Buy America and transit projects

Most transit projects in the U.S. (e.g. construction of subway systems, procurement of ferries, etc.) are undertaken by states and local governments with funding from the Federal Transit Administration (FTA).

This funding brings with it Buy America restrictions that require iron, steel and manufactured products to be made in the U.S.

Buy America requirements for FTA-funded transit projects

When the FTA provides funding to a state or municipal government to undertake a transit project, Buy America requirements apply to the project as a whole (i.e. not only to the FTA-funded portion). The requirements are different depending on whether the project is for the purchase of rolling stock (defined as buses, subways, light rail, commuter rail, monorail, passenger ferryboats, trolleys, inclined railways, and people movers) or for non-rolling stock (for example a new subway station).

Buy America requirements for rolling stock

As provided for in the 2017 Fixing America’s Surface Transportation (FAST) Act, as of January 2020, 70% of rolling stock components procured with FTA funds must be U.S.-made. Final assembly must also take place in the United States.

Here is an illustration of how the percentage of U.S. content is determined:

Assume that the aggregate cost of all components of a bus is $100. In order to comply with Buy America, more than $70 worth of the components will need to be of U.S. origin. To determine which components count as domestic, the origin of the components must be reviewed. If a component has a cost of $10 and more than $7 worth of its subcomponents are manufactured in the U.S., then the entire $10 cost of the component is considered U.S.-made and counts toward the required domestic content of $70 or more.

You can find more detailed information on how to calculate U.S. content in the Department of Transportation’s Buy America Handbook.

The Buy America analysis begins with the identification of the end product being procured. From that you can determine which items are components and which are subcomponent. An end product is "any item that is to be acquired by a grantee as specified in the overall project contract" (49 CFR Subpart 661.11(s)).

If an agency is procuring a new rail car, the car is the end product and the traction motor would be a component of the end product. If that same agency procures a replacement traction motor for an existing rail car, then the traction motor would be the end product for purposes of Buy America analysis.

Buy America requirements for non-rolling stock

For non-rolling stock, all steel, iron and manufactured products procured with funding from the FTA must be entirely made in the U.S. For manufactured products to be considered produced in the U.S., all manufacturing processes for the product must take place in the U.S., and all components must be of U.S. origin. A component is considered of U.S. origin if it is manufactured in the U.S., regardless of the origin of its subcomponents.

How can Canadian companies participate in FTA-funded transit procurements?

Canadian companies pursuing transit procurements funded with federal money should familiarize themselves with provisions of FTA Circular 4220.1E Third Party Contracting Requirements and Title 49 Part 661 of the Code of Federal Regulations (CFR).

Waivers to the FTA’s Buy America requirements may be granted on one of the following grounds:

• public interest: the use of American goods would be contrary to the public interest of the U.S. [49 C.F.R. Subpart 661.7 (b)]; or
• non-availability: the materials for which the waiver is requested are not available in sufficient quantity and reasonable quality in the U.S. [49 C.F.R. Subpart 661.7 (b)]; or
• price: inclusion of American goods would increase the cost of the contract by more than 25% [49 C.F.R. Subpart 661.7 (d)].

To request a waiver, the grant recipient, contractor and subcontractor involved must:

• provide a certificate of non-compliance to the FTA stating that their bids will not comply with Buy America requirements, in which they list the items for which waivers will be sought, and then,
• apply for those waivers from the FTA.

Your nearest Canadian Trade Commissioner – In Canada or Abroad, can assist firms to effectively:

• research provisions that apply to their industry;
• start early to prepare and adhere to special procedures;
• identify, understand and mitigate against competitive stumbling blocks;

Issues specific to Amtrak

The U.S. National Railroad Passenger Corporation (Amtrak) provides medium- and long-distance intercity passenger railroad service in the U.S. and nine Canadian cities. Amtrak is owned by the U.S. government through the U.S. Department of Transportation (DOT).

On contracts worth over US$1 million, Amtrak is legally obliged to purchase only:

• non-manufactured articles, material and supplies mined or produced in the U.S.; or
• manufactured articles, material, and supplies manufactured in the U.S. substantially from articles, material, and supplies mined, produced or manufactured in the U.S.

The Secretary of Transportation may exempt Amtrak from these requirements if:

• restrictions are inconsistent with the public interest; or
• restrictions cause the cost to be unreasonable; or
• U.S. materials are not sufficiently and reasonably available in commercial quantities of a satisfactory quality; or
• rolling stock or power train equipment cannot be bought and delivered to the U.S. within a reasonable time.

For more information:

• Visit the Department of Transportation (DOT) Buy America webpage.
• Visit the Buy America section of the FTA's website.
• For additional assistance, please contact your nearest Canadian Trade Commissioner – In Canada or Abroad.