Dear Mr. Mulhern:
This letter responds to the petition of Cubic Transportation Systems, Inc. (Cubic) requesting that the Federal Transit Administration (FTA) investigate the Massachusetts Bay Transportation Authority’s (MBTA) automated fare collection equipment procurement. For the reasons detailed below, I have determined that the presumption established under 49 C.F.R. 661.15(a) has been overcome.
Section 5323(j)(1) of the Federal transit laws (49 U.S.C. 5301, et seq.) sets forth the general requirements for the procurement of manufactured products. The implementing regulations require that manufactured products used in FTA-funded projects be produced in the U.S. For a manufactured product to be considered domestic, all manufacturing processes must occur in the U.S., and all of the components of the product must be of U.S. origin, though the subcomponents can be foreign. 49 C.F.R. 661.5.
FTA’s Buy America investigative procedures, 49 C.F.R. 661.15, establish a presumption that a bidder who has submitted a Buy America certificate is in compliance with the regulation. A third party may petition FTA to investigate a successful bidder’s certification for alleged non-compliance. The regulation requires that the petition include a statement of the grounds of the petition and any supporting documentation. If FTA determines that the presumption has been overcome, it initiates an investigation.
The petitioner in this case, Cubic, alleges that the apparent successful bidder, Scheidt & Bachmann (SB), certified compliance with Buy America, but that SB will actually procure various end product items (including fare boxes, fare gates, etc.) from foreign sources, in violation of the Buy America requirement. In support of these allegations, Cubic included selected documents from SB’s best and final offer (BAFO). Based on Cubic’s petition and its supporting documentation, FTA has determined that the presumption of compliance has been overcome; accordingly, an investigation is warranted.
A central factor for FTA in deciding to investigate further in this case is that the automated fare collection equipment procurement consists of a series of specific end products, rather than a single end product. Each end product and each of its components must be manufactured in the U.S.
In accordance with the provisions of 49 C.F.R. 661.15, FTA is beginning an investigation and requests that MBTA require SB to document compliance with its Buy America certification. SB has the burden of demonstrating that it is in compliance. MBTA shall reply to this request and furnish SB’s documentation within 15 working days of receipt of this letter. SB may correspond directly with FTA on this matter if authorized in writing by MBTA and a copy of that authorization is provided to FTA.
We look forward to working with you to resolve this matter expeditiously. If you have any questions, please contact Meghan G. Ludtke at 202-366-1936.
Very truly yours,
Gregory B. McBride
Deputy Chief Counsel
cc: Richard Doyle, Regional Administrator