Dear Mr. Boylan:
This letter is in response to your inquiries of January 30, 2002, and February 20, 2002, requesting waiver of the final assembly requirements of the Buy America regulations for up to 36 new rail cars, or 4 test trains for New York City Transit (NYCT).For the reasons below, we have determined that such a waiver is in the public interest.
Section 5323(j)(2)(C) of the Federal transit laws (49 U.S.C. 5301, et seq.) sets forth the general requirements for the procurement of rolling stock. This section provides that when rolling stock is procured with Federal Transit Administration (FTA) funds, the cost of the components and subcomponents produced in the United States must be at least 60 percent of the cost of the components of the rolling stock and must undergo final assembly in the U.S. You request a public interest waiver under 49 U.S.C. 5323(j)(2)(A). This section provides that the general Buy America requirements may be waived if their application “would be inconsistent with the public interest.” The regulations implementing this section provide 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 . . . .” 49 C.F.R. 661.7(b).
According to the information in your letter, NYCT issued a Request for Proposal (RFP) for up to 1700 rail cars to be used in both four-car and five-car trains. The contract will specify that the carbuilder must manufacture and successfully test two trains (two four-car units and two five-car units) prior to delivery to NYCT, where the trains will undergo further testing before production of the entire order is authorized. Three offerors are currently negotiating with NYCT, two of which have indicated that they would need a final assembly waiver for these test trains. Therefore, if one of those manufacturers wins the award, a waiver for two test trains would be needed. However, the RFP provides for the possibility of two awards, in which case both manufacturers would be required to manufacture two test trains each for a total of 36 test cars; therefore, a waiver for two trains for each contract awarded might be necessary.
You state that each type of train needs to undergo extensive testing at the car, unit, and train levels and must be tested to show conformance with safety requirements, performance parameters, and system compatibility. You also explain that in one train, each car will not contain all equipment necessary for the car to function independently, and will only work in conjunction with the other cars in the unit.
The information provided supports the issuance of this waiver for a number of reasons. First, it is in the public interest to properly test these trains, and in order to do so, NYCT must test the different configurations as they will be used in revenue service. Since these cars function interdependently, tests must be performed on the train sets. The number of prototype vehicles proposed for testing under a waiver represents a small percentage of the 1700 cars being procured. Given the public’s interest in riding and paying for properly tested trains, FTA believes that this waiver is in the public interest.
Pursuant to the provisions of 49 C.F.R. 661.7(b) and 49 U.S.C. 5323(j)(2)(A), a final assembly waiver is hereby granted for the above-referenced vehicles. However, FTA urges that NYCT take appropriate steps to ensure that this waiver will not have a material impact on the competitive position of any of the proposers.
If you have any questions, please contact Meghan G. Ludtke, at (202) 366-1936.
Very truly yours,
Gregory B. McBride
Deputy Chief Counsel
cc: Letitia Thompson