[Federal Register Volume 80, Number 115 (Tuesday, June 16, 2015)]
[Notices]
[Pages 34487-34489]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-14711]


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DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

[Docket No. FTA-2015-0020]


Buy America Handbook; Conducting Pre-Award and Post-Delivery 
Audits for Rolling Stock Procurements

AGENCY: Federal Transit Administration, DOT.

ACTION: Notice of Availability of Proposed Handbook and Request for 
Comments.

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SUMMARY: The Federal Transit Administration (FTA) has placed in the 
docket and on its Web site proposed guidance, in the form of a 
handbook, on complying with FTA's Buy America pre-award and post-
delivery audit requirements for rolling stock procurements, from the 
solicitation phase through final acceptance of the rolling stock. This 
proposed guidance explains and illustrates how to calculate domestic 
content of rolling stock, and it is intended for use by recipients of 
Federal funding, auditors, manufacturers, and suppliers (including 
subcontractors).
    This proposed guidance explains to recipients how to verify and 
document their compliance with FTA's Buy America pre-award and post-
delivery audit requirements. In addition, this proposed guidance 
encourages recipients, manufacturers, and suppliers to adopt certain 
best practices to ensure compliance with the pre-award and post-
delivery audit requirements. By this notice, FTA invites public comment 
on this proposed guidance.

DATES: Comments must be submitted by August 17, 2015. Late-filed 
comments will be considered to the extent practicable.

ADDRESSES: Please submit your comments by only one of the following 
methods, identifying your submission by DOT Docket Number FTA-2015-
0020. All electronic submissions must be made to the U.S. Government 
electronic site at http://www.regulations.gov.
    (1) Federal e-Rulemaking Portal: Go to http://www.regulations.gov 
and follow the online instructions for submitting comments.
    (2) Mail: Docket Management Facility: U.S. Department of 
Transportation, 1200 New Jersey Avenue SE., West Building, Ground 
Floor, Room W12-140, Washington, DC 20590-0001.
    (3) Hand Delivery or Courier: West Building Ground Floor, Room W12-
140, 1200 New Jersey Avenue SE., between 9 a.m. and 5 p.m. Eastern 
time, Monday through Friday, except Federal holidays.
    (4) Fax: 202-493-2251.
    Instructions: You must include the agency name (Federal Transit 
Administration) and Docket number (FTA-2015-0020) for this notice at 
the beginning of your comments. Submit two copies of your comments if 
you submit them by mail. For confirmation that FTA received your 
comments, include a self-addressed stamped postcard. All comments 
received will be posted without change to www.regulations.gov including 
any personal information provided and will be available to internet 
users. You may review DOT's complete Privacy Act Statement published in 
the Federal Register on April 11, 2000 (65 FR 19477) or http://DocketsInfo.dot.gov.
    Docket: For access to the docket to read background documents and 
comments received, go to www.regulations.gov at any time or to the U.S. 
Department of Transportation, 1200 New Jersey Avenue SE., Docket 
Operations, M-30, West Building Ground Floor, Room W12-140, Washington, 
DC 20590 between 9:00 a.m. and 5:00 p.m. Eastern Standard Time, Monday 
through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: For program questions, contact Patrick 
Centolanzi, FTA Office of Program Management, at (202) 366-0234 or 
[email protected]. For legal questions, contact Richard L. 
Wong, FTA Attorney-Advisor, at (202) 366-4011 or [email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Overview
II. Section-by-Section Summary
    A. Section 1--Introduction
    B. Section 2--Pre-Award Audit
    C. Section 3--Post-Delivery Audit
    D. Section 4--Domestic Content Calculations
    E. Section 5--Frequently Asked Questions
    F. Appendices

I. Overview

    The FTA's objective in implementing 49 CFR part 661 (Buy America 
Requirements) and 49 CFR part 663 (Pre-Award and Post-Delivery Audits 
of Rolling Stock Purchases) is to support and promote the United States 
(U.S.) manufacturing industry and U.S. jobs. As guidance on the pre-
award and post-delivery audit requirements for rolling stock 
procurements, FTA published two separate Buy America handbooks in May 
1995--i.e., one for rail vehicle procurements and one for bus 
procurements.
    Over the past three years, FTA has conducted Buy America Compliance 
Reviews, where they observed and monitored the pre-award and post-
delivery audit processes for fourteen capital grants. One primary 
finding was that FTA should provide more guidance and clarity on 
conducting pre-award and post-delivery Buy America audits required in 
FTA's Buy America regulations (49 CFR parts 661 and 663).
    The FTA is proposing to publish a new Buy America handbook, 
entitled Conducting Pre-Award and Post-Delivery Audits for Rolling 
Stock Procurements (Handbook), which would replace FTA's two Buy 
America handbooks on this subject from 1995. The proposed Handbook 
would apply comprehensively to rolling stock procurements that are 
subject to the pre-award and post-delivery audit requirements set forth 
in 49 CFR part 663.
    This notice provides a section-by-section summary of the proposed 
Handbook. The proposed Handbook itself is not included in this notice; 
instead, an electronic version may be found on FTA's Web site, at 
www.fta.dot.gov, and in the docket, at www.regulations.gov. Paper 
copies of the proposed Handbook may be obtained by contacting FTA's 
Administrative Services Help Desk at (202) 366-4865. The FTA seeks 
comment on the proposed Handbook.

II. Section-by-Section Summary

A. Section 1--Introduction

    Section 1 of the proposed Handbook is an introductory chapter that 
provides a brief overview of the pre-award and post-delivery audit 
requirements set forth in 49 CFR parts 661 and 663, summarizes the 
contents of each subsequent section, and includes lists of relevant 
legal references, definitions, and acronyms.
    This section states that the purpose of the proposed Handbook is to 
assist

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recipients,\1\ auditors, manufacturers, and suppliers (including 
subcontractors) in understanding and correctly applying FTA's Buy 
America pre-award and post-delivery audit requirements for rolling 
stock procurements. This section sets forth the scope of the proposed 
Handbook, explaining that FTA's Buy America regulations and rulings 
shall take precedence over the contents of the proposed Handbook in the 
event of a conflict, and specifying that this new comprehensive 
Handbook would replace FTA's two handbooks on this subject, one for 
rail vehicles and one for buses, which FTA published in 1995.
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    \1\ That is, recipients ``purchasing rolling stock to carry 
passengers in revenue service with funds made available under 
sections 3, 9, 18, and 16(b)(2) of the Federal Mass Transit Act, as 
amended; 23 U.S.C. 103(e)(4); and section 14 of the National Capital 
Transportation Act of 1969, as amended.'' See 49 CFR 663.3.
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    The FTA seeks comment on the content of this section.

B. Section 2--Pre-Award Audit

    Section 2 describes the pre-award audit requirements set forth in 
49 CFR 663.21-27 and explains that the recipient must ensure that the 
pre-award audit is complete before the recipient enters into a formal 
contract for the purchase of rolling stock. Pursuant to 49 CFR 663.23, 
the pre-award audit must include: A Pre-Award Buy America 
Certification, a Pre-Award Purchaser's Requirements Certification, and, 
where appropriate, a Pre-Award Certification of Compliance with or 
Inapplicability of Federal Motor Vehicle Safety Standards (FMVSS).
    This section outlines what responsibilities the recipient, 
manufacturer, and/or the supplier each bear with respect to the pre-
award audit certifications. For example, this section explains that the 
recipient is required to obtain the pre-award Buy America certification 
of compliance from the bidder (i.e., the manufacturer or supplier), and 
the recipient must keep the certification on file. This section also 
describes the documentation that recipients must review in determining 
whether or not the rolling stock to be purchased meets FTA's Buy 
America requirements.
    This section describes best practices for ensuring compliance with 
the Pre-Award Buy America Certification requirements, including key 
steps that recipients should take early in the solicitation process, as 
well as procedures recipients and manufacturers should adopt for 
verifying compliance with the domestic content and U.S. final assembly 
requirements during the pre-award audit stage.
    Moreover, this section explains that FTA, at its discretion, may 
grant a waiver of the Buy America requirements under certain enumerated 
circumstances.
    Furthermore, this section describes recipients' obligations with 
respect to the Pre-Award Purchaser's Requirements Certification, 
including the documentation requirements set forth in 49 CFR 663.27. 
This section outlines various best practices that recipients should 
utilize to ensure compliance with 49 CFR 663.27, including procedures 
for verifying that the proposed manufacturer's bid complies with the 
recipient's solicitation specifications and that the proposed 
manufacturer has the capacity and capability to produce the transit 
vehicles the recipient is seeking to procure.
    Finally, this section describes recipients' obligations with 
respect to completing a Pre-Award Certification of FMVSS Compliance or 
Inapplicability, if the procurement is for a motor vehicle(s), and this 
section explains what documentation the recipient must obtain from the 
manufacturer regarding FMVSS compliance or inapplicability.
    The FTA seeks comment on the content of this section.

C. Section 3--Post-Delivery Audit

    Section 3 describes the post-delivery audit requirements set forth 
in 49 CFR 663.31-39 and explains that the recipient must ensure that 
the post-delivery audit is complete after the formal contract has been 
signed but before title to the rolling stock is transferred to the 
recipient. Pursuant to 49 CFR 663.33, the post-delivery audit must 
include: a Post-Delivery Buy America Certification, a Post-Delivery 
Purchaser's Requirements Certification (based upon a review of the 
Resident Inspector's Report pursuant to 49 CFR 663.37), and a Post-
Delivery Certification of FMVSS Compliance or Inapplicability, where 
appropriate. This section explains the requisite processes and 
documentation requirements for each of the post-delivery audit 
certifications listed above.
    This section specifies that a post-delivery audit, as distinguished 
from a pre-award audit, must be based on actual production data from 
the manufacturer, including information provided by the supplier to the 
manufacturer, and the production data must demonstrate Buy America 
compliance.
    This section explains that while the manufacturer can provide its 
domestic content calculations in terms of percentages rather than 
dollar figures, the recipient or the third-party auditor must review 
documentation of the actual costs in order to verify compliance during 
the post-delivery audit. This section notes, however, that the post-
delivery audit report should not include the confidential data that was 
provided to the recipient or auditor.
    This section also describes best practices to aid recipients, 
manufacturers, and suppliers in achieving compliance with the post-
delivery audit requirements, including guidance on how to prepare the 
requisite Resident Inspector's Report and supporting documentation, in 
accordance with 49 CFR 663.37, and procedures for effectively verifying 
compliance with the domestic content and U.S. final assembly 
requirements.
    Also, as a best practice, this section recommends that 
manufacturers should require their suppliers to provide sufficient 
documentation that demonstrates Buy America compliance (such as a 
signed and dated certification), and manufacturers should then ensure 
that the suppliers' documentation is valid. This section also 
recommends that the manufacturer should be prepared to provide relevant 
supplier information to the recipient or third-party auditors.
    The FTA seeks comment on the content of this section.

D. Section 4--Domestic Content Calculations

    This section provides proposed guidance and clarification on how to 
calculate domestic content correctly for rolling stock procurements in 
accordance with 49 CFR 661.11, providing guidance relevant to both the 
pre-award audit and the post-delivery audit.
    In order to assist recipients, auditors, manufacturers, and 
suppliers in calculating domestic content, this section defines and 
clarifies the distinctions between components and subcomponents and 
between manufacturing and final assembly. Also, this section instructs 
Handbook readers to refer to Appendices B and C to 49 CFR 661.11 for 
lists of typical major vehicle components. These lists are intended to 
be illustrative, although non-exhaustive.
    This section explains that calculation of domestic content is 
conducted at two levels--i.e., at the vehicle level (which requires 
that the cost of the components produced in the U.S. must be more than 
60 percent of the cost of all components) and at the component level 
(which requires that more than 60 percent of

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the subcomponents, by cost, must be of domestic origin for a component 
to be of domestic origin).
    Importantly, this section provides a sample Domestic Content 
Worksheet with detailed step-by-step instructions for how to fill out 
the worksheet and calculate domestic content.
    Moreover, this section describes best practices for handling 
special considerations that arise in domestic content calculations. For 
example, this section identifies typical non-recurring expenses (NREs) 
and instructs manufacturers to maintain evidence of the NREs for the 
pre-award and post-delivery audits. Also, this section provides 
guidance on exchange rates, transportation costs to the U.S. final 
assembly location, and tariff exemptions.
    In addition, this section provides a sample Buy America 
certification form to be used by suppliers, with accompanying step-by-
step instructions for completing the certification form.
    The FTA seeks comment on the content of this section.

E. Section 5--Frequently Asked Questions

    Section 5 addresses some of the most frequently asked questions 
(FAQs) about pre-award and post-delivery audits. Among numerous other 
topics, the FAQs concern what types of rolling stock are not subject to 
the pre-award and post-delivery audit requirements; how to calculate 
domestic content; and the responsibilities of the resident inspector.
    The FTA seeks comment on the content of this section.

F. Appendices

    The proposed Handbook contains four appendices. Appendix A contains 
domestic content calculation worksheets, including one worksheet for 
rail vehicles and one worksheet for buses.
    Appendix B contains sample compliance checklists for recipients, 
manufacturers, and suppliers to use in order to ensure that the Pre-
Award and Post-Delivery Buy America Certifications and Purchaser's 
Requirements Certifications are properly completed. This appendix also 
contains a sample Resident Inspector's Report, which the recipient must 
review before completing its Post-Delivery Purchaser's Requirements 
Certification.
    Appendix C contains sample pre-award and post-delivery certificates 
and forms. These samples are intended to aid recipients, manufacturers, 
and suppliers in complying with the 49 CFR parts 661 and 663 
requirements, and these samples may be utilized and filled out by these 
parties, where appropriate.
    Appendix D contains a sample pre-award audit report and a sample 
post-delivery audit report, including necessary certifications and 
recommended supporting documentation.
    The FTA seeks comment on the content of the appendices.

Therese W. McMillan,
Acting Administrator.
[FR Doc. 2015-14711 Filed 6-15-15; 8:45 am]
 BILLING CODE 4910-57-P