Mr. Martin B. Schnabel
Vice President and General Counsel
MTA New York City Transit
130 Livington Street
Brooklyn, New York 11201
Dear Mr. Schnabel:
This responds to your July 17, 2003, letter requesting Federal Transit Administration (FTA) concurrence on New York City Transit’s (NYCT) designation of a Service Management and Customer Information System (SMCIS) as microcomputer equipment eligible for the Buy America waiver for microcomputer equipment. The SMCIS is a network linking bus and bus depots with the command center for centralized monitoring of the fleet and information dissemination. You submitted letters from Cubic Transportation Systems and Siemens Transportation Systems that contest your designation of the SMCIS as a microcomputer. For the reasons discussed below, I find that the entire SMCIS should not be designated as microcomputer equipment eligible for the waiver.
The Buy America requirements may be waived if the item or items being procured are not produced in the U.S. in sufficient and reasonably available quantities and of a satisfactory quality. There is a permanent waiver for microcomputer equipment and software. 49 C.F.R. 661.7, App. A(d). FTA has defined a microcomputer as
A computer system whose processing unit is a microprocessor. A basic microcomputer includes a microprocessor, storage, and input/output facility, which may or may not be on one chip. The same source defines computer system as: A functional unit consisting of one or more computers and associated software, that uses common storage for all or part of a program and also for all or part of the data necessary for the execution of the program; executes user-written or user-designated programs performs user-designated data manipulation, including arithmetic operations and logic operations; and that can execute programs that modify themselves during their executions. A computer system may be a stand-alone unit or may consist of several interconnected units. Synonymous with ADP system, computing system.
50 Fed. Reg. 18760 (May 2, 1985). When the waiver is properly applied, a manufacturer may use foreign microcomputer equipment without violating the Buy America requirements. For example, FTA determined that a Mobile Data Communication System was covered by the microcomputer waiver, and found that “[a]ll this equipment and associated software is linked together to a computer system at your headquarters with additional interfaces to other CDTA computer systems.” Capital District Transportation Authority letter, August 30, 2001.
Following that decision, FTA withdrew an outstanding advanced notice of proposed rulemaking on the microcomputer waiver, and stated in the Federal Register:
It should be noted that FTA does not apply the waiver to an entire product because it contains a microcomputer. The parameters of the waiver as it currently exists are that if the end product is itself a microcomputer or software as defined above, Buy America is waived. If, however, the end product contains a microcomputer (e.g., a farecard system), that microcomputer is exempt from the requirements of Buy America, but the rest of the end product must be in compliance.
68 Fed. Reg. 9810 (Feb. 28, 2003). FTA applied that reasoning in another decision, finding that some components of a fare collection system were subject to the waiver, but others were not. Specifically, we found that “[t]he bill and coin validator, and the printer, are not, themselves, microcomputers, although they may each contain embedded microprocessors.” CoinCard letter, May 23, 2003.
As discussed in the original definition, a microcomputer is a computer based on a microprocessor. A microprocessor is a computer whose central processing unit is contained on one or a small number of integrated circuits. Microcomputers may be stand-alone units or they may be embedded in other equipment. They must have, or be, controllers or communication processors and be capable of processing, storage, programming, and input/output facilities. Microcomputers may be grouped within larger systems or equipment, consisting of several interconnected units each functioning as either stand-alone units, embedded into the equipment or system, or a mix of both. Related hardware and equipment that may be controlled by a microprocessor is not covered by the microcomputer waiver. Accordingly, while there is microcomputer equipment being purchased here, all of the elements of this procurement are not subject to the waiver. Our review of the equipment indicates that the items fall into four groups, each of which is addressed below.
The first group consists of software, firmware, servers, communications processor, storage equipment and networks, on-board vehicle microcomputers, wireless local area network processor cards, laptop computers, and desktop PCs. These items meet the requirements for the microprocessor exemption because they are stand-alone computer units or several interconnected units.
The second group is made up of display signs, kiosks, workstations, consoles, passenger counters, and vehicle control heads. Each of these items contains microprocessor controllers, communications boards, and serial ports, which are subject to the waiver because they are controllers or communication processors and are capable of processing, storage, programming, and input/output functions. This equipment also consists of hardware such as cabinets, mounting brackets, power supplies, cabling, and connectors that would not qualify for the microprocessor waiver. Although these products contain microprocessors or microcomputers, as stated in the Federal Register, the waiver does not apply to an entire product because it contains a microcomputer element. The microcomputer elements of these products are eligible for the waiver, but the rest of the product is not.
The third group – receivers, antennas, odometers, gyroscopes, wiring harnesses, interface wiring, delay timers, alarm/status sensors, power supplies, and conditioning equipment and connectors – are unlikely to contain a microprocessor controller, a communications board, or a serial port. Therefore, they would not qualify for the microprocessor waiver.
The fourth group consists of spare parts and testing equipment. The spares would only qualify for the microcomputer waiver if that which they are replacing met the microcomputer exemption. As for test equipment, there was not sufficient information to evaluate these items, but if the test equipment is a microcomputer/microprocessor such as a laptop computer, it is eligible for the waiver. If the test equipment contains a microprocessor as well as other equipment, that microcomputer element is exempt from the requirements of Buy America, but the rest of the test equipment must be in compliance.
Accordingly, NYCT should alert the potential offerors that the entire SMCIS is not a microcomputer. Offerors may use foreign microcomputer equipment without violating the Buy America requirements, but the rest of the components of the system must be domestic. Thank you for bringing these issues to our attention. Please let me know if I can be of further help.
Very truly yours,
Gregory B. McBride
Deputy Chief Counsel
cc: Letitia Thompson
Clarification of the applicability of the microcomputer waiver (49 CFR 661.7, App. d) to a Service Management and Customer Information System procurement. The entire system should not be designated as microcomputer equipment eligible for the waiver.
September 23, 2003