Management & Operations

Buy America, a clearer picture

Posted on November 19, 2007 by Frank Di Giacomo, Publisher

The role that Buy America regulations play in ensuring that federal dollars help to support domestic enterprise is an important one. That’s why it’s worth noting that the FTA published a final rule on Sept. 20 that incorporates Buy America revisions set forth in SAFETEA-LU and follows many of the recommendations supported by APTA.

These changes are perhaps too complex to discuss in detail in this column, but I’ll try to hit the high points. It should be noted that the recent final rule is the second to address requirements mandated by SAFETEA-LU. The first, issued March 2006, covered topics such as negotiated procurements and pre- and post-award reviews of rolling stock purchases.

‘End product’ shifts to non-shift
The final rule issued in September, however, took on more substantive issues. One of the key rulings addressed the definition of “end product.” Under the recently changed Buy America regulations, the classification of “components” and “subcomponents” could shift depending on whether they were part of an initial purchase of an end product, a replacement purchase or aftermarket addition.

That means that a component or subcomponent that was Buy America-compliant when it was procured as part of an end product could become non-compliant when it was procured as a replacement part (or aftermarket addition) because it “shifted” to an “end product,” which has more stringent domestic content requirements.

The final rule put an end to the shift approach. If, for example, a component needs to be replaced, the end user does not have to find a replacement component that meets “end product” requirements. Components and subcomponents will retain their characterization throughout the life of the vehicle. This will help to provide manufacturers and transit systems with predictability and consistency in costing and pricing and will reduce record-keeping burdens.

The final rule also provided a representative, though not exhaustive, list of end products. Here are some rolling stock end products as defined in the final rule: buses, vans, cars, railcars, locomotives, trolley cars and buses. The rule also defines the following as end products: train control, communication and traction power equipment; bridges and trackwork made primarily of steel or iron; and manufactured products not made of steel or iron such as terminals, depots, garages and bus shelters.

Speedier disposition ahead The final rule also addresses the processing of public-interest waiver requests. The FTA believes it’s important to provide a quick turnaround of these waiver requests and targets a 30-day window, relying on its Website and a new e-mail notification system to shorten the decision-making process. But it did not want to reduce the number of comment periods from two to one, as some people had urged.

Consequently, the FTA stipulated a four-step process: posting notification of the public-interest waiver request on its Website and soliciting comments; preparing a justification of its approval or denial; publishing the justification in the Federal Register for notice and comment; and publishing the final decision on its Website. Cutting even a few days from the process could help the transit industry significantly, as many of these requests are time-sensitive and affect procurement schedules.

Before I sign off, I want to thank our friends at APTA for helping to rectify a mistake in the final rule. It dealt with final assembly requirements, which significantly impact the rolling stock manufacturers’ ability to meet Buy America regulations. The FTA inadvertently included language in the final rule that would have significantly altered the status quo and caused major disruptions for manufacturers, but quick action on the part of APTA and its Business Members helped to correct the problem. A week after the rule appeared in the Federal Register, FTA published a correction. Thanks to all who contributed to amending this key error.

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