Feds eye Chinese contractor
Focus on Pennsylvania deal
The U.S Department of Transportation is investigating whether CRRC, the Chinese company manufacturing and assembling new subway cars for the MBTA, complied with federal requirements.
The inspector general’s office of DOT announced Friday that it was launching an audit of Chinese-state-owned CRRC MA’s $138 million contract with the Southeastern Pennsylvania Transportation Authority, for 45 new passenger rail cars.
USDOT launched the probe based on concerns raised by three then-ranking members of the House Transportation and Infrastructure Committee last year, who, citing a Philadelphia Inquirer article, stated that the rail cars appeared to be built almost completely in China before being shipped to Springfield for final assembly.
“In light of the Inquirer’s article, we are concerned whether
CRRC MA has met the Buy America requirements over the course of this contract so far, and whether CRRC MA will be able to meet these requirements as the contract progresses,” the lawmakers wrote to Inspector General Eric Soskin in September 2022.
According to the FTA’s Buy America requirements, the cost of the components and subcomponents for rolling stock produced in the United States must total more than 60% for fiscal years 2016 and 2017, more than 65% for FY18 and FY19, and more than 70% for FY20 and beyond, the letter stated.
“In addition to the components and subcomponents requirement, final assembly for rolling stock must occur in the United States,” the lawmakers wrote. “CRRC has claimed that it sources 70% of the total cost of railcar components from manufacturers in the United States.
The letter went on to state, “This claim has been echoed by press affiliated with Chinese state media. However, a recent report by the Philadelphia Inquirer
gives reason to speculate about the accuracy of that claim.”
The letter also references Congress’ concern with CRRC MA securing more than $2.6 billion in U.S. transit contracts to provide train cars for the cities of Philadelphia, Boston, Chicago and Los Angeles.
This resulted in Congress passing a provision in the National Defense Authorization Act of 2019, which banned mass transit agencies from using federal funds for the purchase of rail cars and buses from Chinese-owned companies, the letter stated.
Although CRRC MA was grandfathered in and allowed to continue doing business with its existing U.S. contracts, the lawmakers stated SEPTA and the company must still comply with FTA’s Buy America requirements.
Carolyn Hicks, assistant inspector general for acquisition and procurement audits, wrote in a Friday memo that the audit, which will begin in the “coming weeks,” will examine FTA’s oversight of SEPTA’s certification of CRRC MA’s adherence to Buy America requirements for rolling stock.
It will also examine SEPTA’s calculation of the total value of foreign components “for the purpose of determining compliance with FTA’s Buy America rolling stock requirements,” Hicks said.
CRRC MA spokesperson Lydia Rivera said the company “is fully aware of Buy America provisions and complies with the requirements.”