[Federal Register Volume 59, Number 164 (Thursday, August 25, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-20979]
[[Page Unknown]]
[Federal Register: August 25, 1994]
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DEPARTMENT OF TRANSPORTATION
49 CFR Part 663
Small Purchase Exception to Resident Inspector Requirement Under
Pre-Award and Post-Delivery Audits of Rolling Stock Purchases
AGENCY: Federal Transit Administration, DOT.
ACTION: Regulatory guidance.
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SUMMARY: This document provides guidance on the Federal Transit
Administration's (FTA) regulation requiring audits of rolling stock
purchased with FTA funds to assure compliance with the bid
specification requirements. For procurements of 11 or more vehicles,
the regulation requires that an inspector be present during
construction of the vehicles at the manufacturing site to assure
compliance with the bid specifications; an exception is thus provided
for purchases of ten or fewer vehicles. FTA explains in this document
that the exception also applies to the purchase of ten or fewer
vehicles by a subrecipient under the umbrella of a Statewide
procurement.
EFFECTIVE DATE: August 25, 1994.
FOR FURTHER INFORMATION CONTACT: George Izumi, Office of Grants
Management, Federal Transit Administration, (202) 366-6475; or Daniel
Duff, Office of Chief Counsel, Federal Transit Administration, (202)
366-4011.
SUPPLEMENTARY INFORMATION:
Background
In accordance with section 12(j) of the Federal Transit Act, as
amended, FTA issued a regulation requiring a pre-award and post-
delivery audit for an FTA grant involving the purchase of buses and
other rolling stock. Under the regulation, a recipient of Federal
financial assistance under sections 3, 9, 16, or 18 of the Act must
certify that its rolling stock procurements comply with the bid
specifications.
Section 12(j) provides that ``manufacturer certification shall not
be sufficient, and independent inspections and auditing shall be
required.'' Accordingly, as part of the post-delivery certification
process, 49 CFR 663.37(a) requires the recipient to have a ``resident
inspector'' at the manufacturing site during the period of manufacture
to assure such compliance, and provides that the inspector cannot be an
agent or employee of the manufacturer.
Section 663.37(c) provides, however, that the ``resident
inspector'' requirement under the regulation does not apply to the
purchase of ten or fewer vehicles, in which case the recipient itself
must assure compliance with the specifications.
Issue
FTA's section 18 (nonurbanized area formula) and section 16
(elderly and persons with disabilities formula) programs are
administered by the States. States also may receive funds under the
section 3 (capital) program. The States receive grant funds from FTA,
and in turn make the funds available to subrecipients that provide
transportation services at the local level.
Some States make arrangements with vehicle manufacturers on behalf
of a number of local subrecipients. These smaller operators prefer the
efficiency and convenience of this process, through which they can
purchase vehicles in a more timely manner and at a more reasonable cost
than if each acted independently. However, the question has arisen
whether, when a subrecipient purchases 10 or fewer vehicles under such
a Statewide procurement, it must employ a resident inspector at the
manufacturing site. Affected States and subrecipients have expressed
concern that the application of the resident inspector requirement in
this situation would impose a considerable cost burden on them. They
contend that the exception in section 663.37(c) covers such small
purchases under a Statewide procurement.
Clarification
As the preamble to the final rule (56 FR 48384, September 24, 1991)
indicates, the purpose of the exception at 49 CFR 663.37(c) is to
provide a recipient of FTA funds procuring a small number of vehicles
relief from the cost burden associated with the requirement that an
inspector be present at the manufacturing site; indeed, a section of
the preamble addresses the rule's economic impact on small entities,
and concludes that it will not have a significant impact on a
substantial number of such entities because of policies adopted in the
final rule, including the exception to the in-plant inspection
requirement provided for small purchases. This rationale applies
equally to a purchase of ten or fewer vehicles by a subrecipient of a
State, even where the purchase or purchase order is made under the
umbrella of a Statewide procurement. Moreover, the unique role of the
States in administering the FTA's nonurbanized and elderly and persons
with disabilities programs should not prevent a subrecipient under
those programs from being afforded the same relief from a regulatory
cost burden currently available to larger recipients under the formula
and capital programs. Accordingly, we intend this guidance to make
clear that the existing exception from the resident inspector
requirement for purchases of ten or fewer vehicles at 49 CFR 663.37(c)
applies to separate purchases of ten or fewer vehicles by a
subrecipient under a Statewide procurement using section 3,16, or 18
funds.
We emphasize that the exception does not relieve grantees from the
audit requirement altogether. Instead, recipients or subrecipients must
verify, independent of the manufacturer, that the vehicles meet the bid
specification requirements by road testing and visually inspecting the
vehicles to make certain that they comply with the bid specifications.
Issued on: August 22, 1994.
Gordon J. Linton,
Administrator.
[FR Doc. 94-20979 Filed 8-24-94; 8:45 am]
BILLING CODE 4910-57-U