North American Bus Industries (NABI)

Mr. Andy Racz
President and CEO
North American Bus Industries, Inc.
H-1165 Budapest
XVI UJSZASZ u.
45 Hungary

Dear Mr. Racz:

This responds to your letter dated December 14, 2001, in which you request two Buy America waivers from the Federal Transit Administration (FTA) for North American Bus Industries’ (NABI) CompoBus. The CompoBus is a light-weight, composite-structured vehicle with an integrated frame and chassis developed in line with FTA’s Advanced Technology Bus program. You request (1) a public interest waiver of the final assembly requirements for a period of seven years and (2) a component waiver for the integrated body/chassis of the CompoBus, based on public interest or non-availability. For the reasons discussed below, we have determined that the grounds for such waivers exist for a two-year period.

Applicable Law

FTA’s 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.

Under 49 U.S.C. 5323(j)(2)(A) and the implementing regulations, these requirements may be waived if their application "would be inconsistent with the public interest." 49 C.F.R. 661.7(b). The regulation also notes that "[i]n determining whether the conditions exist to grant this public interest waiver, the [FTA] will consider all appropriate factors on a case-by-case basis . . . ." Id. And 49 U.S.C. 5323(j)(2)(B) states that the Buy America requirements shall not apply if the item or items being procured are not produced in the U.S. in sufficient and reasonably available quantities or are not of a satisfactory quality. The implementing regulation also provides that public interest and non-availability waivers may be granted for a component of rolling stock, and in such cases, the component would be treated as domestic when calculating the overall component content of the vehicle.
49 C.F.R. 661.7(f).

Final Assembly Waiver Request

Your request for a final assembly waiver is for CompoBus models 40C-LFW and 45C-LFW. You detail a number of advantages offered by the CompoBus, including its lightweight frame/chassis, the fact that it has completed Altoona testing, the lack of rusting, the environmental advantages, and its crash worthiness. NABI has two primary manufacturing facilities, one in Hungary, the other in Anniston, Alabama.

FTA has determined that in this case, a final assembly waiver for a two-year period is in the public interest. FTA acknowledges the technical difficulties and increased costs associated with new technology and the consequent benefits of a single manufacturing facility. FTA supports the continued development of new vehicle technology that will result in more choices for FTA grantees and better buses for the riding public. This waiver will accomplish that goal. These advances are important enough to allow NABI time to further develop the technology. FTA declines to provide a seven-year waiver because we want to encourage continued changes in the marketplace and must be in a position to review this decision in two years and consider any such changes. However, FTA is also aware of the time lapses between entering into a contract and building a bus; therefore, this waiver applies to CompoBus models 40C-LFW and 45C-LFW for all procurements for which solicitations are issued within two years of the date of this letter.

Component Waiver Request

You also request a non-availability waiver for the CompoBus’ integrated frame/chassis structures for use in model numbers 40C-LFW and 45C-LFW. Based on the information you have provided, I have determined that the grounds for a non-availability waiver exist, as it does not appear that there is another source for this product. Therefore, pursuant to the provisions of 49 U.S.C. §5323(j)(2)(B), a non-availability waiver is granted for the CompoBus models 40C-LFW and 45C-LFW integrated frame/chassis structure for all procurements for which solicitations are issued within two years of the date of this letter.

Conclusion

NABI has offered sufficient justification for a public interest waiver for the final assembly of the CompoBus for a period of two years. The grounds necessary for a non-availability component waiver also exist for the integrated frame/chassis structure, and FTA hereby grants such a waiver for a period of two years. To ensure that the public is aware of these waivers, this letter will be published in the Federal Register.

The public interest waiver is predicated on the fact that it is in the public’s interest to waive the Buy America final assembly requirements in this case; however, FTA is not of the opinion that that public interest overrides the government’s interest in full and open competition. It is for this reason that FTA has reviewed the three procurements that resulted in an award to NABI for the CompoBus. FTA has reviewed the underlying competition for each contract and found that in two cases, the waiver will have no impact on the full and open competition required in federally funded procurements. Therefore, this waiver will apply to those contracts between NABI and the City of Phoenix and between NABI and the Los Angeles County Metropolitan Transportation Authority (LACMTA) for 30 CompoBuses.[1] Another LACMTA procurement is affected by this waiver, a contract for 370 buses, the last 20 of which will be composite buses.[2] Because that award would have had a different result if NABI had certified non-compliance and requested a waiver prior to award, it is FTA’s position that NABI is bound by its original certification of compliance and, therefore, must assemble those vehicles in the U.S.

If you have any questions, please contact Meghan G. Ludtke at 202-366-1936.

Very truly yours,


/s/
Gregory B. McBride
Deputy Chief Counsel


[1] The contract with the City of Phoenix was awarded to NABI, the only bidder, which certified compliance with Buy America. Had NABI certified non-compliance, it would have been eligible for award as the only bidder, and Phoenix would have qualified for a non-availability waiver under 49 C.F.R. 661.7(c)(1). The contract with LACMTA for 30 CompoBuses was awarded after a negotiated procurement with two responsive and responsible proposers in competitive range. Both proposers certified compliance with Buy America; however, the other bid was more than twenty-five percent over NABI’s bid. Thus, had NABI certified non-compliance, it would have been eligible for award because there was more than a twenty-five percent price difference between the two offers, and LACMTA would have qualified for a waiver under 49 C.F.R. 661.7(c)(1).

[2] This was a sealed bid with two responsive and responsible bidders, both of which certified compliance. There was not more than a twenty-five percent difference in the bids; therefore, had NABI certified non-compliance, it would not have qualified for the award.

FTA granted a public interest waiver for final assembly and a non-availability component waiver for the integrated frame/chassis to North American Bus Industries (NABI) for all solicitations entered within two years of the date of the letter for NABI’s Composite Bus, a lightweight, composite-structured vehicle with an integrated frame and chassis developed in line with FTA’s Advanced Technology Bus program. March 19, 2002 Re: NABI's Composite Bus