New Jersey Transit

Mr. Jeffrey Warsh
New Jersey Transit
One Penn Plaza East
Newark, New Jersey 07105-2246

Re: Petition by Macton Corporation to Investigate New Jersey Transitís Violations of Buy America

Dear Mr. Warsh:

This correspondence shall serve as further notice to New Jersey Transit (NJT) of NJTís error on the application of the Buy America requirements to the Newark City Subway Vehicle Base Facility turnkey project. As was conveyed to both Paul Kelly on September 7, 1999, and Jean Boyle on September 16, 1999, NJTís Buy America analysis, applying only the rolling stock requirements to all contracts executed under the project, is not correct. Accordingly, it is my understanding, per the September 20, 1999 conversation between our staff, that 21st Century has been notified of the situation and will act accordingly.

The rolling stock section of the Buy America regulations, 49 C.F.R. 661.11, was applied in error to this design-build project. This portion of the regulation applies to "transit vehicles such as buses, vans, cars, railcars, locomotives, trolley cars, buses, and ferry boats, as well as vehicles used for support services."

49 C.F.R. 661.3. It also applies to train control, communication, and traction power equipment. 49 C.F.R. 661.11(a). Applying NJTís analysis would allow up to forty-percent of the "components" of the entire turnkey project to be foreign. The regulation applicable to this project can be found in the section entitled General Requirements, at 49 C.F.R. 661.5. This means that all iron, steel, and manufactured products must be produced in the United States. For a manufactured product to be considered domestic, all of the manufacturing processes must take place in the United States, and one hundred-percent of the components must be of United States origin. 49 C.F.R. 661.5. Therefore, NJT should be conducting an analysis of each individual contract and applying the appropriate section of the regulation.

In order for FTA to complete its review of this situation, it is necessary that we receive additional information. Specifically, I need all of the Buy America Certifications completed by the prime contractor and those submitted by the subcontractors. I also need a list of all subcontracts entered into, the amount of the procurement, and the type of certification provided. Additionally, please provide me with a detailed accounting of those subcontracts that may have been entered into in violation of the Buy America requirements. Please also provide any other documentation, that could serve to further clarify this situation. I look forward to receipt of this information.

Thank you for your attention to this matter. If you have any questions, please do not hesitate to contact Meghan G. Ludtke at (202) 366-4011.

Very truly yours,

Patrick W. Reilly
Chief Counsel

cc: Regional Administrator

Generally, Buy America and turnkey construction contracts. Specifically, a letter to NJT, responding to a petition to investigate NJTís alleged violation of Buy America as it relates to the procurement of hoist equipment. Request for information. See above.

October 20, 1999 Re: Macton Corporation