Mr. Anthony J. Bombace
Senior Director of Procurement and Material Management
New York Metropolitan Transportation Authority
347 Madison Avenue
New York, NY 10017-3739
Dear Mr. Bombace:
I write in response to Metro-North Railroad's (MNR) letter dated March 28, 2012, in which MNR requests the Federal Transit Administration (FTA) to waive its Buy America requirements for the procurement of frogs from Progress Rail Services Corp. (Progress Rail). After careful consideration, I hereby deny MNR's Buy America waiver request.
FTA's Buy America requirements are set forth in 49 U.S.C. § 5323(j) and 49 C.F.R. Part 661. With certain exceptions, FTA may obligate funds for a project only if the steel, iron, and manufactured goods used in the project are produced in the United States. The purpose of this requirement is to preserve and create jobs in the United States by ensuring that taxpayer-funded projects promote domestic manufacturing. Pursuant to 49 U.S.C. § 5323(j)(2), FTA may waive its Buy America requirements if the inclusion of a domestic item or domestic material will increase the cost of the overall project by more than 25 percent, or if the materials for which a waiver is requested are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality.
According to your letter, MNR solicited and received two responsive bids for its frog procurement. Cleveland Track Material, Inc. (Cleveland Track) submitted a certification of compliance with FTA's Buy America requirements and quoted a total gross price of $371,152 for the frogs. Progress Rail submitted a certification of non-compliance with FTA's Buy America requirements and quoted a total gross price of$219,950 for the frogs, a price which constituted the lower of the two bids. MNR is requesting a Buy America waiver from FTA because Cleveland Track, the Buy America-compliant bidder, submitted a price which will increase the cost of the frog procurement by more than 25 percent, in comparison to the price submitted by Progress Rail.
I understand that MNR intends to purchase the frogs with MNR's local fimds. Once purchased, MNR intends to place the frogs into its inventory of track parts. When MNR places the frogs into its inventory, there is no designation to show whether the frogs were purchased with Federal funds or with local fimds. I understand that MNR is working to ensure that all frogs in its inventory are Buy America compliant so the materials can be used interchangeably on future Federally-funded capital projects.
At this time, MNR has not identified specific projects in MNR's Capital Planning Program that would utilize Federal funds and include the frogs from this procurement. Because MNR has not identified a Federally-funded project that would include the frogs, FTA cannot determine whether the frogs would increase the cost of the overall project by more than 25 percent.
Therefore, pursuant to 49 U.S.C. § 5323(j)(2)(D), I hereby deny MNR's request for a price differential waiver for its procurement of the frogs for inventory purposes. If MNR pursues this procurement, it has two options: (1) MNR may purchase the Buy America-compliant frogs from Cleveland Track to ensure that its frog inventory is fully compliant with FTA's Buy America requirements and to ensure that the frogs will be available for use on future Federally-funded capital projects, or (2) MNR may purchase the non-compliant frogs from Progress Rail, the lowest bidder, and use the frog inventory only for locally-funded projects.
If you have any questions or concerns regarding this matter, please do not hesitate to contact me by telephone at (212) 668-2178 or by e-mail at Michael.Culotta@dot.gov.
Michael L. Culotta
Cc: Deborah L. Buckley, MTA MNR
Marilyn G. Shazor, FTA
Anthony G. Carr, FTA
Larry Penner, FTA
Donovan Vincent, FTA
FTA denies a request from Metro-North Railroad, New York Metropolitan Transportation Authority, for a price-differential waiver for the procurement of frogs from Progress Rail Services Corp.