At the 2017 American Public Transportation Association's Bus and Paratransit Conference, the session Buy America: Conducting Pre-Award and Post-Delivery Audits for Rolling Stock Procurements brought up specific aspects on the Federal Transit Administration's (FTA) Buy America Handbook and next steps for agencies, manufacturers, subcontractors and suppliers to meet pre-award audit and post-delivery Buy America audit requirements.
"What you need to be able to be doing with Buy America, you need to be able to demonstrate compliance," said Cecelia Comito, assistant chief counsel, Federal Transit Administration (FTA). "One of the comments manufactures raised to FTA, was that you need to give us time so we can make the necessary Buy America compliance."
Comito said that one of the aspects of the program that the FTA finds important is hearing from manufactures, purchasers and subcontractors.
"You all have really good samples and check lists. You know, share the love. I would be more than happy if you sent them to me. We can make those things available and we can facilitate sharing. You see that in the language. It looks like it is requiring, that there is something new, please reach out to us because some of that is bad drafting," explained Comito.
Comito's request for additional information and effective checklists was mirrored.
I need to know a deadline; we need to communicate that to the manufacture so that we can follow-up and get the audit documentation and any follow-up. We want to make sure that the buses get to where they go. When I get an audit notice, I try and get as much information as I can," said Janette M. Hunter, CFE, CPA, founder and managing director, Global Innovations. "If you have a great checklist that is working for you, send it on in. I’m always looking for something that works."
"This new handbook has some improvements over the 2015 handbook. The handbook is the study guide," said Robert F. Nixon, president, Diversity Matters 2 US LLC. Nixon highlighted the fact that the 2017 guidelines made some aspects clearer than they had been in the previous issue. "From my perspective, the challenges in the audit process is where the issues lie ... They also took out the language the auditor needs to see your process."
"The important thing is that you have to do these audits and they have to be meaningful. We did listen to the comments that we receive, we know that there are a lot of areas where people are begging for more guidelines. We have to do that by regulation, we have to do it by notice and comment," said Comito. "Vehicles are very different than they were 20 years ago with all the bells and whistles and components."
Meeting Requirements
"Buy America pre-award audit is pre-award and is basically designed to take a look to see if the supplier meets the basic content and the summery. What (FTA) really cares about is not what you promised in the initial award, but it is what is delivered at the end of the day," explained Comito. "You want to be sure that the pre-award audit is realistic and we come in and make sure that you meet the statutory requirements."
"Because if all you do is base your pre-award on it and you go to the post-audit after all the vehicles are built, that is not effective. You need to do an audit after the first vehicle is build to ensure that the vehicle fully meets the Buy America," said Nixon.
Nixon said that the way that projects meet compliance has changed as well. The language in Buy America makes it easier to determine if the procurement falls under the umbrella of compliance. Nixon also explained the idea of partial credit — that is when domestic materials and domestic components are counted.
"Now manufacturing of a component is simply pass-fail. Did you manufacture that component in the united states? As long as it is manufactured in the united states and has over 60 percent U.S. components, than it is compliant," explained Nixon. "You don’t look at the total cost of the component, you look at the individual costs of the components."
Before the audit process starts, a project needs to be constructed.
"The three key elements are location, activities and cost," said Steven S. Policar, superintendent, Transit Fleet Contract Management Group, King County Metro Transit Division/Department of Transportation. "They need to ensure that the vehicles of final assembly meet the regulations. Finally, assembly location. The rules say that final assembly takes place in the USA."
Policar explained that within the Buy America handbook there are lists that provide information on what specific documentation is required to ensure that the final applications comply with the rest.
"The rules say that there are minimum requirements for CFR § 661.11, there are requirements for buses, there are requirements for trains," said Policar. "There are a number of steps there that are supposed to be taking place to comply with the finally assembly steps."
Hunter explained that it is important to go through these steps and construct checklists. When preparing for an audit there needs to be all essential information on-hand.
"You know that the manufactures accounting department gets tasked with this. Confidential documentation needs to be revived in they are on site. The handbook has a number of checklists; they can be used for multiple purposes," said Hunter. "They key take away is keep those current regulations on hand."
Keeping the Future in the Forefront
Policar said that one of the most important aspects of abstaining to Buy America is to go in with 'boots on the ground' to observe the site directly. Policar does feel that the Buy America handbook offers a wide variety of options. "The handbook, in my opinion, says way too much and I feel that you need to choose wisely on what you are going to do."
The regulations of Buy America works to create U.S. jobs. Hunter explained that in the future new technology is coming into the process.
"I just want to emphasize for the purposes that when that final report is done, you need to make sure that report shows what you did to get your review and what you put forth," concluded Comito.
"Lets work together with the FTA to improve and standardize the handbook," Nixon added.
