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Best Practices Procurement Manual — Appendix A.2 - Dear Colleague Letters Page 1 FEDERAL TRANSIT ADMINISTRATION BEST PRACTICES PROCUREMENT MANUAL TABLE OF CONTENTS (Appendix A.2 - Governing Documents – Dear Colleague Letters) A.2 – Dear Colleague Letters 1. January 20, 2004: Performance and Payment Bonding Requirements 2. May 29, 2002: Policy Changes and Clarifications re: Procurement Transactions 3. June 15, 2001: Feedback on the Effectiveness of FTA‘s Third Party Contracting Requirements and Procurement Assistance Program 4. December 21, 1998: Joint Procurements, Y2K Compliance Requirements 5. October 1, 1998: Revenue Contracts, Piggybacking, Tag-ons 6. September 4, 1998: APTA‘s Standard Bus Procurement Guidelines 7. March 18, 1997: Buy America Requirements of Pre-Award and Post-Delivery Best Practices Procurement Manual — Appendix A.2 - Dear Colleague Letters Page 2 Best Practices Procurement Manual — Appendix A.2 - Dear Colleague Letters Page 3 1. January 20, 2004: Performance and Payment Bonding Requirements U.S. Department Administrator 400 Seventh St. S.W. of Transportation Washington, D.C. 20590 Federal Transit Administration January 20, 2004 C-01-04 Dear Colleague: In working with our grantees and their transit suppliers, we have found some misunderstanding about the Federal Transit Administration (FTA) requirements regarding performance and payment bonds in Federally-assisted procurements, particularly for rolling stock procurements. In short, FTA does not require bonding in any amount for rolling stock or any other non- construction contracts. FTA leaves to the good business judgment of our grantees the discretion to determine the appropriate amount of bonding –– if any –– to incorporate in non-construction contracts. With APTA‘s assistance, FTA examined the prices rolling stock manufacturers pay for bonds and how those prices have reacted to changes in the broader bond market. We found wide variation in manufacturers‘‘ experiences overall, but a strong indication that rail car manufacturers have been particularly hard hit in terms of bond pricing and availability. Needless to say, high bond costs and reduced availability directly impact both the grantee‘s bottom line and competition within the industry. I challenge each of you to carefully assess the risks involved in any given procurement and carefully balance those risks against the cost and competitive impacts of bonding requirements. At FTA, we will continue to work with the industry to identify cost-effective ways to manage risks, and will share that information through our Best Practices Procurement Manual. Additionally, we will continue to work with both the public and private sectors to ensure our grantees have access to the information they need to make informed choices as they consider bonds in their procurement practices. Even in the area of construction contracts (where bonding is an FTA requirement), we remain willing to review and approve sensible alternatives and exceptions to the bonding levels identified as adequate to protect the Federal interest in FTA Circular 4220.1E. The Circular notes that ―a Grantee may seek FTA approval of its bonding policy and requirements if they do not comply with these criteria,‖ and FTA has approved exceptions to the circular requirements. As responsible stewards of our public resources, it is incumbent upon each of us to maximize the benefits generated by every transit dollar. Please review your bonding practices to ensure that Best Practices Procurement Manual — Appendix A.2 - Dear Colleague Letters Page 4 you are prudently utilizing this important tool. I look forward to sharing the sound and innovative practices that the transit industry always generates. Sincerely, Jennifer L. Dorn Best Practices Procurement Manual — Appendix A.2 - Dear Colleague Letters Page 5 2. May 29, 2002: Policy Changes and Clarifications re: Procurement Transactions U.S. Department Administrator 400 Seventh St. S.W. of Transportation Washington, D.C. 20590 Federal Transit Administration May 29, 2002 C-08-02 Dear Colleague: I am pleased to announce a number of Federal Transit Administration (FTA) policy changes and clarifications that we believe will simplify your procurement transactions, as well as several initiatives intended to identify and share successful procurement practices. The changes and clarifications involve: " Rescission of five-year contract term limitations; " Use of E-commerce for procurements; " Rules on advance payments; and " The effect of using of various FTA funding sources for operating and preventive maintenance contracts. In addition, you will find information on a new Best Practices initiative, as well as the introduction of the Experimental Procurement Laboratory initiative. Through these initiatives, we hope to persuade you to share what works well and encourage new thinking about how procurement practices can be simplified and improved. This information will also be made available on the FTA public website, and I encourage you to share it with your procurement staff. I also want to thank the many transit agencies that have offered comments on how to improve procurement practices, and particularly those who responded to our recent survey. POLICY CHANGES AND CLARIFICATIONS A. FTA C 4220.1D, Paragraph 7(m) -- Contract Term Limitation The five-year contract term limitation for FTA-funded contracts, including "revenue contracts," awarded by grant recipients is hereby rescinded. Revenue contracts are those that utilize FTA- funded real estate, equipment and facilities to generate revenue. With this rescission, grant recipients no longer need to obtain FTA approval for contract terms exceeding five years. Please Best Practices Procurement Manual — Appendix A.2 - Dear Colleague Letters Page 6 note, however, that contracts for rolling stock and replacement parts are still limited to not more than five years, as required by statute. (49 United States Code Section 5326(b)) Grantees are expected to continue to be judicious in establishing and extending their contract terms. Good procurement practice dictates that grantees enter into contract terms no longer than minimally necessary to accomplish the purpose of the contract. B. E-Commerce E-Commerce has been and continues to be an allowable means to conduct procurements. If a grantee chooses to utilize E-Commerce, written procedures must be developed and all requirements for full and open competition must be met. C. FTA C4220.1D, Paragraph 12.a. -- Advance Payments There continues to be some confusion about FTA policy with respect to advance payments, stemming from the interpretation of American Public Transportation Association‘s Standard Bus Procurement Guidelines and subsequent FTA Dear Colleague Letters. The clarification of requirements regarding advance payments provided in the Dear Colleague Letter of June 15, 2001, remains accurate, but is further clarified as follows: FTA C 4220.1D, Paragraph 12, "Payment Provision in Third Party Contracts," states: "FTA does not authorize and will not participate in funding payments to a contractor prior to the incurrence of costs by the contractor unless prior written concurrence is obtained from FTA." This policy remains unchanged: FTA funds may not be used to make advance payments unless prior written concurrence is obtained from FTA. There is no prohibition on a grant recipient‘s use of local funds for advance payments. However, advance payments made with local funds before a grant has been awarded, or before the issuance of a letter of no prejudice or other pre-award authority, are ineligible for reimbursement. D. FTA C 4220.1D, Paragraph 4 – Applicability (Regarding Operating Assistance and Preventive Maintenance) FTA grant recipients who utilize FTA formula funds for operating assistance are required to follow the requirements of the FTA C 4220.1D for all operating contracts. Since FTA formula funds pay a percentage of the net operating deficit, such contracts cannot be segregated and FTA C 4220.1D must be applied. Congestion Mitigation and Air Quality (CMAQ) and Job Access/Reverse Commute (JARC) project funds may be used for operations. Grantees must follow the Circular requirements for any specific contracts that utilize CMAQ or JARC funds. However, the use of CMAQ and JARC funds for operations does not trigger the applicability of the Circular to all other operating contracts. Best Practices Procurement Manual — Appendix A.2 - Dear Colleague Letters Page 7 Grantees who utilize formula capital funds for preventive maintenance contracts are subject to the following requirements under the Circular. If the FTA formula funds are allocated to discrete contracts identified in the grant application for preventive maintenance, then FTA C 4220.1D will apply only to those specific contracts. If the FTA formula funds are not allocated to discrete contracts in the grant application, then all preventive maintenance contracts are subject to the requirements of the Circular. BEST PRACTICES INITIATIVES A. Best Practices Contest While the Best Practices Procurement Manual (BPPM) contains some excellent examples of grantee "best practices," we are eager to encourage the sharing of many more of these practical ideas among grantees. Everyone who submits a best practice that is incorporated into the Manual will be publicly recognized at American Public Transit Association‘s Annual Meeting. In addition, one individual/agency will be recognized at the annual Awards Ceremony, and APTA will waive the conference registration fee for the person who submits the winning "best practice." B. Experimental Procurement Laboratory FTA also is creating an experimental "procurement laboratory." The goal of this initiative is to allow and encourage grantees to improve or streamline their contracting processes through innovative approaches. Grantees are invited to propose procurement innovations for consideration and approval by FTA. If the experiment is successful, the practice will be published in the Best Practices Procurement Manual. More information about the Best Practices Contest and the Experimental Procurement Laboratory initiative will be published soon on the FTA website, the BPPM website, and the APTA website, and will be made available at FTA conferences and National Transit Institute procurement courses. I appreciate your continued support, and look forward to working with you to further improve procurement practices in the transportation industry. Regional Office. Sincerely, Jennifer L. Dorn Best Practices Procurement Manual — Appendix A.2 - Dear Colleague Letters Page 8 3. June 15, 2001: Feedback on the Effectiveness of FTA’s Third Party Contracting Requirements and Procurement Assistance Program U.S. Department Of Transportation 400 Seventh St. S.W. Federal Transit Washington, D.C. 20590 Administration Deputy Administrator C-08-01 June 15, 2001 Dear Colleague: In May 1999, the Federal Transit Administration (FTA) issued a survey inviting feedback on the effectiveness of FTA‘s Third Party Contracting Requirements and Procurement Assistance Program. Based on comments and suggestions in the survey responses, FTA implemented certain changes to these two areas of our program. These changes include offering an increased number and variety of procurement courses; adding to and refining the "Best Practices Procurement Manual;" and posting procurement questions and answers on the Internet. During a workshop held on May 9, 200l, at the American Public Transportation Association (APTA) Bus and Paratransit Conference in Calgary, Canada, FTA provided an update on the actions it has undertaken. The participants felt it was necessary to work collaboratively to address the 5-year term limitation issue at a workshop dedicated solely to this topic at the Fall APTA Bus Equipment and Maintenance/Procurement and Materials Management Conference in Ft. Worth, Texas. Both FTA and APTA agreed to this recommendation. It was also agreed that in the interim, FTA would exempt certain classes of contracts from the requirement to obtain prior FTA approval for periods of performance in excess of a 5-year term, and that FTA would clarify other areas of Circular 4220.1D, "FTA Third Party Contracting Requirements," that the survey revealed were in need of further clarification. A. FTA Circular 4220.1D, Paragraph 7(m) – Contract Period of Performance Limitation Paragraph 7(m) states, "grantees shall not enter into either service or supply contracts with a period of performance exceeding five years inclusive of options without prior written FTA approval. A maximum of five years‘ requirements may be acquired under a single contract without prior FTA approval (including rolling stock), even though delivery may occur beyond five years after the date of contract award. FTA approval is required for contract extensions or renewals beyond a five-year term. This limitation does not apply to construction contracts or to leases of real property for the life of a transit asset to be constructed on such property (which Best Practices Procurement Manual — Appendix A.2 - Dear Colleague Letters Page 9 period will extend beyond five years in order to fulfill the statutory requirements that grantees have ‗satisfactory continuing control.‘)" Further, a blanket waiver is granted to exempt the following class of contracts from the requirement to obtain FTA prior approval for a contract term in excess of five years: Non-construction related contracts such as proprietary software maintenance, consulting and other professional services contracts (except contracts for general engineering services) awarded for a discrete, identifiable item, e.g., a particular piece of litigation, a discrete tort claim, and audit of a particular transaction or fiscal year. This blanket waiver, however, does not cover the following class: All contracts for general engineering consultant services are non-exempt. Task order type arrangements for engineering, architectural, legal, accounting, non-proprietary software maintenance or other professional services not tied directly to a related construction contract or a discrete identifiable item, require prior FTA approval for periods of performance in excess of five years. B. Revenue Contracts – Five-Year Term Limitation It is FTA‘s policy that all persons be afforded an equal opportunity to benefit from business opportunities arising from use of FTA-funded assets. It is also FTA‘s policy to encourage FTA recipients to maximize non-farebox revenues through contractual and other appropriate arrangements involving non-interfering uses of such FTA-funded assets. The establishment of a five-year contract term limitation is one means by which FTA seeks to balance these potentially conflicting policies. A review of recent requests for exemption from the 5-year limitation in the area of "revenue contracts," however, suggests that prior FTA approval is not required under certain conditions. Accordingly, prior FTA approval of the following categories of "revenue contracts" in excess of five years is no longer required: 1). Non-exclusive revenue contracts: Revenue contracts involving business opportunities, that due to their nature and the capacity of the transit system, are not limited by physical constraints or grantee policy to any specific number of entrants do not require prior FTA approval. For example, if a grantee allows any vendor to install fiber optic cable within the grantee‘s right-of-way on reasonable terms and conditions, until such time as the grantee decides to limit the number of entrants due to capacity of the system or other factors, there is no need for prior FTA review. Another example might be allowing multiple vendors to put transmission towers or antennas on grantee property. 2). Exclusive revenue contracts under certain conditions: Revenue contracts involving business opportunities due to their nature and the capacity of the transit system which are limited to a specific number of entrants, whether due to physical constraints or grantee policy, do not require prior FTA approval where the following conditions exist and are documented in the grantee‘s files: Best Practices Procurement Manual — Appendix A.2 - Dear Colleague Letters Page 10 a). Contracts are awarded through a competitive process; b). Economic analysis shows that a contract term longer than five years is necessary to allow the contractor to recover any required capital investment and a reasonable return on investment taking into account both tax (depreciation) and economic/business considerations. 3). Transit Oriented/Joint Development Revenue Contracts. Transit Oriented Developments and Joint Development projects undertaken in conformance with FTA joint development policies may subsequently give rise to revenue contracts. Prior FTA concurrence in a contract term in excess of five years is governed by the same criteria as described in paragraphs 1) and 2) above. Note that FTA routine oversight and concurrence in transit oriented development and joint development projects remains unchanged by this exemption. C. FTA Circular 4220.1D, Paragraph 12 - Payment Provisions in Third Party Contracts The survey results indicated that there is some confusion concerning the use of advance payments. With regard to advance payments, the Circular states, "FTA does not authorize and will not participate in funding payments to a contractor prior to the incurrence of costs by the contractor unless prior written concurrence is obtained from FTA." This policy is unchanged. To clarify, however, there is no prohibition on a Grantee‘s using local funds for advance payments where a grant has been awarded or the project is covered by a letter of no prejudice, or other pre- award authority. Please note that advance payments made before a grant has been awarded or before the project is covered by a letter of no prejudice or other pre-award authority, will be ineligible for reimbursement. D. Preventive Maintenance Preventive maintenance is an eligible expense under FTA‘s capital and operating assistance programs depending upon the size of the population served by the grantee. Grantees have asked how the requirements of FTA Circular 4220.1D apply when preventive maintenance activities are contracted to third parties under a capital assistance program rather than an operating assistance program. The question arises because of the different treatment of capital and operating contracts by the Circular in accordance with applicable law. There are two options. Under the capital assistance program, the grantee may apply the Circular only to the specific preventive maintenance contracts identified in the grant application, but not others. Alternatively, the grantee may elect to receive preventive maintenance funds as a certain percentage of total maintenance costs. Under this alternative, the requirements of the Circular apply across the board to all of the grantee‘s maintenance contracts. Please note that under the latter option, grantees may not selectively exclude certain maintenance contracts from the total operations amount on which they base their percentage calculation. All of the changes reflected in this "Dear Colleague" letter are effective immediately. Best Practices Procurement Manual — Appendix A.2 - Dear Colleague Letters Page 11 FTA does appreciate your feedback. Please continue to give us your suggestions for improving our procurement program. Sincerely, Signed Hiram J. Walker Acting Deputy Administrator Best Practices Procurement Manual — Appendix A.2 - Dear Colleague Letters Page 12 4. December 21, 1998: Joint Procurements, Y2K Compliance Requirements U.S. Department Of Transportation 400 Seventh St. S.W. Federal Transit Washington, D.C. 20590 Administration The Administrator C-98-39 December 21, 1998 Dear Colleague: Recently, there have been several requests for more insight and guidance on the Federal Transit Administration's (FTA) policy and philosophy on various aspects of procurement, and specifically on the use of different strategies and approaches in fulfilling Year 2000 (Y2K) compliance requirements. The minimum requirements applicable to FTA funded procurements are set forth in FTA Circular 4220.1D, "Third Party Contracting Guidelines." The Circular has been designed to provide grant recipients maximum flexibility to operate within the framework of the minimum requirements. In keeping with the discretionary powers and authority which are vested in grant recipients through the Circular, the FTA fully supports the use of creative and innovative procurement techniques and strategies. Grant recipients may utilize these tools to procure their actual needs and for the purpose of leveraging bargaining power, achieving economies-of-scale and/or fulfilling Y2K compliance requirements. Further, recipients are afforded the freedom to collaborate and to partner with each other in order to facilitate and to maximize the use of innovative procurement techniques. This includes, but is not limited to, conducting joint procurements; proceeding with awards that result from proper "piggybacking" transactions; and/or developing standard specifications for consolidated purchases to address common needs for equipment and services such as escalators, Y2K technology, hardware and software. FTA recently clarified its position on "piggybacking" and "tag-one" in a "Dear Colleague" letter dated October 1, 1998, a copy of which is attached. Presently, that policy applies to rolling stock procurements only; however, consideration is being given to expanding the policy to cover other procurements in the near future. Joint procurements may be conducted on a regional, statewide or national basis pursuant to the needs and applicable regulatory and statutory requirements of the parties to the procurement. The FTA has specifically encouraged the use of joint procurements for rolling stock. Guidance on innovative procurement techniques, such as joint procurements, will be covered in the next issue of the "Best Practices Procurement Manual" (BPPM). Currently, the BPPM contains an example Best Practices Procurement Manual — Appendix A.2 - Dear Colleague Letters Page 13 of a statewide acquisition of buses which was provided by the New York Department of Transportation to facilitate and to assist others in use of the joint procurement concept. Regardless of the procurement methodology or strategy chosen, the controlling requirement is that FTA funded procurements must conform to the requirements of FTA Circular 4220.ID. The guiding principle of the Circular is that procurements must be conducted in a manner that provides for full and open competition. However, this does not preclude the award of contracts on a non-competitive basis when supported by sound reasons documented in the recipients' files. For example, sound reasons may exist to either conduct a limited competition among a few known sources or to make award to a single source on a noncompetitive basis in order to fulfill the Y2K compliance requirements. Specifically, the award of a noncompetitive contract to address a Y2K problem would be permissible if circumstances existed where time is of the essence to avoid creating a safety hazard in the operation of your transit system. Should you have questions or desire assistance in addressing procurement issues relating to fulfilling Y2K compliance requirements, please contact your respective FTA Regional Office. Sincerely, Gordon J. Linton Best Practices Procurement Manual — Appendix A.2 - Dear Colleague Letters Page 14 5. October 1, 1998: Revenue Contracts, Piggybacking, Tag-ons U.S. Department 400 Seventh St. S.W. Of Transportation Washington, D.C. 20590 Federal Transit The Administrator Administration C-98-25 October 1, 1998 Dear Colleague: I am pleased to announce the procurement initiatives underway in the Federal Transit Administration (FTA) and to provide recent FTA policy on some key areas which will impact your procurement transactions. First, the FTA has initiated steps to conduct a survey of its customers whose operations and business transactions are impacted by the FTA Circular 4220.lD, Third Party Contracting Requirements. As you may recall, the circular, as amended, was issued on October 1, 1995. The circular was well received, and the feedback has been consistently favorable. However, as we strive to enhance customer satisfaction through the continuous improvement in the delivery of services, the survey will enable us to measure the degree to which the needs of our grantees and industry have been met. Second, the FTA plans to issue the Third Party Contracting Requirements as a formal rule following a Notice of Proposed Rule Making (NPRM). The NPRM will afford both grantees and industry representatives the opportunity to partner with the FTA through the exchange of ideas and recommendations to influence and shape the final rule. Third, in response to numerous requests for FTA policy and guidance in some key areas, the following policy-and guidance is effective immediately relating to transactions in the categories identified: 1. "Tag-ons" are not permitted. This term is defined as the adding on to the contracted quantities (base and option) as originally advertised, competed, and awarded, whether for the use of the buyer or for others and then treating the add-on portion as though it met the requirement of competition. 2. The term "piggybacking" is defined as the post-award use of a contractual document/process that allows someone who was not contemplated in the original procurement to purchase the same supplies or equipment through the original document/process. Best Practices Procurement Manual — Appendix A.2 - Dear Colleague Letters Page 15 Piggybacking is permissible when: (a) the solicitation document and the resultant contract contain an assignability clause that provides for the assignment of all or part of the specified deliverables as originally advertised, competed, evaluated, and awarded. This includes the base and option quantities. In addition, the original solicitation and resultant contract must contain both a minimum and a maximum quantity, which represent the reasonably foreseeable needs of the parties to the solicitation. 3. Revenue contracts are defined as third party contracts whose primary purpose is to either generate revenues in connection with a transit related activity, or to create business opportunities utilizing an FTA funded asset. FTA requires that these contracts be awarded utilizing competitive selection procedures and principles. The extent of and type of competition required is within the discretionary judgment of the grantee. In addition, FTA requires that the contract term be limited to a period of 5 years, except in those instances where FTA has waived this requirement. Requests for waivers from the term limitation may be submitted to your Regional Office. In those situations where FTA may provide prior approval on a project (e.g., Transit Oriented Development projects, Cross Border leases) the waiver for a revenue contract in excess of five years may be obtained as part of the initial FTA approval of the project. Guidance on each of these procurement categories will be published in the Best Practices Procurement Manual within the next few months. Finally, the Office of Federal Procurement Policy is currently re-examining the procurement requirements in the Common Grant Rules which form the basis for the requirements contained in 4220.lD. If you wish to suggest ideas or changes to the Common Grant Rules, please contact the Office of Acquisition and Grant Management, Office of the Secretary at the address below or call area code (202) 366-4289. Mr. Robert G. Taylor Chief, Grants Management Division, M-60 Office of the Secretary of Transportation Washington, DC 20590 I look forward to your continued support and invaluable contributions toward these efforts. Sincerely, Gordon J. Linton Best Practices Procurement Manual — Appendix A.2 - Dear Colleague Letters Page 16 6. September 4, 1998: APTA’s Standard Bus Procurement Guidelines U.S. Department 400 Seventh St. S.W. Of Transportation Washington, D.C. 20590 Federal Transit The Administrator Administration C-98-16 September 4, 1998 Dear Colleague: With the Publication of the Standard Bus Procurement Guidelines (SBPG), I issued a letter pronouncing my support of the collaborative efforts of the American Public Transit Association (APTA) and the Federal Transit Administration (FTA). In that letter I assured APTA members that any FTA funded procurement in conformance with the Phase I guidelines would be deemed to comply with FTA's third party procurement guidelines with respect to the areas addressed. Recently, it has come to my attention that my letter has created some confusion regarding its application and impact on the requirements of third party contracting set forth in the FTA Circular 4220.lD. To clarify this issue, I wish to reiterate that the requirements for FTA funded procurements are covered in FTA Circular 4220.ID. I strongly urge grantees desiring to conduct FTA funded bus procurements utilizing the SBPG to ensure there are no conflicts with the FTA circular. Should clarification be required, grantees should contact their appropriate FTA regional office for guidance. In closing, I hope this clarifies any confusion relating to FTA procurement requirements, and I offer my continued support to this effort and those in the future. Sincerely, Gordon J. Linton Best Practices Procurement Manual — Appendix A.2 - Dear Colleague Letters Page 17 7. March 18, 1997: Buy America Requirements of Pre-Award and Post-Delivery U.S. Department 400 Seventh St. S.W. Of Transportation Washington, D.C. 20590 Federal Transit The Administrator Administration C-97-03 March 18, 1997 Dear Colleague: A Buy America problem and follow-up surveys of several Pre-Award and Post-Delivery Reviews of bus procurements indicates that many grantees and their contractors are not conducting adequate reviews of the Buy America requirements. The Pre-Award and Post- Delivery Reviews are designed to ensure that any vehicle purchased with Federal Transit Administration funds has at least a 60 percent domestic content and undergoes final assembly in the United States. In general, we have found that, particularly in the case of final assembly activities, the grantees surveyed did not provide a description of the manufacturer's final assembly activities and an evaluation of whether Buy America requirements were met. When a grantee receives information from a manufacturer, it must review this information to determine whether it is sufficient to determine if the manufacturer has met the Buy America requirements. If the information is insufficient, the grantee must take whatever steps are necessary to satisfy itself that the manufacturer is complying with the Buy America requirements. This will usually involve seeking additional information from the manufacturer. Otherwise, the grantee certifies compliance with Buy America at its own risk. In order to assist you in conducting reviews in accordance with the Pre-Award and Post-Delivery Review Regulation, 49 CFR Part 663, I have outlined in the enclosure the procedures a grantee must use to ensure that any vehicles it purchases comply with Buy America. If you have any questions regarding Buy America compliance, please contact your Regional Office. Sincerely, Gordon J. Linton Enclosure Best Practices Procurement Manual — Appendix A.2 - Dear Colleague Letters Page 18 FEDERAL TRANSIT ADMINISTRATION GUIDANCE ON BUY AMERICA REQUIREMENTS OF THE PRE-AWARD AND POST-DELIVERY REVIEWS This guidance only addresses the Buy America requirements of the Pre-Award and Post-Delivery Reviews. The Purchaser's Requirements and the Federal Motor Vehicle Safety Standards requirements must still be met. I. Pre-Award Review (before contract award) Review data and information on Buy America compliance submitted by the manufacturer, including Proposed domestic content of vehicle components to determine that the 60 percent United States content requirement is met; - Proposed final assembly location; and - Manufacturing activities that will take place during final assembly. The manufacturer should provide enough detail about these activities to allow for the determination that these activities would constitute adequate final assembly under Buy America requirements. If the manufacturer does not provide sufficient information, the grantee must seek additional information. If the grantee determines that the activities are not adequate, the manufacturer must be asked to submit a revised manufacturing plan. A contract may not be awarded until the grantee is assured that the Buy America requirements will be met. Final assembly is defined in 49 CFR Part 661 Buy America Requirements; Final Rule as "the creation of the end product from different elements brought together for that purpose through the application of manufacturing processes." In the case of the manufacture of a new rail car, final assembly would typically include, as a minimum, the following operations: installation and interconnection of propulsion control equipment, propulsion cooling equipment, brake equipment, energy sources for auxiliaries and controls, heating and air conditioning, communications equipment, motors, wheels and axles, suspensions and frames; the inspection and verification of all installation and interconnection work; and the in-plant testing of the stationary product to verify all functions. In the case of a new bus, final assembly would typically include, at a minimum, the installation and interconnection of the engine, transmission, axles, including the cooling and braking systems; the installation and interconnection of the heating and air conditioning equipment; the installation of pneumatic and electrical systems, door systems, passenger seats, passenger grab rails, destination signs, wheelchair lifts; and road testing, final inspection, repairs and preparation of the vehicles for delivery. Best Practices Procurement Manual — Appendix A.2 - Dear Colleague Letters Page 19 If a manufacturer's final assembly processes do not include all the activities that are typically considered the minimum requirements, it can request a Federal Transit Administration (FTA) determination of compliance. FTA will review these requests on a case-by-case basis to determine compliance with Buy America. The information reviewed supports a Pre-Award Buy America Certification that the proposed procurement meets the domestic content, the final assembly location and final assembly activities requirements. II. Post-Delivery Review Requirements (during and after manufacturing) The grantee is required to: - Review actual component content to ensure that the vehicle meets the 60 percent Buy America domestic content requirement; - Check that the final assembly location is in the United States and the manufacturer's final assembly activities meet the requirements outlined in paragraph I above; and - Have an on-site inspector for rail car procurements and bus procurements of greater than 10 vehicles. The inspector must verify that the actual manufacturing processes are consistent with the information provided by the manufacturer or with the grantee's own assessments. The post-delivery reviews verifies a grantee's Post-Delivery Buy America Certification that the domestic content, final assembly location and final assembly activities requirements are met. Any questions or uncertainties concerning these activities should be referred immediately to FTA.
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