Frequently Asked Questions about the Pre-Award and Post-Delivery Review

This section presents some of the most frequently asked questions about pre-award and post-delivery review. This guidance is for information only. The responses do not constitute a determination of compliance with the Department of Transportation (DOT) standards and rules. Appendix E contains a list of FTA regional offices to contact if further clarification is needed.

General

1. When must a recipient complete the "Certification of Compliance" as stipulated in Section 663.7 of the Rule?

The Section 663.7 Certification of Compliance must be submitted as part of the grant application for any revenue service rolling stock grant. (See Exhibit 5-1 for a sample certification.) Once a recipient has submitted their first certification, the certification may be retained in the recipient’s files and referenced in the "Statement of Continuing Validity" for any future rolling stock grants.

PRE-AWARD AND POST-DELIVERY AUDIT
CERTIFICATION OF COMPLIANCE

As required by 49 CFR Part 663, Subpart A,________________________________
________________(the recipient) certifies that it will conduct, or cause to be conducted, pre-award and post-delivery audits as prescribed in the "Pre-Award and Post-Delivery Audits of Rolling Stock Purchases; Final Rule."

Date: _________________

Signature: ________________________

Title: ______________________________

Exhibit 5-1. Sample Certification of Compliance

2. Who must sign the Certification of Compliance?

The certification must be signed by the recipient even if the funds will be passed on to another party. Further, if the funds are passed on, the initial recipient has the ultimate responsibility of ensuring that the final recipient of the funds carries out its duties and responsibilities as required by the Rule.

3. Who must conduct the pre-award and post-delivery reviews?

The recipient, or an analyst appointed by the recipient must conduct the review. The analyst may not be an employee of the manufacturer or its agent. In many instances a recipient may retain the services of a consultant to conduct the review.

Buy America Certification

1. Must a Buy America certification be conducted for every procurement?

Yes. A manufacturer’s past compliance with the Buy America Rule does not mean that the manufacturer's products will always be compliant. Changes in design, as well as technical developments, may make updated products noncompliant. If a pre-award and post-delivery Buy America review has been conducted for a given vehicle, then the same information may be used to demonstrate compliance at a later date if there has been no component or assembly changes to the vehicle since the last certification.

2. Is the 60 percent domestic content calculated as a percentage of the total vehicle price?

No. The 60 percent domestic content is calculated as a percentage of the total cost of all components, before final assembly. The cost of an individual component is the price a vehicle manufacturer pays a supplier for that component, plus freight-in costs and (if foreign) any applicable duties.

3. How is the origin of a component determined?

A component is considered to be of domestic origin, if at least 60 percent of its subcomponents, by cost, are of domestic origin and component manufacturing takes place in the United States. If the component meets these requirements, the entire cost of the component may be used in the Buy America calculation of the vehicle.

The cost of an individual subcomponent is the price a component manufacturer pays a supplier for that subcomponent, plus freight-in costs and (if foreign) any applicable duties.

If the component is manufactured at the final assembly location, then the manufacturing and final assembly activities must be separate and distinct activities.

4. How is the origin of a subcomponent determined?

Subcomponents manufactured in the United States are considered to be domestic.

Subcomponents manufactured in the United States and exported for inclusion in a component manufactured outside the United States are considered to be of domestic origin if they received a tariff exemption for importation back into the United States. If this is the case, then the cost of the subcomponent may be included in the Buy America calculation. The cost of the subcomponent at the time of export is the cost that should be used in the calculation. If the subcomponent has not received a tariff exemption, then it may not be included in the Buy America calculation.

Raw materials exported for use in a component manufactured outside the United States may not be used in the Buy America calculation.

5. Do the subcomponents have to be broken down into sub-subcomponents?

No. The rule states that sub-subcomponents are not required to be identified in the Buy America calculations.

6. If a vehicle uses a component from a foreign source and we wish to order it later as a spare part, do we need to conduct a domestic content certification for that spare part?

No. The Pre-Award and Post-Delivery Rule applies to the purchase of buses, vans, cars, railcars, locomotives, trolley cars and buses, ferry boats, and vehicles used on guideways and incline planes. The Rule does not apply to the purchase of spare parts. Spare parts must, however, comply with the Buy America Rule.

7. What cost is used in the Buy America calculation for domestic components?

The entire cost of domestic components may be used in the content calculation. A component is considered domestic if it contains at least 60 percent domestic subcomponents, by cost, and is manufactured in the United States. The cost of a domestic component includes direct labor costs, direct material costs, sales costs, general and administrative costs, and overhead costs associated with manufacturing that component, plus freight-in costs. The total cost should be the actual cost of the component, not the bid price.

8. Are only components of domestic origin allowed to be used in the Buy America calculations?

No. Components manufactured in the United States with less than 60 percent domestic subcomponents, by cost, and foreign-manufactured components with domestic subcomponents, that received a tariff exemption for importation back into the United States, may be used in the Buy America content calculation.

9. If a component contains less than 60 percent domestic subcomponents, how would it be used in the calculation?

Components manufactured in the United States with less than 60 percent domestic subcomponents, by cost, may also be used in the domestic content calculation. However, the component’s entire cost may not be used. The cost for such a component includes direct labor costs, domestic direct material costs (domestic subcomponent costs), sales costs, general and administrative costs, and overhead costs associated with manufacturing that component, plus freight-in costs.

10. Can components from foreign sources with domestic subcomponents be used in the calculation?

Yes. If the vehicle contains foreign-manufactured components with domestic subcomponents, which received a tariff exemption for importation back into the United States, then the cost of those domestic subcomponents may be used in the domestic content calculation. The cost of manufacturing the component may not be used, because it has been manufactured outside the United States.

11. What if the manufacturer is concerned about releasing proprietary information?

If the manufacturer is concerned about releasing proprietary information, the recipient may contract with an external consultant to conduct the manufacturer’s Buy America certification review. After the consultant has reviewed the component and subcomponent documentation, the consultant will inform the recipient whether or not the Buy America requirements have been fulfilled. Once the recipient, or consultant, has reviewed the Buy America information, the manufacturer has fulfilled the requirements of the Buy America certification assuming that compliance has been established. The manufacturer is not required to provide the recipient with hard copies of the Buy America calculations. A manufacturer may require the external consultant to sign a proprietary information disclosure statement.

Purchaser’s Requirements Certification

1. Can two or more recipients purchasing vehicles from the same contractor combine the orders and use one resident inspector?

Yes. The contract agreement between the inspector and the recipients should be carefully worded to cover the concerns of all parties.

2. What is the responsibility of the resident inspector?

A resident inspector is required to visit the manufacturer’s final assembly facility during the manufacturing period. The inspector must prepare a report (1) providing accurate records of all vehicle construction activities and (2) summarizing how the construction and operation of the vehicles meet (or do not meet) the terms of the contract.

The intent of the regulation is to help recipients ensure that the vehicles will comply with their contract specifications. It is not meant to require that a resident inspector remain "full-time" at the "manufacturer’s site throughout the period of manufacture." Although this may be recommended for some vehicle procurement, the resident inspector requirements may be fulfilled through the use of periodic visits.

For example, a recipient may wish to send the resident inspector to the manufacturer’s site full-time if the vehicles have been recently developed or significantly modified in order to meet the contract specifications. Or, the recipient may wish to send the inspector to the manufacturer’s site for several short visits if the manufacturing period is expected to be long. On the other hand, the recipient may wish that the resident inspector visit the manufacturer’s site less often if the vehicle lead-time is short or if the recipient has previously purchased identical vehicles from the same manufacturer.

While the in-plant inspector is required in all cases, the recipient must be certain that the resulting inspector’s report is equally comprehensive, regardless of the choice of inspection services. The number of visits and the length of each visit should be based on the recipient’s level of comfort with the manufacturer’s capabilities.

Remember that it is the recipient’s responsibility to ensure that the vehicles comply with the contract specifications. The purpose of the resident inspector’s report is to assist the recipient to verify that the vehicles meet the contract specifications.

3. Do any of the requirements of the Pre-Award and Post-Delivery Rule apply to the purchase of used rolling stock or public-to-public transfer of vehicles?

No. However, any arrangement designed to avoid the regulations would be considered an illegal circumvention of the regulations, which would result in the withdrawal of Federal funding.

4. Where the contract provides for more than one delivery period, does the grantee conduct a post-delivery review for each delivery period?

This question addresses the circumstances where a contract provides for multiple deliveries and the delivery periods are scheduled at substantially different time intervals, such as 6 months or 1 year apart. When a contract for vehicles provides for separately scheduled delivery periods, the recipient should complete a post-delivery review for each period. This does not mean that a separate review is necessary for each shipment within a delivery period.