FR Doc 06-2671

[Federal Register: March 21, 2006 (Volume 71, Number 54)]
[Rules and Regulations]
[Page 14112-14118]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21mr06-15]

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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.

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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: http://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: http://www.nara.gov/fedreg and the Government Printing Office's Web page at: http://www.gpoaccess.gov/fr/index.html.

html.

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 http://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.

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.

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.

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