In December 2019, the U.S. Congress passed and the President signed into law the National Defense Authorization Act for Fiscal Year 2020. While BYD remains strongly opposed to the provisions enacted into the law, we are happy to announce that new guidelines released by the Federal Transit Administration (FTA) allow public transit systems to continue to purchase our buses without suffering financial penalties.
In meetings with FTA staff over the past several months, BYD brought forth many of the questions posed by our transit system customers. Additionally, FTA heard many questions from grantees. As a result, the agency released an FAQ document explaining how it interprets the law’s effects on transit bus purchases.
While there are still many remaining questions about which companies were targeted by these new restrictions, BYD is operating under the assumption that we are affected by this new law. Fortunately, restrictions contained in this law do not apply for two years after the date of enactment of the NDAA 2020. The two-year “phase-in” period ends on December 20, 2021.
During this “phase-in” time period, public transportation agencies may execute contracts for rolling stock without limitation. FTA further explains that if an FTA recipient executes a contract or subcontract for rolling stock on or before December 20, 2021, that contract will be eligible for FTA grant funding, even if the delivery of the base order vehicles and options, if any, occurs after Dec. 20, 2021. FTA emphasizes that this approach is compatible with their current rules and regulations governing the limits on the length of multi-year contracts for bus procurements.
FTA specifically notes that the two-year phase-in applies to the “award of a contract.” If a federal grant recipient enters into a base contract prior to Dec. 20, 2021, that includes options based on the recipient’s reasonably foreseeable vehicle needs, the base contract and options will be eligible for FTA funding, subject to the FTA’s limits for multiyear rolling stock contracts. FTA further offers as an example, that if a recipient enters into a multi-year bus contract with a restricted manufacturer on or before Dec. 20, 2021, the recipient may exercise options acquired in that contract up to five years after the date of contract execution. The cost of the options exercised during that period will be eligible for federal grant assistance, the agency said. BYD is pleased that the response from FTA adheres to current policies.
Assignment of Options
Transit customers have asked whether a transit system can assign their options to another recipient – the so-called “piggybacking” technique. Again, FTA adheres to preexisting policies and continues to treat all piggybacking as a new contract for the assignee. Therefore, if an FTA recipient assigns options under a contract prior to Dec. 20, 2021 with a restricted manufacturer to another grant recipient, that assignment of options will be eligible for FTA funding. After Dec. 20, 2021, piggybacking on a contract with a restricted manufacturer will be ineligible for FTA grant funding.
State Schedule Contracts
FTA will follow current policies and procedures for BYD customers buying buses via a state schedule contract. For state schedule procurement is executed on or before Dec. 20, 2021, all federally-funded transit systems may place orders against that contract for the length of the contract. For example, if a state, on or before Dec. 20, 2021, forms a state schedule contract with BYD for buses for a base period of two years, with a maximum of three one-year extensions, orders placed by FTA recipients using that state schedule contract during the base period and any extension exercised by the state will be eligible for FTA grant funding.
Use of Local Funds
The new law does not impose any prohibitions or requirements relating to the use of local funds to procure buses from a restricted manufacturer, before or after December 20, 2021. In short, a public transit agency can purchase BYD buses using state or local funds and suffer no penalty.
Contracts for replacement parts or maintenance that are separate from a contract for rolling stock are not affected by the new provision. Note: FTA clarifies if a contract or subcontract for rolling stock also includes replacement parts and maintenance, then the new law applies to the entire contract.
BYD, which stands for Build Your Dreams, is a leading electric vehicle company with proven innovative technology for cars, buses, trucks, forklifts and rail systems. BYD is dedicated to creating a truly zero-emission ecosystem offering technology for solar electricity generation, energy storage to save that electricity, and battery-electric vehicles powered by that clean energy. BYD has 220,000 employees across the globe, including nearly 1,000 in North America.