FTA Buy America requirements: why transit rolling stock has a stricter rule than BABA

FTA Buy America requirements are the one place in the Build America, Buy America landscape where the general rule you have learned from every other funding agency stops applying. Run a bus or railcar purchase through the same 55 percent manufactured-products test that governs a HUD-funded HVAC unit or an EPA-funded water pump, and you will certify the wrong number. The Federal Transit Administration has run its own, considerably stricter Buy America regime since the early 1980s, and that regime did not get replaced when BABA became law in 2021, it sits underneath it. This is the agency-specific view for transit agencies, bus and railcar manufacturers, and their contractors who need the actual mechanics, not the general BABA framework applied to the wrong category.

The rule that predates BABA by forty years

Every other agency covered on this site inherited its domestic-content obligation from BABA, enacted 15 November 2021 as part of the Infrastructure Investment and Jobs Act. FTA is different. Its Buy America authority traces back to the Surface Transportation Assistance Act of 1982, codified today at 49 U.S.C. §5323(j) and implemented through FTA's own regulations at 49 CFR Part 661. That statute has required domestic content on federally funded transit procurements since long before BABA existed, and it did not go away when BABA arrived. Instead, 2 CFR Part 184, the OMB guidance that implements BABA government-wide, sits on top of FTA's pre-existing rule. For awards obligated on or after 23 October 2023, both regimes apply to the same transit grant simultaneously, and where they overlap, the stricter standard controls.

Why rolling stock runs on 70 percent, not 55

The category that makes FTA genuinely different is rolling stock, buses, railcars, trolleybuses, ferries used in fixed-route service, and their major subsystems. BABA's manufactured-products test asks whether more than 55 percent of a product's component cost is US-sourced. FTA's rolling stock test asks for more than 70 percent, and it adds a second, independent condition BABA does not impose anywhere else: final assembly of the vehicle must happen in the United States regardless of how the cost percentage works out. A bus that clears 70 percent domestic component cost but is assembled abroad still fails. That 70 percent figure did not appear overnight; the Fixing America's Surface Transportation (FAST) Act of 2015 phased it in over several years specifically for rolling stock, well before BABA's 55 percent number existed for anything else.

What BABA actually added for transit

If FTA's rolling stock and manufactured-product rules were already stricter than BABA's, what did BABA change? Two things, and neither one lowers the bar. First, BABA introduced a construction-materials category, non-ferrous metals, plastics and polymers, glass, lumber, drywall and similar bulk materials, that FTA had not separately regulated before; those now need to be produced in the US the same way construction materials do everywhere else in the BABA landscape. Second, it layered OMB's waiver-review procedure and the Made in America Office's oversight on top of FTA's existing waiver process, adding a federal review step to requests that used to go through FTA alone. Everything else, the 70 percent rolling-stock threshold, the final-assembly requirement, the all-domestic-manufacturing standard for iron and steel, was already there and stayed exactly as strict.

FTA's four waiver types

FTA runs its own waiver taxonomy, distinct from the nonavailability, public-interest and unreasonable-cost categories used elsewhere on this site, though the underlying logic overlaps. Type 1 is a public-interest waiver, granted when applying the domestic requirement would be inconsistent with the public interest. Type 2 is a non-availability waiver, for components not produced in the US in sufficient quantity or acceptable quality. Type 3 is a price-differential waiver, available when sourcing domestically would raise total project cost by more than 25 percent. Type 4 is specific to FTA: a rolling-stock waiver addressing the 70 percent component test or final-assembly requirement directly, the route a transit agency uses when no compliant vehicle exists in a given category yet.

Type 4 waivers are not theoretical. In December 2024, FTA proposed a three-year general waiver of the rolling stock rule for battery-electric minibuses, and a separate five-year partial waiver for certain commercial vans converted for paratransit use, published for comment in the Federal Register with the comment period closing 6 January 2025. The reasoning in both cases was the same: the domestic supply chain for those specific vehicle types had not caught up with demand, so applicants bidding on real solicitations were routinely unable to certify compliance. That is the pattern to watch for any newer vehicle category, electric buses, hydrogen fuel-cell vehicles, autonomous shuttles, where FTA's waiver list is often the more current answer than the base regulation.

Where the paperwork actually breaks down

A 2024 audit by the Department of Transportation's Office of Inspector General looked at exactly this problem on a live contract: SEPTA's $138 million, 45-railcar order with CRRC MA, a state-owned Chinese rolling stock manufacturer. The OIG's findings were not about SEPTA breaking the rule outright; they were about the guidance underneath it. FTA does not require recipients to retain supporting documentation for pre-award audits, does not require verification of a supplier's self-reported Buy America figures, and has no regulation addressing how domestic shipping costs should be treated in the calculation. Without that clarity, the audit concluded, FTA could not reliably confirm that SEPTA's compliance certification, or any recipient's, actually held up. The lesson for any transit agency or manufacturer working an FTA-funded procurement now: keep the underlying component-cost documentation yourself, in a form that would survive exactly this kind of audit, rather than relying on a supplier's certification letter alone.

Delivering new-and-improved bus infrastructure is yet another example of how America is building again under President Trump. (Transportation Secretary Sean P. Duffy, announcing $2.03 billion in FTA bus and low-emission grants, 20 November 2025)

Why the scale matters for FY2026

That November 2025 announcement, $2.03 billion split between the Buses and Bus Facilities Program and Low or No Emission Bus Grants across 165 projects in 45 states and DC, is one slice of a much larger pipeline every one of these dollars runs through FTA's rolling stock test, not the general BABA one. FTA's total FY2026 funding runs to roughly $20.6 billion, including about $5.1 billion in formula and competitive Buses and Bus Facilities grants, a further $5.6 billion in Low or No Emission Bus Grants through FY2026, and $1.5 billion in Bipartisan Infrastructure Law funding for railcar replacement over the same period, of which the second Rail Vehicle Replacement Program package alone has already put roughly $1.3 billion toward new rail vehicles nationwide. FTA reopened its bus-infrastructure funding again on 27 July 2026 with a $610 million notice of funding opportunity. Every vehicle bought with any of that money answers to the 70 percent, final-assembly-in-the-US test, which is exactly why getting the agency-specific rule right, rather than defaulting to BABA's general 55 percent figure, matters more here than almost anywhere else on this site.

What to check on your own FTA-funded procurement

• Confirm whether the item is rolling stock or a rolling-stock major subsystem before applying any percentage test; that classification decides whether 70 percent plus final assembly applies, or FTA's separate iron-and-steel and manufactured-product standards do.
• Check FTA's current waiver list before assuming a newer vehicle type, electric buses, hydrogen fuel-cell vehicles, paratransit conversions, must clear the base rule; several categories carry active Type 4 waivers.
• Keep your own component-cost and country-of-origin records rather than relying solely on a supplier's certification letter; the SEPTA audit found FTA's guidance does not require recipients to verify supplier data independently.
• Treat 2 CFR Part 184's construction-materials category as new ground for transit specifically, non-ferrous metals, plastics, glass, lumber, drywall, since FTA did not separately regulate it before BABA.
• Run non-rolling-stock manufactured products, station elevators, fare equipment, signalling systems, through the standard BABA domestic-content calculation rather than the rolling-stock test; they are governed by different rules.
• File a Type 3 price-differential or Type 4 rolling-stock waiver request as early as design or procurement planning; FTA's review, like other agencies' waiver queues, does not move at proposal speed.

A signed certification letter from the vehicle manufacturer remains the baseline record for any FTA procurement, rolling stock or otherwise, but on rolling stock specifically it needs to state the domestic component-cost percentage and confirm final assembly location explicitly, not just declare general compliance. If a component or vehicle type cannot clear its test, FTA's own Type 1 through Type 4 waiver categories are the route, submitted to FTA directly rather than through the general BABA waiver channel other agencies use.