Updated Guide to Buy America Requirements—2015 Supplement (2017) / Chapter Skim
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From page 15... ...
15 be delivered on or after October 1, 2019, all vehicles in that procurement must contain at least 70 percent domestic content. The same criteria (i.e., 65 percent for vehicles to be delivered beginning in FY 2018 and 70 percent for vehicles to be delivered beginning in FY 2020)
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From page 16... ...
16 However, under the FTA Buy America provision a component is considered domestic as long as all of its manufacturing processes take place in the United States, "regardless of the origin of its subcomponents."147 In other words, a manufactured product can incorporate foreign content, but the manufactured product will still comply with the FTA Buy America provision as long as the foreign content is at the subcomponent level. Accordingly, most Buy America disputes that involve manufactured products revolve around whether foreign content in the manufactured product qualifies as a "subcomponent" (i.e., component of a component)
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From page 17... ...
17 product", adopted by FTA, in 2007 is intended to ensure consistency in application of the FTA Buy America provision from one FTA grant recipient to another, and from one contract to another, so that end products are always evaluated as end products, regardless of the contract deliverable.160 FTA refers to the current practice as a "non-shift approach."161 Representative manufactured end products identified by FTA in 2007 include "fare collection systems; computers; information systems; security systems; data processing systems; and mobile lifts, hoists, and elevators."162 The inclusion of so many "systems" in the list of representative manufactured end products was, in part, a response to direction by Congress in SAFETEA-LU for FTA to address the applicability of the FTA Buy America provision to the procurement of systems. FTA practice prior to 2007 for the procurement of systems (such as a people-mover system)
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18 based largely on FTA's 2007 final rule that adopted a "non-shift" approach and defined "system" end products.172 FTA concluded that, regardless of whether the subject of the procurement was a rehabilitated bus garage, the HVAC system was a system end product for purposes of the FTA Buy America provision. Accordingly, the air handler units were components of the HVAC system, not subcomponents of the facility, and so the air handler units must be manufactured in the United States.173 In summary, the nominal 100 percent domestic content requirement for most manufactured products still allows for a significant amount of foreign content at the subcomponent level.
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From page 19... ...
19 into the rolling stock end product at its "final assembly" location.181 Accordingly, Buy America compliance for rolling stock also turns on what constitutes final assembly.
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20 or subcomponents if the original parts being replaced were components or subcomponents of a rolling stock end product.196 Further, FTA decided that rolling stock replacement parts should be evaluated as components or subcomponents of manufactured end products, under which the origin of subcomponents is disregarded, rather than as components or subcomponents of rolling stock end products.197 This means that a replacement part for a rolling stock component must be manufactured in the United States, although the origin of its subcomponents may be disregarded.198 There is no domestic content requirement for a replacement part for a rolling stock subcomponent.199 In 2012, FTA made a distinction between overhauls and rebuilds of rolling stock end products for purposes of the FTA Buy America provision.200 An overhaul or refurbishment involves the "systematic replacement or upgrade of systems." It "is intended to enable the rolling stock to perform to the end of the original useful life" and "not extend the useful life of the vehicle itself."201 In that situation, the replacement parts are subject to the replacement part standard that accompanied the 2007 adoption of the "non-shift" approach; namely, all replacement parts for rolling stock components must be manufactured in the United States, although the origin of subcomponents is disregarded. On the other hand, a rolling stock rebuild or reconditioning, however, "creates additional useful life" for the vehicle and typically takes place once the vehicle has "already reached the end of its minimum useful life."202 FTA concluded that a rolling stock rebuild or reconditioning is similar to the procurement of a new rolling stock end product, and therefore it should be eligible for the rolling stock Domestic Content waiver.
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21 Unlike other manufactured products, for which the cost of subcomponents is disregarded, Congress specifically provided that the cost of subcomponents is to be considered for rolling stock.210 FTA defines "subcomponent" to include any product or material "that is one step removed from a component…in the manufacturing process and that is incorporated directly into a component."211 A rolling stock component is considered domestic if it is manufactured in the United States and if the cost of its subcomponents satisfies the applicable rolling stock domestic content criterion (i.e., 60 percent domestic content as of 2016, 65 percent domestic content for vehicles to be delivered in FYs 2018 or 2019, or 70 percent domestic content for vehicles to be delivered in FY 2020 and thereafter) .212 If the rolling stock component qualifies as domestic under that test, then the entire cost of that component is treated as domestic when calculating the domestic content of the rolling stock end product.
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22 In 2001, FTA confirmed that a "propulsion system" is not a rolling stock component because the propulsion system "consists of a traction motor, propulsion gearbox, acceleration and [braking] resistors, and propulsion controls,"223 all of which are listed on FTA's list of typical components of rail rolling stock.224 Therefore, those items are components of the rolling stock end product (not subcomponents of the end product's "propulsion system")
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23 Likewise, with respect to buses, final assembly includes, at minimum, the installation or interconnection of a specific list of bus elements, as well as "road testing, final inspection, repairs and preparation of the vehicle for delivery."236 If a manufacturer's domestic assembly processes do not include all of the typical final assembly activities identified in the FTA regulations, the manufacturer can still request a specific determination from FTA that the manufacturer's domestic activities are sufficient to constitute final assembly in the United States (without necessitating a formal waiver) .237 FTA's published lists of "elements" of railcars and buses, which typically must be installed or interconnected at the final assembly location, are not identical to FTA's published lists of typical "components" of railcars and buses.
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24 activity that must take place in the United States) , and FTA specifically noted "that component and climate room testing are excluded from the minimum final assembly activities" for rail rolling stock.244 Therefore, the proposed approach constituted final assembly in the United States, qualifying for the rolling stock Domestic Content waiver of the FTA Buy America provision.
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25 guide rails and elevator doorframes are "construction materials made primarily of steel or iron,"262 which must be domestic. However, in 2015, FTA reversed course and concluded that elevator guide rails and elevator doorframes are subcomponents whose origin may be disregarded.263 The change in policy is based on a combination of FTA's 2007 final rule that adopted a "non-shift" approach and FTA's treatment of transit facilities as manufactured end products, which is discussed in greater detail in the following section.
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From page 26... ...
26 must be domestic, rather than subcomponents of the facility whose origin may be disregarded. As previously noted in Section III.C.1, FTA has determined that elevators and escalators permanently affixed to a transit facility are components of the facility.271 Key to this determination is the fact that an elevator or escalator "becomes functional and can be used as intended only upon incorporation into the station."272 Because the final assembly location of elevators and escalators is the construction site, the elevators and escalators are "manufactured in the United States" and thus considered domestic, regardless of the origin of their subcomponents.
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From page 27... ...
27 necessarily the subject of a procurement. Accordingly, FTA has concluded that utility relocation work in support of an FTA-funded construction project must comply with the FTA Buy America provision, regardless of whether FTA funds the utility relocation work.281 The applicability of Buy America provisions to utility relocation work became more prominent during congressional debate on MAP-21 in 2012.
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