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Suggested Citation:"V. ENFORCEMENT." National Academies of Sciences, Engineering, and Medicine. 2017. Updated Guide to Buy America Requirements—2015 Supplement. Washington, DC: The National Academies Press. doi: 10.17226/24780.
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Suggested Citation:"V. ENFORCEMENT." National Academies of Sciences, Engineering, and Medicine. 2017. Updated Guide to Buy America Requirements—2015 Supplement. Washington, DC: The National Academies Press. doi: 10.17226/24780.
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Suggested Citation:"V. ENFORCEMENT." National Academies of Sciences, Engineering, and Medicine. 2017. Updated Guide to Buy America Requirements—2015 Supplement. Washington, DC: The National Academies Press. doi: 10.17226/24780.
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Suggested Citation:"V. ENFORCEMENT." National Academies of Sciences, Engineering, and Medicine. 2017. Updated Guide to Buy America Requirements—2015 Supplement. Washington, DC: The National Academies Press. doi: 10.17226/24780.
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Suggested Citation:"V. ENFORCEMENT." National Academies of Sciences, Engineering, and Medicine. 2017. Updated Guide to Buy America Requirements—2015 Supplement. Washington, DC: The National Academies Press. doi: 10.17226/24780.
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Suggested Citation:"V. ENFORCEMENT." National Academies of Sciences, Engineering, and Medicine. 2017. Updated Guide to Buy America Requirements—2015 Supplement. Washington, DC: The National Academies Press. doi: 10.17226/24780.
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Suggested Citation:"V. ENFORCEMENT." National Academies of Sciences, Engineering, and Medicine. 2017. Updated Guide to Buy America Requirements—2015 Supplement. Washington, DC: The National Academies Press. doi: 10.17226/24780.
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Suggested Citation:"V. ENFORCEMENT." National Academies of Sciences, Engineering, and Medicine. 2017. Updated Guide to Buy America Requirements—2015 Supplement. Washington, DC: The National Academies Press. doi: 10.17226/24780.
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Suggested Citation:"V. ENFORCEMENT." National Academies of Sciences, Engineering, and Medicine. 2017. Updated Guide to Buy America Requirements—2015 Supplement. Washington, DC: The National Academies Press. doi: 10.17226/24780.
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Suggested Citation:"V. ENFORCEMENT." National Academies of Sciences, Engineering, and Medicine. 2017. Updated Guide to Buy America Requirements—2015 Supplement. Washington, DC: The National Academies Press. doi: 10.17226/24780.
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Suggested Citation:"V. ENFORCEMENT." National Academies of Sciences, Engineering, and Medicine. 2017. Updated Guide to Buy America Requirements—2015 Supplement. Washington, DC: The National Academies Press. doi: 10.17226/24780.
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39 4. FTA will post on its Buy America website its final decision to either grant or deny the waiver. FTA expects its “total processing time” for waiver requests to take about 30 days.432 The FAST Act enacted in December 2015 imposes additional publication requirements on FTA for the situation in which it decides to deny a waiver. When- ever FTA denies a waiver request, it must provide a written certification that the product for which a waiver was requested is available from domestic manufacturers in sufficient quantities and satisfac- tory quality, and it must also provide a list of known domestic manufacturers from which the product can be obtained.433 FTA is to publish its waiver denials and certifications of product availability on its Buy America website. V. ENFORCEMENT A. Certification A contractor or supplier that enters into a contract with an FTA grant recipient is required to execute a Buy America certificate, in which the contractor either certifies compliance with the FTA Buy Amer- ica provision or if noncompliant, certifies that the contractor believes the bid is eligible for a waiver from the FTA Buy America provision.434 (If all other- wise noncompliant products in the bid are covered by an existing waiver already granted by FTA, such as one of the general waivers discussed in Section V, so that the bidder does not need to request a new waiver, the bidder may certify compliance.435) The certificate is to be incorporated into the contract with the FTA grant recipient. If a contractor has certified compliance with the FTA Buy America provision and later determines that it is unable to comply, the contractor is in breach of contract.436 At that point, the FTA grant recipient may pursue its contractual remedies against the contractor for provision subject to nationwide notice-and-comment procedures discussed in the following section, effec- tively making all FTA Buy America waivers subject to approval of FTA Headquarters. The previously discussed procedures will typi- cally be used for project-specific waivers when the low bidder is unable to certify compliance with the FTA Buy America provision. If all noncompliant products in the low bid are already covered by a general waiver granted by FTA, such as those discussed in Section IV.A, the covered products typi- cally may be considered domestic, the bidder may certify compliance, and there is no need to request a project-specific waiver.427 3. Notice-and-Comment Requirements Before issuing any waivers of the FTA Buy America provision, FTA must publish its decision to grant a waiver both on the USDOT website and in the Federal Register.428 After publication, FTA must allow “a reasonable period of time for notice and comment” before granting the waiver.429 This is a relatively recent requirement, originating in 2012 with MAP-21. Prior to that, beginning with SAFETEA-LU in 2005, FTA was only required to publish its decision to grant Public Interest waivers.430 The statutory publication requirement applies only to waivers that FTA has already decided to grant, not to all waiver requests received. However, FTA has interpreted its statutory notice-and-comment requirement, to consist of a four-step process:431 1. FTA will post waiver requests on its Buy America website to solicit public comment. 2. If FTA decides to grant the waiver (based on public comments, information provided by the FTA grant recipient, or FTA’s own investigation), FTA will prepare a written justification detailing its ra- tionale for approving the waiver request. 3. FTA will publish its written justification in the Federal Register for notice and comment within a “reasonable time.” 427 See, e.g., Letter from Dorval R. Carter, Jr., FTA Chief Counsel, to Dennis R. Slimmer, Kansas DOT, Subject: Buy America (Dec. 21, 2010) (concluding that “the bidders should have certified compliance with Buy America” since they intended to take advantage of the general waiver for Chrysler minivans), available at https://www.transit.dot. gov/regulations-and-guidance/buy-america/kansas- coordinated-transit-district-council-december-21-2010. 428 Moving Ahead for Progress in the 21st Century Act, Pub. L. No. 112-141, § 20016, 126 Stat. 405 (Jul. 6, 2012). 429 Id. 430 49 U.S.C. § 5323(j)(3) (2011); SAFETEA-LU, supra note 108. 431 Buy America Requirements—End Product Analysis and Waiver Procedures, 71 Fed. Reg. 69,412, 69,413 (Nov. 30, 2006). 432 Id. 433 Fixing America’s Surface Transportation Act, Pub. L. No. 114-94, § 3011(2)(C), 129 Stat. 1312, 1474 75 (Dec. 4, 2015) (codified at 49 U.S.C. § 5323(j)(6)). 434 49 C.F.R. §§ 661.6, 661.12 (2015); see also Buy Amer- ica Requirements, 51 Fed. Reg. 22,285 (Jun. 19, 1986) (establishing two separate FTA Buy America certification forms, one certifying compliance and one combining a non- compliance certification with a waiver request). 435 See, e.g., Letter from Dorval R. Carter, Jr., FTA Chief Counsel, to Dennis R. Slimmer, Kansas DOT, Subject: Buy America (Dec. 21, 2010) (concluding that “the bidders should have certified compliance with Buy America” since they intended to take advantage of the Chrysler minivan waiver), available at https://www.transit.dot.gov/regulations-and- guidance/buy-america/kansas-coordinated-transit- district-council-december-21-2010. 436 49 C.F.R. § 661.17 (2015).

40 American Certificate unsigned.”444 The Seal court was concerned that bidders would have a noncom- petitive advantage if they could decide after bid opening (based on the competing bids) whether to certify compliance or noncompliance with the FTA Buy America provision. Because of similar concerns, a bid is not responsive if the bidder certifies both compliance and noncompliance with the FTA Buy America provision.445 FTA regulations specifically provide that “failure to sign the certificate, submis- sion of certificates of both compliance and non- compliance, or failure to submit any certification” do not constitute correctible errors.446 Due to such concerns about bid manipulation, prior to 1998, FTA refused to allow bidders to amend their certifications in cases of mistake or error.447 With the passage of TEA-21, however, Congress amended the FTA Buy America provision to provide that, after bid opening, FTA may allow a bidder to correct “any certification of noncompliance or failure to properly complete the certification” if the bidder establishes that its “incorrect certification [w]as a result of an inadvertent or clerical error,” via sworn statement and such other evidence as may be required to satisfy the bidder’s burden of proof.448 FTA requires the bidder to submit such sworn state- ment and accompanying evidence within 10 days of bid opening.449 The decision as to whether to allow the bidder to correct its certification is to be made by the FTA Chief Counsel.450 The FTA Chief Counsel regularly allows bidders to correct their certifica- tions from noncompliance to compliance as long as breach of contract,437 which may include terminat- ing the contractor or withholding payment pending the contractor either achieving compliance or obtain- ing a waiver. If at least one bidder certifies compliance with the FTA Buy America provision, then a compliant bid will typically be accepted, notwithstanding all other noncompliant bidders who indicate that they may be eligible for a waiver. The fact that at least one bidder is able to supply domestic products typically precludes a project-specific Non-Availability waiver for the other bidders (because a domestic source is avail- able), and the circumstances justifying a Price Differ- ential or Public Interest waiver are rare. For example, in 2003, in Conti Enterprises, Inc. v. Southeastern Pennsylvania Transportation Authority,438 only one bidder certified compliance, and the U.S. District court for the Eastern District of Pennsylvania agreed with the contracting agency that all other bidders who certified noncompliance were nonresponsive.439 The Conti court determined that the contracting agency reasonably concluded that FTA was unlikely to grant a waiver for the bidders who certified noncompliance, and that the contracting agency was not obligated to request a waiver in that situation.440 Likewise, in 2012, in Estes Company v. Rock Island County Metropolitan Mass Transit District,441 the U.S. District Court for the Central District of Illinois declined to consider a low bidder’s challenge to the Rock Island County Metropolitan Mass Transit District’s (MetroLINK’s) determination that its bid was nonresponsive, when the low bidder had executed a certificate of noncompliance and MetroLINK had awarded the contract to another bidder that certified compliance with the FTA Buy America provision. The Buy America certificate is a condition of bid responsiveness, so bids without either certificate must be rejected.442 In Seal and Co., Inc. v. Washing- ton Metropolitan Transit Authority,443 the low bidder to supply a communications system for WMATA failed to execute either Buy America certificate. The U.S. District Court for the Eastern District of Virginia upheld WMATA’s disqualification of the bid, concluding that the Buy America certificate is a material requirement due to the “potential for manipulating the process by leaving the Buy 437 49 C.F.R. § 18.36(i) (2015). 438 Conti Enters., Inc. v. Se. Pa. Transp. Auth., No. 03 CV 05345, 2003 U.S. Dist. LEXIS 19848 (E.D. Pa. Oct. 14, 2003). 439 Id. at *6. 440 Id. at *8–9. 441 Estes Co. v. Rock Island Metro. Mass Transit District, No. 12 CV 04087 (C.D. Ill. Sept. 26, 2012). 442 49 C.F.R. § 661.3(b) (2015). 443 768 F. Supp. 1150 (E.D. Va. 1991). 444 Id. at 1159. 445 See, e.g., Letter from Dana Nifosi, FTA Chief Counsel, to Pete Dawley, Benson Chrysler Jeep Dodge (Dec. 23, 2014), available at https://www.transit.dot.gov/regulations-and- guidance/buy-america/charlotte-area-transit-system-cats- december-23-2014; Letter from Dorval R. Carter, Jr., FTA Chief Counsel, to Chris Brooks, PENTA Building Group (Aug. 10, 2012), available at https://www.transit.dot.gov/ regulations-and-guidance/buy-america/penta-building- group-lp-august-10-2012; Letter from Dorval R. Carter, Jr., FTA Chief Counsel, to David L. Ferstendig, Fine Organics Corporation (Jun. 24, 2010), available at https://www.transit. dot.gov/regulations-and-guidance/buy-america/fine- organics-corporation-june-24-2010. 446 49 C.F.R. § 661.13(b)(1) (2015). 447 Buy America Requirements—Amendments, 53 Fed. Reg. 32,994 (Aug. 29, 1988) (“To allow such a bidder to mod- ify its certification, would give the bidder the best of both worlds…. [I]f a bidder mistakenly executes the wrong certi- fication, it is bound by that certification.”). 448 Transportation Equity Act for the 21st Century, Pub. L. No. 105 178, § 3020(b), 112 Stat. 107 (Jun. 9, 1988) (cod- ified at 49 U.S.C. § 5323(j)(10)); see also Buy America Requirements; Amendment of Certification Procedures, 64 Fed. Reg. 8,015 (Feb. 18, 1999). 449 49 C.F.R. § 661.13(b)(1) (2015). 450 49 C.F.R. § 661.13(b)(1)(i) (2015).

41 between “inadvertence,” which is correctible, and “ignorance,” which is not, often depends upon whether the bidder follows the instructions provided by the FTA grant recipient. For example, when bidders incorrectly certified that their bids were noncompliant because they intended to take advan- tage of the Chrysler minivan waiver, FTA deter- mined that this was an “inadvertent or clerical error” and allowed the bidders to correct their certif- icates from noncompliance to compliance, because the bidders had been incorrectly instructed by the FTA grant recipient to certify noncompliance.458 However, when a bidder certified, that its bid to supply signal equipment complied with the FTA Buy America provision (incorrectly applying the manufactured products standard rather than the rolling stock standard to the signal equipment), FTA concluded that the certificate was “based on igno- rance” and did not allow it to be corrected, in part because the FTA grant recipient’s solicitation expressly stated that the rolling stock standard applied to the procurement.459 In “sealed bid” situations, when the FTA grant recipient “awards on the basis of initial proposals without discussion,” the Buy America certification must be submitted with the initial bid, and is bind- ing on the bidder.460 However, in “negotiated procure- ments,” FTA has long taken the position that the Buy America certification submitted with the initial bid “may be superseded by subsequent certifications submitted with revised proposals, and the certifica- tion submitted with the offeror’s final revised proposal (or best and final offer) will control.”461 With the passage of SAFETEA-LU in 2005, Congress required FTA to update its Buy America regulations to clarify the Buy America certification require- ments for negotiated procurements.462 Thereafter, in 2006, FTA defined “negotiated procurement” broadly to include any “contract awarded using other than they submit the sworn statement of inadvertent or clerical error within 10 days after bid opening.451 Because the statutory language of the FTA Buy America provision allows bidders “to correct after bid opening any certification of non-compliance,”452 for many years FTA took the position that it could allow bidders to correct a certificate of noncompli- ance to a certificate of compliance, but not vice versa, after bid opening.453 In recent years, however, FTA appears to have abandoned its earlier position, and there have been instances in which FTA has allowed a bidder “to change its certification from compliance to non-compliance” by providing the sworn state- ment of inadvertent or clerical error within 10 days of bid opening.454 The opportunity to correct a mistaken certificate of Buy America compliance is significant, because the bidder is otherwise bound by its certificate and is typically unable to obtain a waiver after contract award, even if the conditions that would justify granting a pre-award waiver are satisfied.455 However, with the passage of SAFETEA- LU in 2005, Congress provided that FTA may permit Non-Availability waivers after contract award, when the contractor made an initial certification of Buy America compliance “in good faith.”456 Incorrect certification due to “ignorance of the proper application of the Buy America require- ments” is not a correctible error.457 The difference 451 See, e.g., Letter from Dorval R. Carter, Jr., FTA Chief Counsel, to Theodore W. Meshover, Universal Security Sys- tems, Subject: Incorrect Buy America Certificate (Jun. 24, 2011), available at https://www.transit.dot.gov/regulations- and-guidance/buy-america/universal-security-systems- june-24-2011; Letter from Dorval R. Carter, Jr., FTA Chief Counsel, to Kent I. Jackson, Jenkins Construction, Inc., Re: Clerical Error on Buy America Certificate (Mar. 16, 2011), available at https://www.transit.dot.gov/regulations-and- guidance/buy-america/jenkins-construction-inc- march-16-2011; Letter from Scott A. Biehl, FTA Chief Counsel, to Grover Lee, F.D. Thomas, Inc., Re: Incorrect Buy America Certificate (Jun. 2, 2009). 452 Transportation Equity Act for the 21st Century, Pub. L. No. 105-178, § 3020(b), 112 Stat. 107 (Jun. 9, 1988) (codi- fied at 49 U.S.C. § 5323(j)(10)). 453 Buy America Requirements—Amendment to Certifi- cation Procedures, 68 Fed. Reg. 9,798, 9,799 (Feb. 28, 2003); see also Letter from Gregory B. McBride, FTA Deputy Chief Counsel, to Robin Arthur Stimson, Siemens Transportation (Dec. 29, 2003) (“[T]he statute permits correction of a ‘certificate of noncompliance or failure to properly complete the certification,’ not an incorrect certificate of compliance.”). 454 Letter from Dorval R. Carter, Jr., FTA Chief Coun- sel, to Ed Woldt, San Diego Friction Products, Subject: Incorrect Buy America Certificate (Jul. 1, 2011), available at https://www.transit.dot.gov/regulations-and-guidance/ buy-america/san-diego-friction-products-inc-july-01-2011. 455 49 C.F.R. § 661.13(c) (2015). 456 SAFETEA-LU, supra note 108, at § 3032(i)(5)(C). 457 49 C.F.R. § 661.13(b)(3) (2015). 458 Letter from Dorval R. Carter, Jr., FTA Chief Counsel, to Dennis R. Simmer, Kansas DOT, Subject: Buy America (Dec. 21, 2010), available at https://www.transit.dot. gov/regulations-and-guidance/buy-america/kansas- coordinated-transit-district-council-december-21-2010. 459 Letter from Gregory B. McBride, FTA Deputy Chief Counsel, to Ellen M. O’Neill, Alstom Signaling (Jun. 19, 2003). 460 49 C.F.R. § 661.13(b)(2) (2015). 461 BPPM, supra note 107, at 43; see also Letter from Gregory B. McBride, FTA Deputy Chief Counsel, to Robin Arthur Stimson, Siemens Transportation (Dec. 29, 2003) (allowing bidder to change its certification from noncom- pliance to compliance with a subsequent submission of its best and final offer), available at https://web.archive.org/ web/20151120043016/http://www.fta.dot.gov/legislation_ law/12316_605.html. 462 SAFETEA-LU, supra note 108, at §§ 3032(i)(5)(B),(D).

42 for the procurement of rolling stock.469 The pre-award audit should generate a pre-award Buy America certification, which the FTA grant recipient is required to keep “on file.”470 If FTA has granted a Buy America waiver for “the rolling stock to be purchased” by the grant recipient, that documentation satisfies the Buy America certification requirements for the pre-award audit.471 Otherwise, the pre-award audit must include an independent review (by the FTA grant recipient or someone independent of the manu- facturer) of the manufacturer’s documentation of proposed components and subcomponents “to be purchased,” their anticipated costs, and their country of origin472; the pre-award audit must also include the manufacturer’s documentation of final assembly loca- tion, the proposed final assembly activities “that will take place” at that location, and the anticipated cost of final assembly.473 The auditor is to confirm that the manufacturer’s identification of components and subcomponents is consistent with FTA’s published lists of typical rolling stock components.474 The audi- tor is to also confirm that the manufacturer’s calcula- tion of domestic content percentage is consistent with FTA’s regulations, and that the computed domestic content percentage satisfies the applicable rolling stock domestic content criterion (i.e., 60 percent domestic content as of 2016, 65 percent domestic content for vehicle procurements with scheduled delivery of the first production vehicle in FY 2018 or 2019, or 70 percent domestic content for vehicle procurements with scheduled delivery of the first production vehicle in FY 2020 or thereafter).475 Finally, the auditor is to confirm that the proposed final assembly location is in the United States, and that the manufacturer’s proposed final assembly activities are consistent with FTA’s published list of minimum requirements for final assembly.476 The post-delivery audit is to take place after the rolling stock is delivered to the FTA grant recipient, but “before title to the rolling stock is transferred to the recipient”477 and before “the rolling stock is put into revenue service.”478 The post-delivery audit should generate a post-delivery Buy America certifi- cation, which the FTA grant recipient is required to sealed bidding procedures.”463 In the case of a negoti- ated procurement, FTA recognizes that, during the negotiation process, the bidder may make multiple proposals, with or without Buy America certifica- tions, and the bidder may change its certification based on information learned during negotiations. However, the bidder is required to submit one of the Buy America certification forms (either compliance or noncompliance) with its “best and final offer,” and the successful bidder is contractually bound by the certification in its best and final offer just as a sealed-bid contractor is bound by the certification in its proposal.464 Any earlier certifications made during the negotiation process are disregarded. For example, FTA has determined that its grant recipi- ents may not reject initial proposals for failing to include a Buy America certification, when the grant recipient intends to allow its bidders to submit best and final offers after a technical evaluation of their proposals.465 However, when an FTA grant recipient, “reserves the right to select on initial proposals, and chooses to do so, the [grant recipient] must reject a proposal that does not include a Buy America certifi- cate…as there is no opportunity to change the proposal to comply with the Buy America certifica- tion requirement.”466 B. Pre-Award and Post-Delivery Audits For rolling stock procurements, the FTA grant recipient is not entitled to rely on its contractor’s or supplier’s certification of compliance with the FTA Buy America provision—the FTA grant recipient is required to conduct pre-award and post-delivery audits of the manufacturer or contractor to ensure compliance.467 The audits are also intended to ensure compliance with applicable Federal Motor Vehicle Safety Standards as well as the contracting agency’s technical specifications;468 however, the focus of this discussion will be limited to auditing compliance with the FTA Buy America provision. A pre-award audit is to be conducted before the FTA grant recipient “enters into a formal contract” 463 49 C.F.R. § 661.3 (2015); see also Buy America Requirements—Amendments to Definitions, 71 Fed. Reg. 14,112 (Mar. 21, 2006). 464 49 C.F.R. § 661.13(b)(2) (2015); see also Buy Amer- ica Requirements—Amendments to Definitions and Waiver Procedures, 70 Fed. Reg. 71,246, 71,253 (Nov. 28, 2005). 465 Letter from Gregory B. McBride, FTA Deputy Chief Counsel, to Donna Raney, Palm Beach County (Jul. 27, 2004), available at https://web.archive.org/web/ 20150918093100/http://www.fta.dot.gov/legislation_ law/12316_616.html. 466 Id. 467 49 U.S.C. § 5323(m) (2016). 468 Id. 469 49 C.F.R. § 663.21 (2015); see also 49 C.F.R. § 663.3(a) (2015). 470 49 C.F.R. § 663.25 (2015). 471 49 C.F.R. § 663.25(a) (2015). 472 49 C.F.R. § 663.25(b)(1) (2015). 473 49 C.F.R. § 663.25(b)(2) (2015). 474 49 C.F.R. § 661.11, App. B, C (2015). 475 49 C.F.R. § 661.11 (2015). 476 49 C.F.R. § 661.11, App. D (2015). 477 49 C.F.R. § 663.31 (2015). 478 49 C.F.R. § 663.3(b) (2015).

43 “proposal has merit and will take this recommenda- tion into consideration in a future action that FTA may take to address pre-award and post-delivery audits for minivan procurements.”487 It remains to be seen whether vehicle manufacturers will submit their stan- dard models to annual Buy America audits conducted by FTA, although such a streamlined procedure would relieve FTA grant recipients of the audit responsibility and would avoid duplicative audit efforts. However, until such action is taken by FTA or Congress, it remains the responsibility of each FTA grant recipient to conduct pre-award and post-delivery audits of all of its rolling stock procurements. In May 1995, FTA issued two separate handbooks for conducting audits for rail procurements488 and bus procurements.489 In June 2015, in the Federal Register,490 FTA published notice of availability of a new draft handbook for conducting audits of both rail and bus procurements,491 which is proposed to replace the 1995 guidance, and solicited public comments on the draft handbook.492 As of this publi- cation, the handbook remains in draft form. C. FTA Investigations FTA may conduct an investigation of FTA Buy America compliance on any FTA-funded project.493 FTA’s investigation may include “site visits of manu- facturing facilities and final assembly locations.”494 keep on file.479 If FTA has granted a Buy America waiver for the rolling stock that is actually “received” by the grant recipient, that documentation satisfies the Buy America certification requirements for the post-delivery audit.480 Otherwise, the post-delivery audit must include an independent review (by the FTA grant recipient or someone independent of the manufacturer) of the manufacturer’s documentation of components and subcomponents of the delivered rolling stock end product, their actual costs, and their country of origin481; it must also include the manufacturer’s documentation of the actual final assembly location, the final assembly activities “which took place” at that location, and the actual cost of final assembly.482 The auditor is to confirm that the manufacturer’s identification of components and subcomponents is consistent with FTA’s published lists of typical rolling stock components.483 The auditor is to also confirm that the manufactur- er’s calculation of domestic content percentage is consistent with FTA’s regulations, and that the computed domestic content percentage based on the actual cost of components and subcomponents satis- fies the applicable rolling stock domestic criterion (i.e., 60 percent domestic content as of 2016, 65 percent domestic content for vehicle procurements with scheduled delivery of the first production vehi- cle in FY 2018 or 2019, or 70 percent domestic content for vehicle procurements with scheduled delivery of the first production vehicle in FY 2020 or thereaf- ter).484 Finally, the auditor is to confirm that the actual final assembly location is in the United States, and that the manufacturer’s actual final assembly activities were consistent with FTA’s published list of minimum requirements for final assembly.485 With respect to procurements of standard model vehicles, such as minivans for vanpool programs, it seems inefficient to require each FTA grant recipient to conduct pre-award and post-delivery audits of the same vehicle model. In May 2016, in the Federal Regis- ter, FTA questioned “whether manufacturers would consider submitting to a pre-award and post-delivery audit process that was conducted by FTA on each new model year, as opposed to requiring audits for each individual procurement.”486 In October 2016, following a notice-and-comment period, FTA concluded that its 479 49 C.F.R. § 663.35 (2015). 480 49 C.F.R. § 663.35(a) (2015). 481 49 C.F.R. § 663.35(b)(1) (2015). 482 49 C.F.R. § 663.35(b)(2) (2015). 483 49 C.F.R. § 661.11, App. B, C (2015). 484 49 C.F.R. § 661.11 (2015). 485 49 C.F.R. § 661.11, App. D (2015). 486 Notice of Proposed Buy America Waiver for Minivans, 81 Fed. Reg. 30,602, 30,604 (May 17, 2016). 487 Notice of Buy America Waiver of Domestic Content Requirement for Minivans and Vans, 81 Fed. Reg. 72,667, 72,670 (Oct. 20, 2016) (emphasis supplied). 488 FTA, conducting Pre-aWard and Post-delivery revieWs For rail vehicle Procurements, Report No. FTA- DC-90-7713-94-1, Rev. B (1995), available at https://web. archive.org/web/20150918092503/http://www.fta.dot.gov/ legislation_law/12921_5424.html. 489 FTA, conducting Pre-aWard and Post-delivery revieWs For Bus Procurements, Report No. FTA- DC-90-7713-93-1, Rev. B (May 1, 1995), available at https:// www.transit.dot.gov/regulations-and-guidance/buy- america/conducting-pre-award-and-post-delivery-audits- bus-procurements. 490 Buy America Handbook—Conducting Pre-Award and Post-Delivery Audits for Rolling Stock Procurements, 80 Fed. Reg. 34,487 (Jun. 16, 2015). 491 FTA, conducting Pre-aWard and Post-delivery audits For rolling stock Procurements, Report No. FTA DC-90-7713-93-1, Rev. C (2015), available at https://www. transit.dot.gov/regulations-and-guidance/buy-america/buy- america-handbook-conducting-pre-award-and-post-delivery. 492 See Guidance for Industry and Staff, Docket No. FTA 2015 0020 (Jun. 16, 2015), available at https://www. regulations.gov/docket?D=FTA-2015-0020. 493 49 C.F.R. § 661.15(c) (2015); see also 49 U.S.C. § 5325(g) (2016) (granting FTA “the right to examine and inspect all records, documents, and papers, including contracts, related to a project for which a grant is made” by FTA). 494 49 C.F.R. § 661.15(i) (2015).

44 of fact or points of law that were not known or avail- able to the party during the investigation.”506 If FTA determines that sufficient new information has been submitted to reconsider its decision, the investiga- tion process may effectively restart, with FTA again submitting a request for information and documen- tation and the other parties having opportunities to respond, comment, and reply as necessary.507 FTA’s 2010 investigation508 of a light rail vehicle procurement by the Metropolitan Transit Authority of Harris County (Houston METRO) offers a sample investigation timeline. To provide some background, in August 2007, Houston METRO had issued a solicitation for a light rail vehicle procurement that stated that the FTA Buy America provision did not apply.509 After being informed by FTA that the FTA Buy America provi- sion did apply, Houston METRO amended its solicita- tion in April 2008 to include the FTA Buy America provision.510 A Spanish bidder, Construcciones y Auxiliar de Ferrocarriles (CAF), submitted a Buy America certification with its bid in June 2008, certi- fying compliance with the FTA Buy America provi- sion.511 In March 2009, at CAF’s request, however, Houston METRO requested a Public Interest waiver from FTA for assembly of two prototype vehicles in Spain.512 In April 2009, FTA denied the waiver request on the basis of CAF’s binding certificate of compliance and also notified Houston METRO that it could not segment the prototype vehicle procurement from the production-and-assembly procurement for purposes of the FTA Buy America provision.513 Never- theless, in April 2009, Houston METRO entered into two separate contracts with CAF: a federally funded contract for 103 light rail vehicles subject to the FTA Buy America provision and a locally funded contract for two prototype vehicles to be assembled in Spain.514 On April 23, 2010, after learning that Houston METRO had entered into the separate contract with CAF for noncompliant prototype vehicles 1 year Pre-award or post-delivery audits conducted by the FTA grant recipient do not preclude FTA from conducting its own investigation.495 In practice, however, FTA does not routinely initi- ate investigations; most investigations are prompted by disappointed bidders challenging the Buy Amer- ica certifications of the successful bidders.496 “Any party may petition FTA to investigate the compli- ance of a successful bidder or offeror with the bidder’s or offeror’s certification.”497 In that case, the bidder’s certification of Buy America compliance is presumed to be true.498 The petitioner seeking an investigation must overcome that presumption by presenting an adequate “statement of the grounds of the petition and any supporting documentation.”499 If the petition for investigation is made before award of a contract, the award typically must be postponed pending FTA’s resolution of the matter.500 If the FTA grant recipient elects to proceed with the project while a petition for investigation is unre- solved, the FTA grant recipient must make a finding that failure to proceed will result in undue delay or undue harm, or that the procurement is otherwise urgently required.501 If the FTA grant recipient elects to proceed with award in that situation, FTA may elect not to participate in funding the project.502 If the evidence forecast by the petitioner is suffi- cient for FTA to initiate an investigation, the burden of proof shifts to the successful bidder to prove that it is in compliance with the FTA Buy America provi- sion. FTA will notify its grant recipient of the infor- mation and documentation to be requested from the successful bidder. The grant recipient typically must furnish a response on behalf of the successful bidder (including the requested documentation) within 15 business days of FTA’s request.503 The petitioner has an opportunity to comment on the submission within 10 business days after receipt, and then the grant recipient has one last opportunity to reply within 5 days after receipt of the petitioner’s comments.504 FTA will issue a written decision.505 The peti- tioner, successful bidder, or FTA grant recipient may request reconsideration within 10 business days after the decision, if the party “submits new matters 495 49 C.F.R. § 663.13 (2015). 496 TCRP LRD 31, supra note 2, at 3. 497 49 C.F.R. § 661.15(b) (2015). 498 49 C.F.R. § 661.15(a) (2015). 499 49 C.F.R. § 661.15(b) (2015). 500 49 C.F.R. § 661.15(m) (2015). 501 49 C.F.R. § 661.15(m) (2015). 502 49 C.F.R. § 661.15(n) (2015). 503 49 C.F.R. § 661.15(e) (2015). 504 49 C.F.R. § 661.15(g) (2015). 505 49 C.F.R. § 661.15(o) (2015). 506 Id. 507 Id. (“A request for reconsideration will be subject to the [investigation] procedures…consistent with the need for prompt resolution of the matter.”). 508 Memorandum from Kerry L. Miller, FTA Assistant Chief Counsel, to Dorval R. Carter, FTA Chief Counsel, Re: Report of Investigation: Houston METRO—Buy America & Procurement (Sept. 3, 2010) [hereinafter, Houston METRO Investigation Report], available at https://www.transit.dot. gov/regulations-and-guidance/buy-america/report- investigation-houston-metro-buy-america-and-procurement. 509 Id. at 11. 510 Id. at 14. 511 Id. 512 Id. at 16. 513 Id. 514 Id. at 17.

45 CAF requested reconsideration 10 days later, on September 17, 2010. However, FTA upheld its deci- sion on October 1, 2010, because it determined that “CAF has submitted no new matters of fact or points of law that were not known or available to it during the investigation.”521 Thus, the investigation proce- dure was concluded within 6 months of its initiation by FTA. D. Penalties 1. Termination of Funding by FTA Procurements that do not comply with the FTA Buy America provision are not eligible to receive FTA funds unless a waiver has been granted.522 Accordingly, violations of the FTA Buy America provision can result in loss of FTA funding for a project. If the FTA grant recipient learns prior to contract award that its contractor is either not in compliance with the FTA Buy America provision or that FTA has not granted a waiver of the contrac- tor’s noncompliance, the FTA grant recipient may not award the contract obligating FTA funds.523 If the FTA grant recipient elects to proceed with contract award while an FTA Buy America investi- gation is pending (as discussed in Section V.C), FTA reserves the right not to participate in the funding of that contract.524 In the case of a rolling stock procurement, if the FTA grant recipient fails to comply with its audit responsibilities (as discussed in Section V.B), FTA may withhold funds or even require the FTA grant recipient to repay funds previously received from FTA.525 2. Termination of Contract by FTA Grant Recipient The FTA Buy America provision is to be a mate- rial term of any FTA-funded contract between an FTA grant recipient and its contractor. The FTA grant recipient must include a notice of the applica- bility of the FTA Buy America provision in its solici- tation or request for bids.526 As discussed in Section V.A, the FTA grant recipient must require bidders to certify compliance or noncompliance with the FTA Buy America provision as a condition of bid respon- siveness. The FTA grant recipient’s contractor is earlier, FTA initiated an investigation on its own accord, without a formal petition by a disappointed bidder.515 Because FTA initiated the investigation, the burden of proof was on Houston METRO to demonstrate compliance. FTA made several requests for documents over the next 3 months, finding that Houston METRO’s “responses were sporadic and incomplete at times.”516 On July 26, 2010, Houston METRO certified that it had produced all investiga- tion-related documents to FTA.517 On September 7, 2007, FTA notified Houston METRO of its decision that Houston METRO and CAF violated the FTA Buy America provision by entering into the locally funded contract to produce two prototype vehicles.518 Key to its decision were FTA’s findings that “FTA forced METRO to include the Buy America requirements in its solicitation” in 2008, that CAF certified Buy America compliance on the assumption that a waiver would be available for prototype vehicles, and that METRO segmented the procurement by entering into a separate contract with CAF to manufacture the prototypes in Spain after “FTA denied its request for that waiver.”519 As a result, FTA required Houston METRO to either terminate its contracts with CAF (both the proto- type vehicle contract and the larger federally funded procurement) and rebid the procurement or forego an anticipated $250 million in federal funding.520 515 Letter from Dorval R. Carter, Jr., FTA Chief Counsel, to Frank J. Wilson, Houston METRO President, Re: Buy America Investigation (Apr. 23, 2010), available at https:// www.transit.dot.gov/regulations-and-guidance/buy- america/houston-metro-caf-parsons-transportation-group- april-23-2010. 516 Letter from Dorval R. Carter, Jr., FTA Chief Counsel, to Paula J. Alexander, Houston METRO Chief Counsel, Re: Decision Letter—Buy America & Procurement Inves- tigation (Sept. 7, 2010), available at https://www.transit. dot.gov/regulations-and-guidance/buy-america/houston- metro-caf-decision-letter-september-07-2010. 517 Houston METRO Investigation Report, supra note 508, at 7. 518 Letter from Dorval R. Carter, Jr., FTA Chief Counsel, to Paula J. Alexander, Houston METRO Chief Counsel, Re: Decision Letter—Buy America & Procurement Inves- tigation (Sept. 7, 2010), available at https://www.transit. dot.gov/regulations-and-guidance/buy-america/houston- metro-caf-decision-letter-september-07-2010. 519 Houston METRO Investigation Report, supra note 508, at 19. 520 Letter from Peter Rogoff, FTA Administrator, to Gilbert Andrew Garcia & George Greanias, Houston METRO (Sept. 7, 2010), available at https://www.transit. dot.gov/regulations-and-guidance/buy-america/letter- houston-metro-buy-america-and-procurement-investigation. Anticipated federal funding for Houston METRO’s light rail vehicle procurement included $64 million under ARRA and $141 million under FTA’s Major Capital Invest- ment Program (New Starts). Houston METRO Investiga- tion Report, supra note 508, at 3 n.9. 521 Letter from Dorval R. Carter, Jr., FTA Chief Counsel, to James J. Maiwurm & Shanker A. Singham, Squire, Sanders & Dempsey, LLP, Re: Request for Reconsideration— Buy America & Procurement Investigation (Oct. 1, 2010), available at https://www.transit.dot.gov/regulations-and- guidance/buy-america/caf-houston-metro-october-01-2010. 522 49 C.F.R. § 661.5(a) (2015). 523 49 C.F.R. § 661.17 (2015). 524 49 C.F.R. § 661.15(n) (2015). 525 49 C.F.R. § 663.15 (2015). 526 49 C.F.R. § 661.13(b) (2015).

46 Buy America provision to CTA, the subcontract agreement did not impose the FTA Buy America requirements on the subcontractor and did not provide that the subcontract could be terminated for the subcontractor’s failure to comply with the FTA Buy America provision. Therefore, the subcontractor could sue the prime contractor for breach of contract, when the prime contractor cancelled the subcon- tract and retained a replacement domestic contrac- tor to comply with the FTA Buy America provision. 3. Contractor Suspension or Debarment by FTA A contractor’s “willful refusal” to comply with its Buy America certificate can subject the contractor to debarment or suspension.534 Suspension will prevent the contractor from participating in the FTA-funded contract pending completion of FTA’s investigation “and any judicial or administrative proceedings that may ensue.”535 Debarment will exclude the contrac- tor from participating in future FTA-funded contracts for a fixed period of time,536 and typically would be imposed by FTA as a result of a criminal conviction or civil judgment imposed by a court. If FTA or a court determines that a contractor has intentionally falsified its Buy America certification, by falsely representing that products are domestic when they are not, the contractor is ineligible to receive FTA grant funds.537 FTA’s regulations authorize FTA, and not FTA grant recipients, to suspend or debar contractors for violations of the FTA Buy America provision. This probably precludes state or local transit agencies from suspending or debarring their contractors for violations of the FTA Buy America provision. In CF&I Steel, L.P. v. Bay Area Rapid Transit District,538 a steel manufacturer filed suit against the San Francisco Bay Area Rapid Transit District (BART) after BART resolved to refrain from purchasing or using steel from the manufacturer over concerns about “foreign content” as well as labor standards. A steelworkers union had notified BART that the manufacturer was not in compliance with the FTA Buy America provision and certain labor laws. BART conducted an investigation, and although it found no violations of the FTA Buy America bound by its Buy America certificate.527 If the FTA grant recipient has awarded a contract, and the contractor is unable to comply with its Buy America certificate, the contractor is in breach of the contract.528 A wide variety of legal and equitable remedies may be available under the contract,529 including requiring the contractor to get into compli- ance at no additional cost to the FTA grant recipi- ent,530 terminating the contract for default,531 and even the filing of a lawsuit by the FTA grant recipi- ent against its contractor for damages (e.g., for the additional costs associated with hiring a replace- ment contractor). The FTA regulations do not provide similar reme- dies for the FTA grant recipient’s contractor whose subcontractor or supplier fails to comply with the FTA Buy America provision. The contractor must ensure that its subcontract document puts the subcontractor on notice that the FTA Buy America provision applies to the subcontract, and that the subcontract provides appropriate remedies for the contractor in the event that the subcontractor fails to comply with the FTA Buy America provision. For example, in Albert M. Higley Co. v. N/S Corp.,532 the U.S. Court of Appeals for the Sixth Circuit allowed a contractor to maintain a breach of contract action in federal court against its subcontractor for failing to comply with the FTA Buy America provision, when Buy America compliance was a material term of the subcontract. Knowledge of the applicability of the FTA Buy America provision will not be imputed to subcon- tractors, however, when the FTA grant recipient’s contractor fails to expressly flow down the Buy America requirements in its subcontracts. In Energy Labs, Inc. v. Edwards Engineering, Inc.,533 the U.S. District Court for the Northern District of Illinois allowed a subcontractor to maintain a breach of contract action in federal court against a prime contractor for the CTA. Although the prime contrac- tor was required to certify compliance with the FTA 527 49 C.F.R. § 661.13(c) (2015). 528 49 C.F.R. § 661.17 (2015). 529 49 C.F.R. § 663.39(a) (2015) (“The [FTA grant] recipi- ent may exercise any legal rights it has under the contract or at law.”). 530 See, e.g., 49 C.F.R. § 663.39(b) (2015) (allowing an FTA grant recipient to conditionally accept rolling stock pending the manufacturer achieving compliance with the FTA Buy America provision “within a reasonable period of time”). 531 See, e.g., 49 C.F.R. § 663.39(a) (2015) (allowing an FTA grant recipient to reject a rolling stock delivery if it does not comply with the FTA Buy America provision). 532 445 F.3d 861 (6th Cir. 2006). 533 No. 14-CV-07444, 2015 U.S. Dist. LEXIS 71058 (N.D. Ill. Jun. 2, 2015). 534 49 C.F.R. § 661.19 (2015). Although FTA’s regula- tions provide that the suspension or debarment proceed- ing is to be conducted according to 49 C.F.R. Part 29, those procedures have been superseded and replaced by the sus- pension and debarment proceedings for federal grant- funded projects at 2 C.F.R. Part 180. 535 2 C.F.R. § 180.1015 (2015). 536 2 C.F.R. § 180.925 (2015). 537 49 U.S.C. § 5323(j)(8) (2016). 538 No. 00-CV-00529, 2000 U.S. Dist. LEXIS 13810 (N.D. Cal. Sept. 19, 2000).

47 by a rail rolling stock manufacturer to a USDOT grant recipient was not a claim made to the federal govern- ment for purposes of the False Claims Act, even if the claimant was seeking to be paid with USDOT grant funds. The Totten court’s opinion was based on statu- tory construction of the language of the False Claims Act, which at the time applied to claims presented “to an officer or employee of the United States Govern- ment or a member of the Armed Forces of the United States,”543 and the court concluded that compliance certification made to a federal grant recipient is not a claim made to the federal government.544 Although the U.S. Supreme Court in 2008 disagreed that the False Claims Act only applies to claims presented directly to the federal government, it agreed with the Totten court that the False Claims Act does not apply to all false claims made to federal grant recipients,545 and thus concluded that the False Claims Act is applicable only when the false claimant specifically intends to defraud the federal government and not merely a federal grant recipient (such as a state or local transit agency). At the time of the Totten decision, another qui tam case was pending in federal court, this time alleging that false certifications of compliance with the FTA Buy America provision constituted false claims for purposes of the False Claims Act. In United States ex rel. Sanders v. North American Bus Industries, Inc.,546 the relator alleged that North American Bus Industries (NABI) understated the cost of bus shells that it imported from Hungary, in order to qualify for a rolling stock Domestic Content waiver from the FTA Buy America provision for buses sold to WMATA, the Maryland Transit Admin- istration, and MDT. As with the defendant manufac- turer in Totten, however, NABI argued that the False Claims Act did not apply because NABI made its Buy America certifications to the local transit agencies rather than to FTA and sought payment from the local transit agencies rather than FTA. FTA paid funds to the local transit agencies rather than to NABI, and would have done so with or with- out NABI’s allegedly false Buy America certificate (argued NABI).547 In 2008, the U.S. Court of Appeals provision, it issued the resolution to encourage the manufacturer to resolve its labor dispute with the union, based in part on an agreement from the union to stop raising questions about the domestic content of the steel. The U.S. District Court for the Northern District of California found that BART had effec- tively debarred the manufacturer. The court further determined that BART exceeded its authority by debarring the manufacturer on the basis of federal labor laws, because the federal government has preempted that field, and “[s]tate and local govern- ments are precluded from adding supplemental penalties for violations of these federal laws.”539 Likewise, a state or local transit agency probably cannot suspend or debar its contractor for violating the FTA Buy America provision, because federal regulations authorize FTA (and not the FTA grant recipient) to suspend or debar noncompliant contrac- tors.540 There may be state and local procedures allowing the state or local transit agency to suspend or debar contractors for violations of state and local requirements, however, including state Buy Amer- ica requirements that are similar to or even more stringent than the FTA Buy America provision (as discussed in Section I.C.4). 4. False Claims Act Liability Under the Federal False Claims Act, anyone who “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval” may be liable to the federal government for a civil penalty, as well as treble the government’s actual damages resulting from the false or fraudulent claim.541 For many years, it was questionable as to whether a false Buy America compliance certifica- tion might qualify as a false or fraudulent claim for purposes of the False Claims Act. The FTA Buy America provision does not expressly provide for liability under the False Claims Act for false Buy America compliance certifications. However, as a result of 2009 revisions made by Congress to the False Claims Act, it is likely that false certifications of compliance with the FTA Buy America provision can subject a contractor, supplier, or manufacturer to civil liability under the False Claims Act. In 2004, in United States ex rel. Totten v. Bombar- dier Corp.,542 the U.S. Court of Appeals for the D.C. Circuit concluded that a compliance certification made 539 Id., at *1. 540 49 C.F.R. § 661.19 (2015); see also 2 C.F.R. § 180.930 (2015) (authorizing the federal agency to debar contractors of federal grant recipients); 2 C.F.R. § 180.1010 (2015) (authorizing the federal agency to suspend contractors of federal grant recipients). 541 31 U.S.C. § 3729(a)(1). 542 380 F.3d 488, 363 U.S. App. D.C. 180 (D.C. Cir. 2004). 543 31 U.S.C. § 3729(a)(1) (2008). 544 Totten, 380 F.3d at 502 (D.C. Cir. 2004) (“[C]laims were presented only to Amtrak for payment or approval, and Amtrak is not the Government.”). 545 Allison Engine Co., Inc. v. U.S. ex rel. Sanders, 553 U.S. 662, 669, 128 S. Ct. 2123, 2128, 170 L. Ed. 2d 1030, 1038 (2008) (quoting Totten for the proposition that Congress did not intend for False Claims Act liability to attach to all false claims made to federal grant recipients such as colleges and universities). 546 546 F.3d 288 (4th Cir. 2008). 547 Brief of Appellees at 41 43, U.S. ex rel. Sanders v. North America Bus Indus., Inc., No. 07-1773 (4th Cir. Nov. 20, 2007).

48 Claims Act allegations.554 U.S. Secretary of Trans- portation Anthony Foxx stated, “The U.S. Depart- ment of Transportation considers compliance with Buy America to be a fundamental requirement when a company is involved in federal projects. As we work to be good stewards of limited federal resources, the department applauds the Depart- ment of Justice and our own Office of Inspector General for the successful prosecution of this case.”555 There is no longer any serious disagreement that the False Claims Act applies to false certifications of compliance with the FTA Buy America provision. 5. Criminal Penalties If a contractor’s Buy America certification is “knowingly and willfully…false, fictitious, or fraud- ulent,” the contractor or the individual who made the certification is subject to criminal fines and imprisonment of up to 5 years.556 The FTA Buy America provision is unique among the federal transportation grant Buy America provisions by expressly providing for criminal liability. In March 2016, in the Novum case previously discussed, the defendant contractor pleaded guilty to falsifying, concealing, and covering up material facts from the federal government, based on charges that it falsely certified compliance with the FTA Buy America provision on multiple projects, including the Miami Intermodal Center and the New Orleans bus canopy project.557 Novum was thus ordered to pay a $500,000 criminal fine,558 in addition to its $2.5 million payment to settle civil claims. E. Legal Action by Disappointed Bidders Historically, a disappointed bidder who disputed an FTA grant recipient’s application of the FTA Buy America provision was generally not permitted to maintain a lawsuit in federal court to prevent a contract award to its competitor. As a result of 2005 revisions by Congress as part of SAFETEA-LU, however, disappointed bidders may be able to bring suit in federal court to challenge decisions by FTA for the Fourth Circuit declined to decide whether the False Claims Act applied to Buy America certifi- cations made by contractors to FTA grant recipients, ruling instead that the Sanders relator did not file suit within the statutory limitations period for the False Claims Act.548 Shortly thereafter, in May 2009, Congress revised the False Claims Act to clarify that it applies to false claims made to federal grant recipi- ents by their contractors.549 In congressional debate on the revision, one justification offered for the legislation was to allow the federal government to pursue recovery from contractors who make false claims to federal grant recipients rather than directly to the federal government, specifically citing the Totten case.550 As a result, the False Claims Act now specifically applies to claims made to federal grant recipients by their contractors (or to the contractors by their subcontractors) if the federal government “provides or has provided any portion of the money or property requested or demanded,” or if the federal grant recipient or its contractor will be reimbursed by the federal govern- ment “for any portion of the money or property which is requested or demanded.”551 Thereafter, in 2012, in United States ex rel. King v. Novum Structures, Inc.,552 a qui tam relator alleged that her former employer supplied foreign materials to FTA-funded projects, including a streetcar expan- sion project for the New Orleans Regional Transit Authority and the Miami Intermodal Center project for the Florida Department of Transportation, in violation of the FTA Buy America provision. The relator alleged that Novum’s applications for payment therefore constituted false claims under the False Claims Act. The federal government inter- vened on December 31, 2015.553 In January 2016, the U.S. Department of Justice announced that Novum agreed to pay $2.5 million to settle the False 548 Sanders, 546 F.3d at 296 (dismissing FCA action as untimely based on the statute of limitations, and not reach- ing the question of whether a false certification of compli- ance with the FTA Buy America provision constitutes a false claim under the FCA). 549 Fraud Enforcement and Recovery Act of 2009, Pub. L. No. 111 21, § 4, 123 Stat. 1617 (May 20, 2009). 550 155 cong. rec. S2,424–25 (Feb. 24, 2009) (statement of Sen. Grassley); 155 cong. rec. S2,428 (Feb. 24, 2009) (statement of Sen. Durbin). 551 31 U.S.C. § 3729(b)(2)(A)(ii) (2016). 552 Complaint, U.S. ex rel. King v. Novum Structures, Inc., No. 12-CV-00860 (E.D. Wis. Aug. 23, 2012). 553 The Government’s Notice of Election to Intervene in Part and Decline to Intervene in Part, U.S. ex rel. King v. Novum Structures, Inc., No. 12 CV 00860 (E.D. Wis. Dec. 31, 2015). 554 U.S. Dep’t of Justice, Wisconsin Architectural Firm to Plead Guilty and Pay $3 Million to Resolve Criminal and Civil Claims (Jan. 5, 2016), available at https://www.justice. gov/opa/pr/wisconsin-architectural-firm-plead-guilty-and- pay-3-million-resolve-criminal-and-civil-claims. 555 Id. 556 18 U.S.C. § 1001 (2016); see also 49 U.S.C. § 5323(l)(1) (2016) (making a certificate of compliance with the FTA Buy America provision subject to 18 U.S.C. § 1001). 557 Information, United States v. Novum Structures, Inc., No. 16 CR 00001 (E.D. Wis. Jan. 5, 2016). 558 Judgment in a Criminal Case, United States v. Novum Structures, Inc., No. 16-CR-00001 (E.D. Wis. Mar. 7, 2016).

49 Seal, a low bidder challenged WMATA’s decision that its bid was nonresponsive for failure to submit a Buy America certificate with the bid, and sought an injunction preventing the award of a contract to its competitor. The U.S. District Court for the Eastern District of Virginia concluded that the plaintiff had standing as an “aggrieved bidder,” because “Congress intended WMATA to conduct its procurements as a federal agency would, and to be subject to suits by aggrieved bidders for procurement activities in viola- tion of” applicable procurement regulations.564 The Seal decision had limited precedential author- ity outside of WMATA procurements, as most bidders typically deal directly not with FTA or a federally chartered transit authority, but rather with a state or local transit agency not chartered by Congress. In the typical situation, where an FTA-funded contract was let by a state or local transit agency, a disappointed bidder could not manufacture standing by asserting its claim for declaratory or injunctive relief against FTA directly. In 2004, in Cubic Transportation Systems, Inc. v. Mineta,565 a disappointed bidder seeking to supply fare collection systems to MBTA filed suit against the FTA Administrator and USDOT Secre- tary, in their official capacities, challenging the low bidder’s compliance with the FTA Buy America provi- sion. The plaintiff had previously requested an FTA investigation, but FTA concluded that the low bidder complied with the FTA Buy America provision, and the plaintiff sought a declaratory judgment that the low bidder did not comply. The U.S. District Court for the District of Columbia concluded that the plaintiff did not have standing to challenge FTA’s decision, because the plaintiff was not aggrieved by any action taken by FTA: “FTA did not make the final decision awarding the MBTA contract to [the low bidder], and a finding by FTA that [the low bidder] was not compli- ant with the Buy America regulations would not have necessarily resulted in awarding the contract to [plaintiff].”566 Shortly after the Conti and Cubic decisions, with passage of SAFETEA-LU in 2005,567 Congress provided that a “party adversely affected by an agency action under” the FTA Buy America provi- sion “shall have the right to seek review” under the Federal Administrative Procedure Act (APA).568 The APA entitles the adversely affected party to judicial review by a federal court in an action against the United States seeking “relief other than money damages,” such as an injunction against contract that influence contract award. Relief may also be available in state court, as discussed herein. In the late 1980s, in Ar-Lite Panelcraft, Inc. v. Siegfried Constr. Co., Inc.,559 a product supplier sued the Niagara Frontier Transportation Authority (NFTA) and a number of its potential contractors on a station construction project after FTA granted NFTA a Buy America waiver for the project. The waiver allowed contractors to offer foreign products instead of the plaintiff ’s domestic product, which had failed testing to determine whether it satisfied the project’s technical specifications. The U.S. District Court for the Western District of New York dismissed the plaintiff ’s Buy America contentions for failure to state a claim, due to the absence of a private cause of action in the FTA Buy America provision. The court stated that the FTA Buy Amer- ica provision “does not create a federal right in favor of [noncompliant domestic manufacturers], and there is no indication of legislative intent to create such a right.”560 In a similar manner, a disappointed bidder has historically not had standing to maintain a federal lawsuit seeking declaratory or injunctive relief when the disappointed bidder disputes the FTA grant recipient’s application of the FTA Buy America provi- sion. In the early 2000s, in Conti Enterprises, Inc. v. Southeastern Pennsylvania Transportation Author- ity,561 a low bidder who certified Buy America noncom- pliance challenged SEPTA’s decision to not seek a waiver from FTA and instead award a contract to the only bidder who certified compliance with the FTA Buy America provision. In a decision based on Penn- sylvania law, the U.S. District Court for the Eastern District of Pennsylvania concluded that the disap- pointed bidder did not have standing to challenge SEPTA’s decision. In contrast with FTA or state governments who fund transit projects and have “direct interests in overseeing the expenditure of tax revenues,” the Court concluded that a bidder’s inter- est is typically too remote and indirect to maintain suit to enforce federal procurement regulations.562 One exception in which a federal court did allow a disappointed bidder to bring an action seeking injunctive relief that involved the FTA Buy America provision was Seal and Company, Inc. v. Washington Metropolitan Area Transit Authority563 in 1991. In 559 No. 86-CV-00525, 1989 U.S. Dist. LEXIS 6394 (W.D.N.Y. Mar. 10, 1989). For a detailed discussion of the Ar Lite case, see TCRP LRD 31, supra note 2, at 28. 560 Id. 561 No. 03-CV-05345, 2003 U.S. Dist. LEXIS 19848 (E.D. Penn. Oct. 14, 2003). 562 Id. at *5. 563 768 F. Supp. 1150 (E.D. Va. 1991). 564 Id. at 1157. 565 357 F. Supp. 2d 261 (2004). 566 Id. at 263 n.2. 567 SAFETEA-LU, supra note 108, at § 3023(i). 568 49 U.S.C. § 5323(j)(11) (2016).

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Updated Guide to Buy America Requirements—2015 Supplement Get This Book
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TRB's Transit Cooperative Research Program (TCRP) Legal Research Digest 49: Updated Guide to Buy America Requirements—2015 Supplement examines various statutory and regulatory Buy America requirements that a state or local governmental entity must examine when receiving funds for a public transportation project from one or more USDOT agencies. The purpose of this Legal Research Digest is to update the earlier TRB legal research to provide a comprehensive and current summary of the FTA Buy America provision.

TRB first published its Guide to Federal Buy America Requirements in 2001 as TCRP Legal Research Digest 17. A 2009 supplement to the guide was published as TCRP Legal Research Digest 31, which addressed significant legislative changes to the FTA Buy America provision enacted by Congress in 2005, as well as FTA’s 2007 final rule implementing those changes. In 2015, the FTA Buy America provision was addressed again in National Cooperative Rail Research Program (NCRRP) Legal Research Digest 1, along with other federal transportation grant Buy America provisions that are applicable to federally funded rail projects.

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