A Department of Transportation investigation revealed weaknesses in the procurement guidance given to CRRC MA.
There were a lot of problems with the Federal Transit Administration’s oversight of SEPTA’s Buy America compliance for rolling stock, the U.S. Department of Transportation’s Office of the Inspector General announced this week.
That announcement was the finding of a report, requested in 2022 by members of the House Transportation and Infrastructure Committee, examining the Philadelphia-area transit agency’s $138 million contract with CRRC MA, a Massachusetts-based subsidiary of a Chinese state-owned enterprise.
This is precisely the kind of company that, upon receiving a bunch of federal money to purchase rail cars, would draw scrutiny from regulators and Members of Congress. Capitol Hill had CRRC specifically in mind when it passed the bipartisan Transportation Infrastructure Vehicle Security Act (TIVSA) in 2019, which prohibits Chinese state-owned firms from bidding on future federally funded contracts for rail cars and buses. CRRC’s subsidiary got its ultra-low SEPTA bid accepted two years before that, though. And it was photos in the Philadelphia Inquirer showing largely finished SEPTA cars in China, not Massachusetts, that spurred the committee members’ request for an investigation.
And while it’s now kind a moot point – SEPTA canceled its CRRC MA contract, after millions spent and zero rail cars delivered, a few months ago – this OIG report is illuminating. It’s a peek behind the curtain into how haphazard enforcement is of these domestic procurement laws.
Without requirements that define how to review manufacturers’ rolling stock documentation or requirements for retaining supporting documentation to verify the pre-award audit results, FTA and SEPTA had no assurance as to the quality and thoroughness of the work performed to determine Buy America compliance. For example, (a) pre-award audit (by a third party consultant) —conducted 6 years earlier — stated that ‘the description of the workspace to be performed at the Springfield facility satisfies the final assembly requirements. Estimated cost data for the final assembly work was also provided during the audit as required. The labor hours and costs appeared consistent with the described work scope for this type of vehicle.’ However, in conducting its ongoing enhanced Buy America compliance review, FTA found that, as of February 23, 2024, CRRC MA had not provided SEPTA with supporting documentation describing final assembly activities in sufficient detail to determine compliance.
Buy America is a smart and popular public policy. But it needs to be enforced to work correctly.
You can read the OIG report here.