Dear Mr. Smith:
This letter responds to your correspondence of March 24, 2003, in which New Flyer of America (New Flyer) requests a non-availability waiver of the Buy America requirements for the procurement of the Hubner Manufacturing Corporation (Hubner) articulated joint system for New Flyer’s low floor buses.
The Federal Transit Administration’s (FTA) requirements concerning domestic preference for federally funded transit projects are set forth in 49 U.S.C. 5323(j). Section 5323(j)(2)(C) addresses the general requirements for the procurement of rolling stock. This section provides that all rolling stock procured with FTA funds must have a domestic content of at least 60 percent and must undergo final assembly in the U.S. You request a waiver under 49 U.S.C. 5323(j)(2)(B), which states the Buy America requirements shall not apply if the item or items are not produced in the U.S. in sufficient and reasonably available quantities or are not of a satisfactory quality. The implementing regulation provides that non-availability waivers may be granted for a component of rolling stock. 49 C.F.R. 661.7(f).
FTA posted a summary of this waiver request on its website and requested comment. We received four comments, one against and three in favor of granting the waiver.1 The comment against the waiver argues that the Buy America rules for rolling stock already allow a waiver of up to forty percent foreign content, and when a component is unavailable from a domestic source, the vehicle maker should use part of its allotted foreign content. However, as noted above, the regulation currently allows component waivers for rolling stock when the product is not available from a domestic source. FTA received no comments indicating that these articulating joint systems are available from a U.S. source.
Based on a thorough review of the industry, FTA previously granted a two-year non-availability waiver to Newflyer for this articulated joint system on April 24, 2001. You state that the circumstances necessitating the current waiver remain unchanged and in the near term, New Flyer must still use the Hubner joint, which is still not available from a domestic source.
In response to the original waiver, FTA received a comment from a U.S. bellows manufacturer, A&A Manufacturing, expressing concern that because the articulated joint system is made of separate subcomponents that could be supplied separately by different manufacturers, the waiver effectively prevented A&A from selling its product, the bellows, to New Flyer. New Flyer’s response stated that in the low floor bus, the articulated joints are purchased as an entire unit and any changes or integration of a subcomponent, such as new bellows, would require sufficient time to design, integrate and test.
On January 17, 2001, FTA directed Newflyer to work with domestic suppliers for these parts to develop alternative sources. We noted that this good faith effort to qualify new domestic suppliers would be considered should New Flyer request a renewal of the waiver. Newflyer now informs FTA that it plans to install an articulated joint, utilizing A&A’s bellows and manufactured by a domestic manufacturer, in August 2003. The requisite testing should be completed by April 2004. FTA has also been advised by Hubner Manufacturing, that it plans to relocate the entire articulation systems manufacturing process from Germany to South Carolina by the end of 2003.
Based on the information you have provided, I have determined that the grounds for a
non-availability waiver still exist. Therefore, pursuant to the provisions of
49 U.S.C. §5323(j)(2)(B), a waiver is granted for the procurement of Hubner’s articulated joint system for New Flyer low floor buses until June 30, 2004, as requested. This waiver will allow time for Hubner’s relocation to the U.S. and completion of necessary testing for the alternate U.S. joint system. In order to insure that the public is aware of this waiver, particularly potential manufacturers, this waiver will be published in the Federal Register.
If you have any questions, please contact Meghan G. Ludtke at (202) 366-1936.
Very truly yours,
Gregory B. McBride
Deputy Chief Counsel
1 The comment against the waiver was from Gillig Corporation. The comments in favor of the waiver were from CAPtech, Inc., North American Bus Industries, and Hubner Manufacturing.