Dear Mr. Simonetta:
I write in response to your request dated May 20, 1999 and supplemented first on August 10, 1999, and again on August 18, 1999, for waiver of the final assembly requirements of 49 C.F.R. 661.11(a), as they apply to the procurement by the Metropolitan Atlanta Rapid Transit Authority (MARTA) of two married pairs of preproduction CQ312 rail cars to be manufactured by Breda Costruzioni Ferroviarie S. p. A. (Breda) in Pistoia, Italy. You state that the remaining CQ312 rail cars manufactured by Breda will be assembled in the United States.
Section 661.11 of our regulations sets forth the general requirements for the procurement of rolling stock. It provides that all rolling stock procured with Federal Transit Administration (FTA) funds must have a domestic content of at least sixty percent and undergo final assembly in the United States. You request a waiver under 49 C.F.R. 661.7(b). This section provides that the general Buy America requirements may be waived if "their application would be inconsistent with the public interest." It further provides 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 . . . ."
According to the information in your correspondence, the contract between MARTA and Breda specified that a progressive test program would be performed prior to full production. The purpose of this test program is to ascertain that the components and assemblies will interface properly and operate as ordered. This qualification testing can best be conducted at Bredaís primary facility located in Pistoia, Italy, under the direct observation of the engineering team with access to advanced rail technology test equipment which is only available at the design and manufacturing facility. Accordingly, if any problems arise, Breda would have the capability to adjust the design during initial assembly and testing and prior to full production.
In addition, you state that thirty CQ312 rail cars must be available for service by December 16, 2000, since this Revenue Operation Date is a condition of the existing Full Funding Grant Agreement (GA-03-0037-03) between MARTA and FTA. The rail cars are necessary for passenger service on the North Line extension to North Springs for compliance with the Transportation Equity Act for the 21st Century (TEA-21) and the Clean Air Act Amendments of 1990 and to accommodate increased ridership. Further, the waiver for both married pairs would allow more than twice as many transit vehicles to enter revenue service by the opening date of December 16, 2000. This waiver would allow MARTA to satisfy ridership demands and meet its commitment to the public at the opening of the North Line extension. Should MARTA be permitted foreign production and testing on only one married pair, it would take an additional five months for Breda to complete the order.
FTA policy is not intended to interfere with the publicís 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 inevitable negative effect of a five-month delay on the riding public present the conditions necessary for a "public interest" waiver. Pursuant to the provisions of 49 C.F.R. 661.7(b) and 49 U.S.C. 5323(j)(2)(A), a waiver is hereby granted for two married pairs.
If you have any questions, please feel free to contact Meghan G. Ludtke, at (202) 366-4011.
Very truly yours,
Patrick W. Reilly