OIG finds flaws in FTA 'Buy America' guidance on SEPTA rail-car contract

Weaknesses in the Federal Transit Administration's Buy America guidance hindered its oversight of the Southeastern Pennsylvania Transportation Authority's  with Buy America rolling stock requirements, the U.S. Department of Transportation's Office of Inspector General found.

In 2022, three members of the House Transportation and Infrastructure Committee asked the OIG to investigate FTA's oversight of SEPTA's certification of the state-owned China Railway Rolling Stock MA Corp. (CRRC) and whether it adhered to federal Buy America requirements. In 2017, SEPTA awarded a $138 million contract to CRRC MA for 45 passenger rail cars.

The OIG found that FTA does not require recipients to retain supporting documentation for pre-award audits or to verify suppliers’ Buy America information, nor does FTA have regulations to address domestic shipping costs. Without clear guidance, FTA could not rely on SEPTA to provide oversight of rolling stock procurements and risks that recipients miscalculate domestic content costs — raising concerns about whether FTA’s Buy America rules are being met.

In December 2022, FTA initiated an enhanced compliance review of SEPTA to verify compliance with Buy America rolling stock standards, but the agency faced challenges in obtaining sufficient data from both SEPTA and CRRC.

Although FTA suspended funds for the CRRC contract, the absence of policy as to when to initiate an enhanced Buy America compliance review and take corrective action limits the agency’s ability to address delays or compliance issues on future FTA-funded projects, the OIG found.

The OIG made eight recommendations to improve FTA’s oversight of SEPTA’s compliance with Buy America rolling stock requirements and FTA’s oversight of future rolling stock procurements. FTA concurred with six recommendations and partially concurred the final two, and provided alternative actions that meet the intent of the recommendations.

The OIG report can be read here.