Alstom Transportation Inc.

Mr. Peter Stahlmann
Corporate Counsel
Contract Risk Manager
Alstom Transportation Inc.
353 Lexington Avenue
New York, New York 10016

Dear Mr. Stahlmann:

This letter responds to your correspondence of August 28, 2002, in which you request that FTA determine Alstom’s compliance with the Buy America requirements as they apply to final assembly of overhauled rail vehicles to be provided to the Maryland Mass Transit Administration (MMTA).

Facts Presented

You explain that MMTA assigned a contract to Alstom to conduct mid-life overhauls of 100 heavy rail vehicles. Under Alstom’s proposed plan, Alstom will perform overhaul of truck assemblies at its facility in Montreal, Canada. The overhauled trucks will then be delivered to Alstom’s plant in Hornell, New York where the trucks will be reconnected to the refurbished car bodies.

Applicable Law and Policy

Under FTA’s Buy America requirements for rolling stock, 49 U.S.C. 5323(j)(2)(C) and 49 C.F.R. 661.11, 60 percent of all components, by cost, must be of U.S. origin, and final assembly must take place in the United States. The minimum requirements for final assembly are described in FTA’s Dear Colleague Letter of March 18, 1997. See also, §3035, Transportation Equity Act for the 21st Century. It is FTA’s policy to treat major rebuilds or overhauls of rail cars as rolling stock procurements.

Alstom proposes to overhaul truck assemblies in Canada. This work consists, in part, in removal and reinstallation of traction motors; wheel, axle and gear units; tread brake units; and cab signal antennas (communications equipment). Installation and interconnection of these major components are specifically included in the Dear Colleague Letter as activities that are part of final assembly; accordingly, Alstom’s plan to overhaul truck assemblies in Canada does not meet the requirements of Buy America.

This determination is consistent with our recent decision in a letter to Metropolitan Transit Authority of Harris County (Houston Metro) dated August 15, 2002. In that case, FTA informed Houston Metro that the proposal by Siemens Transportations Systems (Siemens) to manufacture truck assemblies overseas did not meet the Buy America requirements for final assembly. Again, it should be emphasized, FTA makes no distinction between the manufacture of new rail cars and the rebuild or overhaul of existing vehicles in requiring that final assembly take place in the U.S.

If you have any questions, please contact Joe Pixley at (202) 366-1936.

Very truly yours,

Gregory B. McBride
Deputy Chief Counsel

Determination of compliance with the Buy America requirements as they apply to the final assembly of overhauled rail vehicles, specifically, truck assemblies.

October 10, 2002