Mr. Edward Wiseman
Spacecraft Components Corporation
3040 Clayton Street
North Las Vegas, Nevada 89032
Dear Mr. Wiseman:
This responds to your request for clarification of the Buy America requirements as they apply to procurements funded by the Federal Transit Administration (FTA). According to the information you have submitted, Spacecraft Components Corporation (Spacecraft) manufactures electrical connectors, which are subcomponents used in railcars.
Section 5323(j)(2)(C) of the Federal transit laws (49 U.S.C. 5301, et seq.) sets forth the general requirements for the procurement of rolling stock. This section provides that when rolling stock is procured with FTA funds, the cost of the components and subcomponents produced in the United States must be at least 60 percent of the cost of the components of the rolling stock; and the vehicle must undergo final assembly in the U.S.
The implementing regulations for rolling stock can be found at 49 C.F.R. 661.11. A component is considered domestic and, therefore, may be counted towards the 60 percent domestic content if “more that 60 percent of the subcomponents of that component, by cost, [are] of domestic origin; and the manufacture of the component [takes] place in the United States.” 49 C.F.R. 661.11(g). A subcomponent is an item one step removed from a component in the manufacturing process and incorporated directly into the component, and is of domestic origin if it is manufactured in the U.S. 49 C.F.R. 661.11(f) and (h).
Manufacturing means “the application of processes to alter the form or function of materials or of elements of the product in a manner adding value and transforming those materials or elements so that they represent a new end product functionally different from that which would result from mere assembly of the elements or materials." 49 C.F.R. 661.3. The processes of alteration may include forming, extruding, material removal, welding, soldering, etching, plating, material deposition, pressing, permanent adhesive joining, shot blasting, brushing, grinding, lapping, finishing, vacuum impregnating and, in electrical and electronic pneumatic, or mechanical products, the collection, interconnection, and testing of various elements. 56 Fed. Reg. 926, 929 (Jan. 9, 1991).
When a railcar manufacturer incorporates an electrical connector into a component in its vehicle, that subcomponent may be counted towards the 60 percent subcomponent requirement only if it is manufactured in the U.S. The railcar manufacturer may use a foreign-made subcomponent, but it may not count that product towards the required
60 percent domestic content of a component.
I hope this explanation is helpful. More information may also be found on our website. If I can offer further assistance or information, please do not hesitate to contact me.