Dear Ms. O’Keefe:
I write in response to your letter dated July 21, 2010, asking the Federal Transit Administration (“FTA”) to determine whether the final assembly approach outlined by Kawasaki Rail Car, Inc. (“Kawasaki”) for the Washington Metropolitan Area Transit Authority (“WMATA”) 7000 Series Railcars complies with the minimum requirements for final assembly contained at Appendix D to 49 CFR 661.11. After several in-person meetings and careful review of the technical information provided by Kawasaki, I am pleased to inform you that Kawasaki’s plan complies with FTA’s Buy America rules.
This issue first came to my attention when WMATA requested a public interest waiver of the Buy America requirements. By letter dated June 10, 2010, WMATA explained its plan to enter into a contract with Kawasaki for the purchase of up to 748 new rail cars to be known as the 7000 Series Railcars, the fact that Kawasaki asked WMATA to seek a public interest waiver of the Buy America requirements from FTA. If granted, a public interest waiver would have permitted Kawasaki to assemble eight pilot railcars in Japan.
On June 17, 2010, I wrote to request more information from WMATA Associate General Counsel Donald A. Laffert. Following that letter, you and I spoke over the phone. I explained that this Administration’s policy is to take a very strict view of the Buy America requirements, that FTA would only grant public interest waivers under the most extreme circumstances, and described FTA’s decisions to deny similar requests for public interest waivers submitted by Houston METRO and the Massachusetts Bay Transportation Authority in 2008 and 2009, respectively.
By letter dated July 1, 2010, WMATA formally withdrew its request for a public interest waiver. Instead of a public interest waiver, WMATA indicated to FTA that Kawasaki had submitted a Revised Final Proposal certifying compliance with FTA’s Buy America requirements, along with a plan to assemble the pilot cars in the United States.
FTA hosted an in-person meeting with WMATA staff on July 2, 2010, to discuss Kawasaki’s revised proposal and plan. Because FTA expressed serious reservations with many aspects of the plan, WMATA and Kawasaki developed a new plan for complying with the minimum requirements for final assembly.
WMATA presented the new plan at a meeting hosted by FTA on July 15, 2010. Following this meeting, WMATA asked Kawasaki to submit a formal, written description of its clarified approach for complying with Buy America in a form that could be transmitted to FTA. WMATA attached a copy of Kawasaki’s clarified approach to the July 21, 2010, communication that is the subject of this letter.
For railcars and all “rolling stock,” FTA’s Buy America requirements are twofold:
FTA outlined its minimum requirements for final assembly at Appendix D to 49 CFR 661.11. “In the case of the manufacture of a new rail car, final assembly would typically include, as a minimum, the following operations:
If a recipient of FTA funds or a manufacturer has questions about the requirements for final assembly, they may ask FTA to make a determination of compliance.
WMATA and Kawasaki have asked FTA to determine whether Kawasaki’s clarified approach for demonstrating compliance with the Buy America requirements satisfies the minimum requirements for final assembly described at Appendix D to 49 CFR 661.11. In particular, because Kawasaki intends to perform certain design and engineering activities in Japan, WMATA and Kawasaki have sought FTA guidance on whether Kawasaki’s approach will satisfy the requirement that in-plant testing of the stationary product take place in the United States. The following is a summary of the approach outlined by Kawasaki and enclosed with WMATA’s letter dated July 21, 2010:
It is my understanding and expectation that WMATA and Kawasaki will incorporate the clarified approach into Kawasaki’s Technical Proposal to ensure that the 7000 Series Railcars are, in fact, produced in accordance with FTA’s Buy America requirements of 23 U.S.C. § 5323(J), as implemented at 49 CFR Part 661.
I also note from the e-mail you sent me on July 23, 2010, that as a result of the conversations between FTA and WMATA, Kawasaki has modified its plans for this procurement and now estimates the domestic content of the components for the 7000 Series Railcars at 61% for the pilot cars and 69% for the production cars, and that Kawasaki will perform more testing activities in the United States than what is minimally required. The additional tests to be performed in the United States include a spin simulation test, cab-mounted radio equipment qualifications test, water tightness test, car weight test, train line test, height control test, static system test, dynamic system test, and a final function test.
Based on the foregoing, I hereby determine that the approach outlined by Kawasaki will comply with the Buy America requirements of 49 U.S.C. § 5323(j), as implemented at 49 CFR Part 661.
Feel free to contact Jayme Blakesley at (202) 366-0304 or email@example.com with any further questions.
Dorval R. Carter, Jr.