. RTC must submit separate waiver requests if it wishes to exercise its options using Federal funds.

Feel free to contact Jayme L. Blakesley at (202) 366-0304 or jayme.blakesley@dot.gov with any questions.

Sincerely,


Severn E.S. Miller
Chief Counsel