Buy America Requirements; Amendments to Definitions, 14112-14118 [06-2671]

Agencies

• Federal Transit Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 71, Number 54 (Tuesday, March 21, 2006)]
[Rules and Regulations]
[Pages 14112-14118]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-2671]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

49 CFR Parts 661 and 663

[Docket No. FTA-2005-23082]
RIN 2132-AA80


Buy America Requirements; Amendments to Definitions

AGENCY: Federal Transit Administration (FTA), DOT.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This final rule amends 49 CFR Parts 661 and 663 as required by 
the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A 
Legacy for Users (SAFETEA-LU) [Pub. L. 109-59, August 10, 2005]. The 
Federal Transit Administration (FTA) proposed certain changes to the 
Buy America requirements on November 21, 2005 (70 FR 71246). This final 
rule addresses fewer issues than were proposed in the Notice of 
Proposed Rulemaking (NPRM) because of the complexity of a number of 
recommendations and issues presented during the comment period. Thus, 
FTA is publishing a final rule on those issues that received little or 
no public comment. FTA will publish a new NPRM in the Federal Register 
and hold a public meeting to address the issues raised in the NPRM 
published on November 21, 2005, but not addressed herein. Thereafter, 
FTA will publish a final rule with respect to such issues.

DATES: Effective Date: The effective date of this rule is March 21, 
2006.

FOR FURTHER INFORMATION CONTACT: Joseph Pixley, Chief Counsel's Office, 
Federal Transit Administration, 400 Seventh Street, SW., Room 9316, 
Washington, DC 20590, (202) 366-4011 or Joseph.Pixley@fta.dot.gov.

SUPPLEMENTARY INFORMATION:

Availability of the Final Rule and Comments

    A copy of this rule and comments and material received from the 
public, as well as any documents indicated in the preamble as being 
available in the docket, are part of docket FTA-2005-23082 and are 
available for inspection or copying at the Docket Management Facility, 
U.S. Department of Transportation, Room PL-401 on the plaza level of 
the Nassif Building, 400 Seventh Street, SW., Washington, DC between 9 
a.m. and 5 p.m., Monday through Friday, except Federal holidays.
    You may retrieve the rule and comments online through the Document 
Management System (DMS) at: https://dms.dot.gov. Enter docket number 
23082 in the search field. The DMS is available 24 hours each day, 365 
days each year. Electronic submission and retrieval help and guidelines 
are available under the help section of the Web site.
    An electronic copy of this document may also be downloaded by using 
a computer, modem and suitable communications software from the 
Government Printing Office's Electronic Bulletin Board Service at (202) 
512-1661. Internet users may also reach the Office of the Federal 
Register's home page at: https://www.nara.gov/fedreg and the Government 
Printing Office's Web page at: https://www.gpoaccess.gov/fr/.

I. Background

    On November 28, 2005, FTA published an NPRM in the Federal Register 
(70 FR 71246) discussing a number of proposals as mandated by SAFETEA-
LU and to provide further clarification of existing FTA decisions on 
Buy America. Due to the complexity of many of the Buy America issues 
addressed in the NPRM, the divergence of opinion on important areas, 
and the

[[Page 14113]]

potential for ``unintended consequences'' to affected industries and 
grantees, several commenters recommended that FTA issue an ``interim 
final rule'' to allow commenters and FTA more time to consider the 
potential impact of the proposed changes. FTA acknowledges these 
concerns. Therefore, this final rule addresses fewer issues than 
proposed in the NPRM. FTA identified several subject areas that 
represent the more routine issues proposed in the NPRM. These topics 
include: (1) Administrative review; (2) the definition of ``negotiated 
procurement;'' (3) the definition of ``contractor;'' (4) repeal of the 
general waiver for Chrysler vehicles; (5) certification under 
negotiated procurements; (6) preaward and postaward review of rolling 
stock purchases; and (7) miscellaneous corrections and clarifications 
to the Buy America regulations. Accordingly, this final rule addresses 
the above subject areas only.
    FTA will issue a new NPRM this calendar year to address the 
following issues: (1) Justification for public interest waiver; (2) 
microprocessor and post-award waivers; (3) definition of ``final 
assembly;'' (4) proposed changes to ``communication equipment;'' and 
(5) the definition of ``end product'' and a representative list of end 
products. In addition to the new NPRM, FTA will hold a public meeting 
in Washington, DC to discuss its new proposal. The meeting date and 
location will be contained in the Federal Register notice for the new 
NPRM.

Administrative Review

    In the NPRM, FTA requested comments on its proposal to implement 
the SAFETEA-LU requirement that parties adversely affected by an agency 
action may seek judicial review under the Administrative Procedure Act 
(APA), 5 U.S.C. 702 et seq. FTA received four comments on this issue, 
two of which concurred with FTA's proposed change to the regulation. 
The other two comments, which were identical, expressed the view that 
administrative review without remedies such as injunctions, damages or 
cancellations was essentially ``meaningless.''
    FTA Response: The comments that express disagreement with FTA's 
proposal appear to misunderstand the requirements of SAFETEA-LU, which 
merely state that ``[a] party adversely affected by an agency action 
under this subsection shall have the right to seek judicial review'' 
under the APA. As the other two commenters recognized, FTA's proposed 
wording to section 661.20, fully implements the requirement that FTA's 
Buy America decisions are subject to judicial review.
    The two adverse commenters also appear to misinterpret the proposed 
language in Sec.  661.20 as implying that FTA will not take action if 
it finds that a grantee has ``awarded business based on an improperly 
justified Buy America waiver.'' To the contrary, under the Agency's 
existing regulations at 49 CFR 661.17, ``[i]f a successful bidder fails 
to demonstrate that it is in compliance with its certification, it will 
be required to take the necessary steps in order to achieve 
compliance'' without changing its bid price. Furthermore, ``[a] willful 
refusal to comply with a certification by a successful bidder may lead 
to the initiation of debarment or suspension proceedings under part 29 
of this title.'' See 49 CFR 661.19. In short, FTA already has a full 
range of administrative tools at its disposal to enforce Buy America 
compliance to include possible cancellation of Federal funding of a 
project, and suspension and debarment actions for willful violations. 
Any further ``enforcement'' language in the proposed new rule in 
section 661.20 is, therefore, unnecessary.
    Accordingly, FTA adopts as final the changes proposed in the NPRM 
with respect to administrative review.

Repeal of General Waiver for Chrysler Vans

    In the NPRM, FTA sought comment on the repeal of two general 
waivers for Chrysler vehicles from the Buy America regulations, as 
mandated by SAFETEA-LU. None of the commenters opposed this change. 
Accordingly, FTA adopts as final the changes proposed in the NPRM with 
respect to general waivers for Chrysler vehicles.

Definition of Negotiated Procurement

    In the NPRM, FTA requested comments on its proposal to adopt a 
``flexible'' definition of negotiated contracts used in the Federal 
Acquisition Regulation (FAR) part 15. The proposed definition states: 
``Negotiated Procurement means a contract awarded using other than 
sealed bidding procedures.'' Of the twelve comments received on this 
issue, five agreed with FTA's proposed definition.
    Two commenters proposed an alternative definition of negotiated 
procurements as * * * ``a contract in which (a) potentially differing 
proposals from offerors are evaluated, (b) the evaluations are based on 
more factors than the two normally used in a sealed bidding procurement 
(specification compliance and price), and (c) the evaluation process 
could include discussions or negotiations between the buyer and seller, 
amended specification and revised proposals, before a final award is 
made.''
    Three other commenters offered individual definitions, as follows:
    ``A negotiated procurement means a contract awarded under selection 
procedures that allow the Contracting Officer to conduct discusions or 
negotiations;''
    ``A negotiated procurement means a solicitation issued or contract 
awarded using other than sealed bidding procedures;'' and,
    ``A negotiated procurement means a contract awarded on a best value 
basis using other than sealed bidding procedures.''
    The final commenter recommended that FTA include a definition of 
sealed bidding.
    FTA Response: A number of comments recommend alternative 
definitions of the term ``negotiated procurement'' to reflect standard 
practices in a particular industry or personal preference and to 
include such terms as ``best value,'' ``discussions,'' ``revised 
proposals,'' among other terms. However, FTA believes that its proposed 
definition is broad enough to incorporate all of these recommended 
definitions. In addition, to the extent possible, FTA prefers to base 
any proposed definition on existing precedents in public contracting 
law and practice. FTA believes that basing the definition of 
``negotiated procurement'' on the example in FAR part 15 serves this 
purpose. Furthermore, in keeping with the requirements of 49 CFR 
18.36(b), which states that FTA grantees and subgrantees ``will use 
their own procurement procedures which reflect applicable State and 
local laws and regulations'' in third party contracts, FTA prefers a 
broad, flexible definition of ``negotiated procurement,'' which will 
not conflict with or limit specific local practices.
    FTA disagrees with the comment that the Agency should also define 
the term ``sealed bidding'' on the grounds that such defined term is 
unnecessary. The Department's regulations on third party contracting 
requirements already provide descriptions of ``Procurement by sealed 
bids'' and ``Procurement by competitive proposals.'' See 49 CFR 
18.36(d)(2) and (3) (emphasis in original). FTA believes that these 
regulatory descriptions of sealed bidding and negotiated procurement 
methods suffice for purposes of the Agency's Buy America practices. 
Accordingly, FTA adopts as final the

[[Page 14114]]

changes proposed in the NPRM with respect to the definition of 
``negotiated procurement.''

Definition of Contractor

    In the NPRM, FTA sought comments on two alternative definitions of 
the term ``contractor.'' The first proposed definition comes from the 
definition of contractor in FAR 9.403 (suspension & debarment section). 
FTA's proposed definition states:

    Contractor means any individual or other legal entity that 
directly or indirectly (e.g., through an affiliate) submits bids or 
offers for or is awarded, or reasonably may be expected to submit 
bids or offers for or be awarded, a federally funded third party 
contract or subcontract under a federally funded third party 
contract; or, conducts business, or reasonably may be expected to 
conduct business, with an FTA grantee, as an agent or representative 
of another contractor.

    The second proposed definition is based on the definition of 
``contractor'' in the Contract Disputes Act (CDA), 41 U.S.C. 601(4) 
which states: ``Contractor means any party to a third party government 
contract other than the government.''
    FTA received eight comments on this issue. Only one of the 
commenters supported the first proposed definition based on FAR 9.403. 
Four commenters believed that the proposed FAR definition is worded too 
broadly and includes parties to whom a contract has not yet been 
issued, or has no business relationship with a grantee. As an 
alternative, one commenter suggested that FTA adopt a definition from 
FAR 33.102(e) which defines ``interested party'' as ``an actual or 
prospective offeror whose direct economic interest would be affected by 
the award of a contract or by the failure to award a contract.''
    Two commenters supported FTA's other proposed definition of 
``contractor'' adopted from the Contract Disputes Act. Six commenters 
believed that the Contract Disputes Act definition lacks clarity, as it 
does not contain a definition of the term ``contract,'' or confuses the 
term ``any party'' with ``third party.'' One commenter noted that some 
grantee contracts are entered into with other governments, acting as a 
contractor. Four of the commenters proposed an alternative definition 
which defines a contractor as ``any entity engaged in a federally 
assisted agreement with an FTA grantee under authority of Title 49, 
Code of Federal Regulation, Section 18.36 or similar authority. This 
term does not encompass entities based on their engagement in grants, 
sub-grants, or cooperative agreements, nor does it encompass 
prospective contractors such as bidders or offerors.''
    The remaining commenter recommended defining a contractor as ``a 
party entering into an agreement for the provision of goods or 
performance of services with a FTA grantee, other than grant agreements 
or subgrant agreements.''
    FTA Response: FTA concurs with the commenters who advise against 
adopting a definition of ``contractor'' from FAR 9.403. Accordingly, 
FTA will not do so. Moreover, FTA will not implement the recommended 
alternative definition from FAR 33.102(e), ``interested party,'' as 
this term refers to disappointed bidders and offerors ``wishing to 
protest'' a contract award. Indeed, FAR 33.102(e) pertains to Federal 
agency bid protest procedures. FTA agrees with those commenters who 
stated that the proposed definition of ``contractor'' should not 
include prospective contractors such as bidders or offerors.
    FTA will, therefore, adopt a definition of ``contractor'' based on 
the Contract Disputes Act. FTA agrees with one commenter who stated 
that the proposed definition has the benefit of simplicity. As stated 
earlier, to the extent possible, FTA prefers to base any proposed 
definitions and regulatory requirements on existing precedents in 
public contracting law and practice. For example, contrary to the 
comments that the CDA-based definition ``lacks clarity'' or does not 
exclude ``potential contractors'' such as bidders or offerors, Federal 
courts have long defined the term ``contractor,'' e.g., a party to a 
government contract other than the government, as a party in privity of 
contract with the government; the term ``contractor'' does not include 
bidders, offerors, subcontractors, or performance bond and prime 
contractor's sureties. See generally Johnson Controls v. U.S., 44 Fed. 
Cl. 334, 340 (1999) (cited cases omitted); Monchamp Corp. v. U.S., 19 
Cl.Ct. 797 (1990). Under the plain meaning of the CDA usage, a 
contractor is simply the party that executes a government contract with 
the government. Thus, there is a large body of Federal law on which the 
FTA may rely on to clarify the term ``contractor'' in the unlikely 
event that should be necessary. [Note: To date, FTA has not formally 
addressed the definition of ``contractor'' as a substantive matter in 
Buy America practice, other than in the instant rulemaking. In fact, 
the Buy America provisions at 49 U.S.C. 5323(j) and 49 CFR part 661, 
heretofore, do not include the term ``contractor.'' FTA's Buy America 
regulations refer to ``bidders, offerors, and suppliers.'']
    Moreover, FTA does not believe it is necessary to define the term 
``contract,'' as some commenters have suggested. FTA has already 
defined that term in several guidance documents. In particular, FTA 
Circular 4220.1E ``Third Party Contracting Requirements,'' dated June 
19, 2003, defines ``third party contract,'' which is the Federally-
assisted procurement applicable to Buy America, as follows: `` `Third 
party contract' refers to any purchase order or contract awarded by a 
grantee to a vendor or contractor using Federal financial assistance 
awarded by FTA.'' In another instance, FTA has stated that 
``[c]ontracts do not include grants and cooperative agreements.'' See 
FTA's Best Practices Procurement Manual, dated November 6, 2001, para. 
1.2 ``Identifying a Contract.'' FTA believes that these definitions of 
``contract'' suffice for purposes of its Buy America practices.
    FTA agrees with one commenter who noted that the proposed CDA-based 
definition of contractor as ``a party to a government contract other 
than the government'' may create some confusion as ``some grantee 
contracts are entered into with another government, acting as a 
contractor.'' However, the term ``other than the government'' in the 
CDA definition does not mean ``any government,'' but rather, in the 
context of a direct Federal procurement, the United States Government, 
the entity which issued the solicitation and is the other party to the 
contract. See Serra v. GSA, 667 F. Supp. 1042, 1048 (S.D.N.Y. 1987). 
Indeed, the FAR expressly recognizes that agencies of the United States 
may contract with other State, local, and tribal governments. See FAR 
31.107.
    Nevertheless, to avoid confusion and to make the term 
``contractor'' more applicable to the scenario of third party 
contracts, FTA will substitute the terms ``any'' with ``a'' and ``other 
than the government'' with ``other than the grantee''; FTA will also 
delete the term ``government'' from ``third party government 
contract.'' These changes should make clear that a ``contractor'' for 
Buy America purposes is a party in privity of contract with the 
grantee, on an FTA-funded procurement. Accordingly, FTA adopts as final 
the following definition at Sec.  661.3:
    Contractor means a party to a third party contract other than the 
grantee.

Certification Under Negotiated Procurement

    In the NPRM, FTA sought comments on its proposal to implement the 
SAFETEA-LU requirement that ``in any case in which a negotiated 
procurement

[[Page 14115]]

is used, compliance with the Buy America requirements shall be 
determined on the basis of the certification submitted with the final 
offer.'' FTA proposed the following language to the Buy America 
regulations:

    In the case of a negotiated procurement, a certification 
submitted as part of an initial proposal may be superseded by a 
subsequent certification(s) submitted with a revised proposal or 
offer. Compliance with the Buy America requirements shall be 
determined on the basis of the certification submitted with the 
final offer or final revised proposal. However, where a grantee 
awards on the basis of initial proposals without discussion, the 
certification submitted with the initial proposal shall control.

    FTA received six comments on this issue, two of which favored the 
language proposed by FTA. The four remaining comments recommended 
simplifying FTA's proposal. Two commenters suggested the following 
language: ``In the case of a negotiated procurement, compliance with 
the Buy America requirements shall be determined on the basis of the 
certification submitted with the final offer or final revised proposal. 
However, where a grantee awards on the basis of initial proposals 
without discussion, the certification submitted with the initial 
proposal shall control.'' One of these commenters stated that this 
proposed language will permit cases, in which, during a negotiated 
procurement, a certification is not submitted with initial offers, but 
no award is made on the basis of initial offers.
    Two other commenters made similar suggestions that FTA's proposed 
language should recognize circumstances where an initial offer fails to 
include any Buy America certification. Both of these commenters agreed 
that in an award made on initial proposals, a grantee could not award a 
contract to an offeror that failed to include a Buy America 
certification with its initial proposal. However, both commenters 
stated that where a grantee reserved the right to conduct discussions 
with offerors, the grantee need not eliminate a proposal from the 
competitive range simply because there was no Buy America 
certification. Another commenter suggested that language on ``initial 
proposals'' may be eliminated entirely because ``the initial offer 
becomes the final offer when a grantee awards on the basis of initial 
proposals. Thus, it is not necessary to restate this fact.''
    One commenter recommended that the language on certification under 
negotiated procurements be expanded to include design-build contracts. 
In such cases, the commenter suggested that ``the governing certificate 
shall be the one submitted with the final offer or final revised 
proposal; after 70% design the contractor would be eligible for a Post 
Award Non-Availability Waiver by providing evidence demonstrating that 
the material has become unavailable or compliance is impracticable due 
to cost.''
    FTA Response: FTA agrees with the commenters who suggest that the 
Agency's proposed language in the NPRM should be simplified as follows:


    In the case of a negotiated procurement, compliance with the Buy 
America requirements shall be determined on the basis of the 
certification submitted with the final offer or final revised 
proposal. However, where a grantee awards on the basis of initial 
proposals without discussion, the certification submitted with the 
initial proposal shall control.

    Regarding the comment that language on ``initial proposals'' may be 
eliminated as unnecessary, FTA agrees that in an award made on the 
basis of initial proposals, ``initial'' and ``final'' offers are one 
and the same, technically speaking. However, FTA believes that the 
additional language on ``initial proposals'' puts grantees and 
suppliers squarely on notice of the absolute necessity of submitting 
Buy America certifications with any final offer or final revised 
proposal, in any type of negotiated procurement.
    As to the commenters who expressed concern that the proposed 
language should be modified to address situations where an initial 
proposal does not include any Buy America certification, FTA does not 
believe this is necessary. FTA agrees with one commenter who states 
that the simplified version of the regulation ``will permit cases, in 
which, during a negotiated procurement, a certification is not 
submitted with initial offers, but no award is made on the basis of 
initial offers.'' In other words, the proposed rule makes clear that 
proposers must include certifications with final offers and final 
revised proposals. Offerors will not be excluded for failing to include 
certifications with initial proposals, where grantees do not award on 
the basis of initial proposals. This is consistent with current FTA 
guidance on this issue. See FTA Buy America decision in ``Palm Beach 
County,'' July 27, 2004 [if a grantee ``enters into discussions 
requiring submission of final offers, any offeror could change its 
original proposal to include a Buy America certification, or change the 
original certification,'' prior to submission of best and final 
offers].
    Similarly, FTA does not share the concern of the commenter who 
stated that some grantees may unfairly eliminate proposals from the 
competitive range ``simply because there was no Buy America 
certification.'' Again, FTA has issued guidance on this specific issue. 
See ``Palm Beach County,'' supra [failure to include certificate with 
initial proposal does not affect grantees' obligation to perform some 
form of technical evaluation]. FTA believes that further clarification 
of the rule on this point is unnecessary.
    As to the comment which recommends that the proposed rule should 
include language pertaining to design-build contracts, FTA finds this 
is non-responsive and beyond the scope of the present rulemaking. 
Although FTA's administrative decisions have addressed design-build 
contracts, the current Buy America regulations at 49 CFR part 661 do 
not mention design-build contracts. Implementation of rules 
specifically for design-build contracts may be appropriate at a later 
date.
    Accordingly, the final rule at Sec.  661.13(b)(2)will read as 
follows:

    For negotiated procurements, compliance with the Buy America 
requirements shall be determined on the basis of the certification 
submitted with the final offer or final revised proposal. However, 
where a grantee awards on the basis of initial proposals without 
discussion, the certification submitted with the initial proposal 
shall control.

    FTA inadvertently omitted Sec.  661.13(b)(3) in the NPRM's proposed 
regulatory text. This section remains unchanged and is brought forward 
in the final rule.

Preaward and Postdelivery Review of Rolling Stock Purchases

    SAFETEA-LU amends 49 U.S.C. 5323(m) by mandating that rolling stock 
procurements of 20 vehicles or fewer that serve rural (other than 
urbanized) areas, or urbanized areas of 200,000 people or fewer, are 
subject to the same post-delivery certification requirements that apply 
to procurements of ``10 or fewer buses,'' i.e. no resident factory 
inspector is required. In the NPRM, FTA proposed the following language 
and sought comment on this proposed change.

    For procurements of (1) Ten or fewer buses; or (2) procurements 
of 20 vehicles or fewer serving rural (other than urbanized) areas, 
or urbanized areas of 200,000 people or fewer; or (3) any number of 
primary manufacturer standard production and unmodified vans, after 
visually inspecting and road testing the vehicles, the vehicles meet 
the contract specifications.


[[Page 14116]]


    FTA received five comments on this issue, three of which concurred 
with FTA's proposed modification. One commenter suggested that the 
language be expanded to include ``not just the requirement for a 
resident inspector, but the post-delivery audit requirement as well.'' 
The final commenter supported the proposed language but requested 
clarification as to the nature and time within which the ``20 vehicles 
or fewer'' requirement is calculated.
    FTA Response: FTA considers the SAFETEA-LU requirement to be self-
explanatory and limited in scope. FTA does not understand the comment 
which recommends that the language of FTA's proposed rule be expanded 
``to include not just the requirement for a resident inspector, but the 
post-delivery audit requirement as well.'' To the extent that the 
commenter is recommending that FTA eliminate the requirement for post-
delivery audits in this type of smaller procurement, FTA disagrees. In 
particular, 49 U.S.C. 5323(m) states, in part, that the ``Secretary of 
Transportation shall prescribe regulations requiring a preaward and 
postdelivery review * * * Under this subsection, independent 
inspections and review are required.'' (emphasis added). Historically, 
FTA has interpreted Congressional intent, here, as requiring preaward 
and postaward audits in all cases. FTA does not believe that SAFETEA-LU 
provides authority to eliminate either of the audit requirements.
    In response to the comment which raised questions concerning the 
length of time the ``20 vehicles or fewer'' requirement is calculated, 
FTA believes that such questions are best addressed through FTA's 
existing administrative process of providing guidance on Buy America 
issues on a case-by-case basis, consistent with current practice.
    Accordingly, FTA adopts the changes addressed in the NPRM (see 70 
FR 71253, (November 28, 2005)). The NPRM addressed this subject in the 
preamble which generated comments; however, FTA inadvertently omitted a 
Sec.  663.37 in the NPRM's proposed regulatory text. FTA has considered 
the comments received and is adopting regulatory text for Sec.  663.37 
in the final rule.

Miscellaneous--Corrections and Clarifications

    In the NPRM, FTA proposed minor corrections and clarifications to 
the Buy America regulations in the following areas: (1) Deleting 
references to an older version of FTA's implementing statute, and 
replacing them with references to SAFETEA-LU; (2) Adding the word 
``iron,'' after the word ``steel'' in the certification requirement for 
procurement of steel or manufactured products; and (3) adding the term 
``offeror'' and ``offer'' where appropriate throughout the regulations, 
to reflect the use of negotiated procurement methods in FTA funded 
projects.
    FTA received three comments on this issue, all of whom supported 
FTA's proposed changes. However, one commenter recommended that FTA 
also define the terms ``bidder,'' ``offeror'' and ``proposer,'' rather 
than continue to state that these are ``terms of art.'' FTA declines to 
define these additional terms in the regulation, as unnecessary. These 
terms have generally recognized meanings in the public contracting 
realm. It is self-evident that a ``bidder'' refers to a party that 
participates in a sealed bidding procurement. ``Offeror'' and 
``proposer'' are generally synonymous terms referring to parties that 
participate in negotiated procurements.

II. Regulatory Analyses and Notices

Statutory/Legal Authority for This Rulemaking

    This rule is authorized under the Safe, Accountable, Flexible, 
Efficient Transportation Equity Act: A Legacy for Users (Pub. L. 109-
59) amended Section 5323(j) and (m) of Title 49, United States Code and 
requires FTA to revise its regulations with respect to Buy America 
requirements.

Executive Order 12866 and DOT Regulatory Policies and Procedures

    This rule is a nonsignificant regulatory action under section 3(f) 
of Executive Order 12866 and, therefore, was not reviewed by the Office 
of Management and Budget. This rule is also nonsignificant under the 
Regulatory Policies and Procedures of the Department of Transportation 
(44 FR 11034). This rule imposes no new compliance costs on the 
regulated industry; it merely clarifies terms existing in the Buy 
America regulations and adds terms consistent with SAFETEA-LU.

Executive Order 13132

    This rule has been analyzed in accordance with the principles and 
criteria contained in Executive Order 13132 (``Federalism''). This rule 
does not include any regulation that has substantial direct effects on 
the States, the relationship between the national government and the 
States, or the distribution of power and responsibilities among the 
various levels of government. Therefore, the consultation and funding 
requirements of Executive Order 13132 do not apply.

Executive Order 13175

    This rule has been analyzed in accordance with the principles and 
criteria contained in Executive Order 13175 (``Consultation and 
Coordination with Indian Tribal Governments''). Because this rule does 
not have tribal implications and does not impose direct compliance 
costs, the funding and consultation requirements of Executive Order 
13175 do not apply.

Regulatory Flexibility Act and Executive Order 13272

    The Regulatory Flexibility Act (5 U.S.C. 601-611) requires each 
agency to analyze regulations and proposals to assess their impact on 
small businesses and other small entities to determine whether the rule 
or proposal will have a significant economic impact on a substantial 
number of small entities. This rule imposes no new costs. Therefore, 
FTA certifies that this proposal does not require further analysis 
under the Regulatory Flexibility Act.

Unfunded Mandates Reform Act of 1995

    This rule does not propose unfunded mandates under the Unfunded 
Mandates Reform Act of 1995. If the proposals are adopted into a final 
rule, it will not result in costs of $100 million or more (adjusted 
annually for inflation), in the aggregate, to any of the following: 
State, local, or Native American tribal governments, or the private 
sector.

Paperwork Reduction Act

    This rule proposes no new information collection requirements.

Environmental Assessment

    The National Environmental Policy Act of 1969 (NEPA), as amended 
(42 U.S.C. 4321-4347), requires Federal agencies to consider the 
consequences of major federal actions and prepare a detailed statement 
on actions significantly affecting the quality of the human 
environment. There are no significant environmental impacts associated 
with this rule.

Privacy Act

    Anyone is able to search the electronic form for all comments 
received into any of our dockets by the name of the individual 
submitting the comments (or signing the comment, if submitted on behalf 
of an association, business, labor union, etc.). You may review DOT's 
complete Privacy Act

[[Page 14117]]

Statement in the Federal Register published on April 11, 2000 (Volume 
65, Number 70; Pages 19477-78) or you may visit https://dms.dot.gov.

List of Subjects in 49 CFR Parts 661 and 663

    Grant programs--transportation, Public transportation, Reporting 
and recordkeeping requirements.


0
For the reasons described in the preamble, parts 661 and 663 of Title 
49 of the Code of Federal Regulations are amended as follows:

PART 661--[AMENDED]

0
1. The authority citation for part 661 is revised to read as follows:

    Authority: 49 U.S.C. 5323(j) (formerly sec. 165, Pub. L. 97-424; 
as amended by sec. 337, Pub. L. 100-17, sec. 1048, Pub. L. 102-240, 
sec. 3020(b), Pub. L. 105-178, and sec. 3023(i) and (k), Pub. L. 
109-59); 49 CFR 1.51.


0
2. Revise Sec.  661.3 to read as follows:


Sec.  661.3  Definitions.

    As used in this part:
    Act means the Surface Transportation Assistance Act of 1982 (Pub. 
L. 97-424), as amended by the Safe, Accountable, Flexible, Efficient 
Transportation Equity Act: A Legacy for Users (Pub. L. 109-59).
    Administrator means the Administrator of FTA, or designee.
    Component means any article, material, or supply, whether 
manufactured or unmanufactured, that is directly incorporated into the 
end product at the final assembly location.
    Contractor means a party to a third party contract other than the 
grantee.
    FTA means the Federal Transit Administration.
    Grantee means any entity that is a recipient of FTA funds.
    Manufactured product means an item produced as a result of the 
manufacturing process.
    Manufacturing process means the application of processes to alter 
the form or function of materials or of elements of the product in a 
manner adding value and transforming those materials or elements so 
that they represent a new end product functionally different from that 
which would result from mere assembly of the elements or materials.
    Negotiated procurement means a contract awarded using other than 
sealed bidding procedures.
    Rolling stock means transit vehicles such as buses, vans, cars, 
railcars, locomotives, trolley cars and buses, and ferry boats, as well 
as vehicles used for support services.
    SAFETEA-LU means the Safe, Accountable, Flexible, Efficient 
Transportation Equity Act: A Legacy for Users (Pub. L. 109-59).
    United States means the several States, the Commonwealth of Puerto 
Rico, the District of Columbia, Guam, American Samoa, the Virgin 
Islands, and the Commonwealth of the Northern Mariana Islands.

0
3. Revise 661.6 to read as follows:


Sec.  661.6  Certification requirements for procurement of steel or 
manufactured products.

    If steel, iron, or manufactured products (as defined in Sec. Sec.  
661.3 and 661.5 of this part) are being procured, the appropriate 
certificate as set forth below shall be completed and submitted by each 
bidder or offeror in accordance with the requirement contained in Sec.  
661.13(b) of this part.

Certificate of Compliance With Section 165(a)

    The bidder or offeror hereby certifies that it will comply with the 
requirements of section 165(a) of the Surface Transportation Assistance 
Act of 1982, as amended, and the applicable regulations in 49 CFR part 
661.

 Date------------------------------------------------------------------
 Signature-------------------------------------------------------------
 Company---------------------------------------------------------------
 Name------------------------------------------------------------------
 Title-----------------------------------------------------------------

Certificate for Non-Compliance With Section 165(a)

    The bidder or offeror hereby certifies that it cannot comply with 
the requirements of section 165(a) of the Surface Transportation 
Assistance Act of 1982, as amended, but it may qualify for an exception 
to the requirement pursuant to section 165(b)(2) or (b)(4) of the 
Surface Transportation Assistance Act of 1982, as amended, and the 
applicable regulations in 49 CFR 661.7.

 Date------------------------------------------------------------------
 Signature-------------------------------------------------------------
 Company---------------------------------------------------------------
 Name------------------------------------------------------------------
 Title-----------------------------------------------------------------


Sec.  661.7  [Amended]

0
4. In Sec.  661.7, Appendix A, remove paragraphs (b) and (c) and 
redesignate paragraphs (d) and (e) as paragraphs (b) and (c), 
respectively.

0
5. In Sec.  661.9, revise paragraphs (b) and (d) to read as follows:


Sec.  661.9  Application for waivers.

* * * * *
    (b) A bidder or offeror who seeks to establish grounds for an 
exception must seek the exception, in a timely manner, through the 
grantee.
* * * * *
    (d) FTA will consider a request for a waiver from a potential 
bidder, offeror, or supplier only if the waiver is being sought under 
Sec. [th x nsp]661.7 (f) or (g) of this part.
* * * * *

0
6. Revise Sec.  661.12 to read as follows:


Sec.  661.12  Certification requirement for procurement of buses, other 
rolling stock and associated equipment.

    If buses or other rolling stock (including train control, 
communication, and traction power equipment) are being procured, the 
appropriate certificate as set forth below shall be completed and 
submitted by each bidder in accordance with the requirement contained 
in Sec.  661.13(b) of this part.

Certificate of Compliance With Section 165(b)(3)

    The bidder or offeror hereby certifies that it will comply with the 
requirements of section 165(b)(3), of the Surface Transportation 
Assistance Act of 1982, as amended, and the applicable regulations of 
49 CFR 661.11.

 Date------------------------------------------------------------------
 Signature-------------------------------------------------------------
 Company---------------------------------------------------------------
 Name------------------------------------------------------------------
 Title-----------------------------------------------------------------

Certificate for Non-Compliance with Section 165(b)(3)

    The bidder or offeror hereby certifies that it cannot comply with 
the requirements of section 165(b)(3) of the Surface Transportation 
Assistance Act of 1982, as amended, but may qualify for an exception to 
the requirement consistent with section 165(b)(2) or (b)(4) of the 
Surface Transportation Assistance Act, as amended, and the applicable 
regulations in 49 CFR 661.7.

 Date------------------------------------------------------------------
 Signature-------------------------------------------------------------
 Company---------------------------------------------------------------
 Name------------------------------------------------------------------
 Title-----------------------------------------------------------------

0
7. In Sec.  661.13, revise paragraphs (b) introductory text (b)(1), 
(b)(2), and (c), add new paragraph (b)(1)(i), and add and reserve 
paragraph (b)(1)(ii) to read as follows:


Sec.  661.13  Grantee responsibility.

* * * * *
    (b) The grantee shall include in its bid or request for proposal 
(RFP) specification for procurement within the scope of this part an 
appropriate notice of the Buy America provision. Such specifications 
shall require, as a condition of responsiveness, that the bidder or 
offeror submit with the bid or offer a completed Buy America

[[Page 14118]]

certificate in accordance with Sec. Sec.  661.6 or 661.12 of this part, 
as appropriate.
    (1) A bidder or offeror who has submitted an incomplete Buy America 
certificate or an incorrect certificate of noncompliance through 
inadvertent or clerical error (but not including failure to sign the 
certificate, submission of certificates of both compliance and non-
compliance, or failure to submit any certification), may submit to the 
FTA Chief Counsel within ten (10) days of bid opening of submission or 
a final offer, a written explanation of the circumstances surrounding 
the submission of the incomplete or incorrect certification in 
accordance with 28 U.S.C. 1746, sworn under penalty of perjury, stating 
that the submission resulted from inadvertent or clerical error. The 
bidder or offeror will also submit evidence of intent, such as 
information about the origin of the product, invoices, or other working 
documents. The bidder or offeror will simultaneously send a copy of 
this information to the FTA grantee.
    (i) The FTA Chief Counsel may request additional information from 
the bidder or offeror, if necessary. The grantee may not make a 
contract award until the FTA Chief Counsel issues his/her 
determination, except as provided in Sec.  661.15(m).
    (ii) [reserved]
    (2) For negotiated procurements, compliance with the Buy America 
requirements shall be determined on the basis of the certification 
submitted with the final offer or final revised proposal. However, 
where a grantee awards on the basis of initial proposals without 
discussion, the certification submitted with the initial proposal shall 
control.
    (3) * * *
    (c) Whether or not a bidder or offeror certifies that it will 
comply with the applicable requirement, such bidder or offeror is bound 
by its original certification (in the case of a sealed bidding 
procurement) or its certification submitted with its final offer (in 
the case of a negotiated procurement) and is not permitted to change 
its certification after bid opening or submission of a final offer. 
Where a bidder or offeror certifies that it will comply with the 
applicable Buy America requirements, the bidder, offeror, or grantee is 
not eligible for a waiver of those requirements.

0
8. In Sec.  661.15, revise paragraphs (a), (b), (d), and (g) to read as 
follows:


Sec.  661.15  Investigation procedures.

    (a) It is presumed that a bidder or offeror who has submitted the 
required Buy America certificate is complying with the Buy America 
provision. A false certification is a criminal act in violation of 18 
U.S.C. 1001.
    (b) Any party may petition FTA to investigate the compliance of a 
successful bidder or offeror with the bidder's or offeror's 
certification. That party (``the petitioner'') must include in the 
petition a statement of the grounds of the petition and any supporting 
documentation. If FTA determines that the information presented in the 
petition indicates that the presumption in paragraph (a) of this 
section has been overcome, FTA will initiate an investigation.
* * * * *
    (d) When FTA determines under paragraph (b) or (c) of this section 
to conduct an investigation, it requests that the grantee require the 
successful bidder or offeror to document its compliance with its Buy 
America certificate. The successful bidder or offeror has the burden of 
proof to establish that it is in compliance. Documentation of 
compliance is based on the specific circumstances of each 
investigation, and FTA will specify the documentation required in each 
case.
* * * * *
    (g) The grantee's reply (or that of the bidder or offeror) will be 
transmitted to the petitioner. The petitioner may submit comments on 
the reply to FTA within 10 working days after receipt of the reply. The 
grantee and the low bidder or offeror will be furnished with a copy of 
the petitioner's comments, and their comments must be received by FTA 
within 5 working days after receipt of the petitioner's comments.
* * * * *

0
9. Revise Sec.  661.17 to read as follows:


Sec.  661.17  Failure to comply with certification.

    If a successful bidder or offeror fails to demonstrate that it is 
in compliance with its certification, it will be required to take the 
necessary steps in order to achieve compliance. If a bidder or offeror 
takes these necessary steps, it will not be allowed to change its 
original bid price or the price of its final offer. If a bidder or 
offeror does not take the necessary steps, it will not be awarded the 
contract if the contract has not yet been awarded, and it is in breach 
of contract if a contract has been awarded.

0
10. Revise Sec.  661.19 to read as follows:


Sec.  661.19  Sanctions.

    A willful refusal to comply with a certification by a successful 
bidder or offeror may lead to the initiation of debarment or suspension 
proceedings under part 29 of this title.

0
11. Revise Sec.  661.20 to read as follows:


Sec.  661.20  Rights of parties.

    (a) A party adversely affected by an FTA action under this 
subsection shall have the right to seek review under the Administrative 
Procedure Act (APA), 5 U.S.C. 702 et seq.
    (b) Except as provided in paragraph (a) of this section, the sole 
right of any third party under the Buy America provision is to petition 
FTA under the provisions of Sec.  661.15 of this part. No third party 
has any additional right, at law or equity, for any remedy including, 
but not limited to, injunctions, damages, or cancellation of the 
Federal grant or contracts of the grantee.

PART 663--[AMENDED]

0
12. The authority citation for part 663 is revised to read as follows:

    Authority: 49 U.S.C. 1608(j); 23 U.S.C. 103(e)(f); Pub. L. 96-
184, 93 Stat. 1320; Pub. L. 101-551, 104 Stat. 2733; sec. 3023(m), 
Pub. L. 109-59; 49 CFR 1.51.


0
13. In Sec.  663.37, revise paragraph (c) to read as follows:


Sec.  663.37  Post-delivery purchaser's requirements certification.

* * * * *
    (c) For procurements of:
    (1) Ten or fewer buses; or
    (2) Procurements of twenty vehicles or fewer serving rural (other 
than urbanized) areas, or urbanized areas of 200,000 people or fewer; 
or
    (3) Any number of primary manufacturer standard production and 
unmodified vans, after visually inspecting and road testing the 
vehicles, the vehicles meet the contract specifications.

    Issued in Washington, DC this 14th day of March, 2006.
David Horner,
Chief Counsel.
[FR Doc. 06-2671 Filed 3-20-06; 8:45 am]
BILLING CODE 4910-57-P