Dear Mr. Skoutelas:
This letter is in response to Port Authority of Allegheny County’s (Port Authority) request for a waiver of the final assembly requirements of the Buy America regulations for two new and two remanufactured light rail vehicles (LRV) to be procured under a contract with Construcciones Y Auxiliar de Ferrocarriles, S.A. and CAF U.S.A., Inc. These four LRVs will be used as prototype vehicles. 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, Port Authority’s Stage II Light Rail Transit Project, which includes the complete reconstruction of the 5.5 mile long Overbrook Line, is scheduled to be operational in 2003. Also included in this project is the purchase of the 28 LRVs and the remanufacture of Port Authority’s existing 55 LRV fleet. You state that utilizing two prototype vehicles of each type to develop and verify work procedures and processes will be a major advantage to the Port Authority’s vehicle delivery schedule. You indicate that timely delivery of the LRVs is critical because the Overbrook Line was closed in 1993 and the lack of LRV service, and in some cases public transportation service, has put a great strain on Port Authority’s customers. You point out that Port Authority’s 27,000 existing weekday LRV riders and an estimated 14,000 new riders will be affected by FTA’s decision.
You state that the ability to test with a second vehicle of each type would advance the schedule by approximately nine months, and thereby enable Port Authority to put the new and remanufactured LRVs into service by November 2003, the anticipated opening of the Overbrook line. These additional cars will increase patron satisfaction by minimizing passenger overcrowding and providing more vehicles to cover the extended service area. When discussing the advantages of parallel testing, you specifically note that the climate testing requirements cause two of the prototype LRVs to be unavailable for all other tests for up to three months. You point out that having a second new and remanufactured prototype vehicle would allow other system tests to continue during this time.
FTA policy is not intended to interfere with the public’s use of transit. FTA implements Buy America requirements in a manner that takes into account the realities of the industry and the practical necessities of foreign assembly of a prototype vehicle in appropriate circumstances. Both an understanding of the need for first article testing and inspection and the negative effect of a nine month delay on the riding public if a second prototype is not available, present the conditions necessary for a "public interest" waiver for the two new and two remanufactured vehicles. 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 these four vehicles.
If you have any questions, please contact Meghan G. Ludtke, at (202) 366-4011.
Very truly yours,
Gregory B. McBride
Acting Chief Counsel