Public Transit: Updated Guidance and Expanded Federal Authority Could Facilitate Bus Procurement
Published: 2015-09-10T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Buses are critical to the nation's public transportation services. According to data from FTA's National Transit Database, buses carry more passengers than all other modes combined. FTA provides grants to transit agencies to buy buses. When making these purchases, agencies must comply with a range of federal requirements. GAO was asked to review the transit bus market and federal role in bus procurement.
This report examines (1) the characteristics of the U.S. transit bus market, (2) the federal role in transit bus procurement, and (3) views of selected transit agencies on challenges, if any, agencies face when procuring new buses and federal actions that could address those challenges. GAO reviewed FTA's National Transit Database data from 2004 and 2013 and applicable federal law, regulations, and grant documents; conducted six discussion groups with representatives of 36 rural and urban transit agencies; and interviewed FTA and GSA officials, national transit industry organizations, and transit bus manufacturers.
section_title: What GAO Found
paragraphs: Overall, the number of manufacturers of transit buses has declined in recent years, but bus production has remained constant. Transit agencies purchase over 5,000 buses per year—about half are heavy-duty buses and half are smaller buses called “cutaways” because they consist of a bus body on top of a chassis built by another manufacturer. The number of firms that produce most heavy-duty transit buses declined from 10 in 2004 to 4 in 2013, the latest year data were available, due to business failures and consolidation. In contrast, the number of firms that produce most cutaways increased over the same time frame from 13 to 15. The number of buses procured annually by transit agencies from 2009–2013, using grant funds other than American Recovery and Reinvestment Act (Recovery Act) funds, ranged from 4,670 to 5,652. Transit agencies and others used Recovery Act funds to purchase 7,544 more buses in 2009 and 2010.
The amount of Federal Transit Administration's (FTA) grant funding that transit agencies used for bus procurement increased from $794 million in 2009 to $1.3 billion in 2013. Also, agencies spent $1.7 billion in funds from the Recovery Act on buses from 2009 to 2010. FTA oversees transit agencies by requiring them to certify their compliance with a range of federal requirements and by periodic reviews. FTA also provides bus procurement guidance and technical assistance. However, GAO found that some resources provided by FTA, such as its Best Practices Procurement Manual , reference obsolete FTA documents. Without updated guidance, transit agency officials may not be able to purchase buses as efficiently as possible because they may need to spend additional time researching the guidance or to repeat a required step in the procurement process.
Transit agency officials GAO spoke with identified a range of challenges they face when procuring buses. Those challenges include difficulties in complying with federal procurement requirements. For example, officials reported that it is time consuming to comply with a requirement to certify that at least 60 percent of the bus's components are made in the U.S. because the agency must conduct pre- and post-award reviews of bus manufacturers. Transit agency officials in four of six discussion groups also identified the procurement process as difficult and resource-intensive, particularly for those transit agencies that do not purchase buses each year and may lack procurement capacity. Transit agency officials in four of six discussion groups stated these challenges could be addressed by allowing agencies access to General Services Administration's (GSA) sources of supply. Purchasing through GSA could allow agencies to decrease the time they spend on bus procurements since GSA would be responsible for ensuring that vehicles comply with federal procurement requirements. Further, purchasing through GSA could result in lower prices for buses, given GSA's ability to purchase vehicles well below the dealer invoice. According to FTA and GSA officials, both agencies have explored the feasibility of establishing a process to allow transit agencies to procure buses through GSA, but neither agency has developed a legislative proposal requesting that Congress grant authority to allow transit agencies to do so. In the past, nonfederal entities, such as state and local governments, have been authorized to purchase items through GSA.
section_title: What GAO Recommends
paragraphs: GAO recommends FTA update its Best Practices Procurement Manual , assess its other related guidance, and update that guidance as needed. GAO also recommends FTA work with GSA to develop a legislative proposal to authorize transit agencies that receive relevant FTA grants to access GSA sources of supply for the purchase of transit buses. FTA and GSA agreed with our recommendations

section_title: Letter
paragraphs: Buses are the most widely used form of public transportation in the United  States. In fact, according to data from the Federal Transit Administration’s  (FTA) National Transit Database (NTD), buses carry more passengers  than all other modes—such as commuter rail, light rail, and ferries— combined. Buses play a particularly important role in the provision of  paratransit services for people with disabilities. To support public  transportation, Congress, through grant programs managed by FTA  provides billions of dollars annually to transit agencies for operations and  capital investments, including bus procurement. In fiscal year 2013,  transit agencies used $1.3 billion of the funds provided by FTA to buy  buses.
In total, transit agencies use FTA’s grant funding to purchase about 5,000  buses per year, although not all agencies purchase buses each year.  New buses are needed to replace aging existing buses or to expand an  agency’s existing service. Transit agencies have raised concerns about  the difficulties of complying with federal procurement requirements for  buses and have sought alternative ways to buy buses. For example,  many agencies have purchased buses through buying cooperatives or by  acquiring the rights to procure buses under another transit agency’s  existing contract, a process known as piggybacking. Both methods of  procurement are acceptable to FTA, if done in compliance with federal  procurement requirements.
You asked us to review the market for transit buses, the relevant federal  role, and impediments to transit bus procurement. This report examines  (1) the characteristics of the U.S. transit bus market, including  manufacturing capacity and the production of new buses; (2) the federal  role in transit bus procurement, including funding, procurement  requirements, and oversight and guidance; and (3) the views of selected  transit agencies on challenges, if any, that they face when procuring new  buses and federal actions that could address those challenges.
To determine the characteristics of the U.S. transit bus market, we  reviewed FTA’s Annual Statistical Summaries from 2009 to 2013, the  latest year data are available, and American Recovery and Reinvestment  Act of 2009 (Recovery Act) Statistical Summaries. We reviewed data from  the NTD for the years 2004 and 2013 to evaluate changes to transit  agencies’ bus fleets over time. We included vehicles agencies used for  fixed route, demand response, and deviated-fixed route services and  excluded vehicles used for other services—commuter buses, inter-city  buses, trolley or specialty buses, vanpool vans, and automobiles— because these excluded vehicles represent a small portion of all vehicles  used. To assess the reliability of NTD data, we spoke with FTA officials  about data quality control procedures and reviewed relevant  documentation and determined that the data were sufficiently reliable for  the purposes of this report. We reviewed relevant literature and  interviewed officials representing FTA; American Public Transportation  Association (APTA); Community Transportation Association of America  (CTAA); transit agencies; and transit bus manufacturers. To determine  the federal government’s role in transit bus funding, procurement  requirements, and oversight and guidance, we reviewed applicable  federal law, regulations, FTA guidance and grant documents, as well as  interviewed FTA officials.
Finally, to identify any challenges transit agencies face when procuring  transit buses and federal actions that could address those challenges, we  conducted six discussion groups with officials from 36 rural and urban  transit agencies with bus fleets. We recruited discussion group  participants through a mass e-mail solicitation to transit agencies and  solicited the help of three national transit industry groups that work closely  with transit and state transportation agencies–APTA, CTAA, and  American Association of State Highway and Transportation Officials  (AASHTO)—to send our solicitation e-mail to transit agencies. We  allocated participants into homogeneous groups based on whether they  receive an urban or rural FTA grant, their location, and size of the transit  agency. To ensure we received input from urban transit agencies of  varying sizes, we established three size categories: large (with more than  100 buses); medium (with 50–100 buses), and small (with less than 50  buses). We did not group rural agencies into size categories because we  selected all who volunteered and 97 percent of rural agencies have less  than 50 buses. We conducted two of the four urban group discussions  with small agencies due to the higher proportion of small agencies in the  total population of transit agencies, and we conducted one group  discussion each with medium and large urban-transit agencies. Based on  our findings from these discussion groups and a review of literature, we  summarized the challenges related to bus procurement into general  categories. While these challenges were consistently identified by both  urban and rural transit agencies with a mix of bus fleets, their views were  based on a self-selecting, non-representative sample of transit agencies,  and thus the results are not generalizable to all transit agencies. We also  interviewed FTA and General Services Administration (GSA) officials  about potential changes to transit bus procurement identified by the  discussion groups. Appendix I describes our objectives, scope, and  methodology in greater detail.
We conducted this performance audit from October 2014 to September  2015 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: According to data from the NTD, there were about 2,200 transit agencies  in the U.S. in 2013, most of which used buses. The bus fleets ranged in  size from large agencies operating more than a thousand buses to small  agencies with a single bus. For example, MTA New York City Transit  reported that it had more than 3,300 buses and the city of Goodland,  Kansas, reported that it had one. Although bus fleets of transit agencies  in most major cities number in the hundreds, 85 percent of all transit  agencies operated fewer than 50 buses.
Bus transit services from these agencies include:  fixed routes, in which buses operate according to a set route and schedule; demand response, including paratransit service required under the Americans with Disabilities Act 1990, as amended (ADA), in which buses are scheduled in response to calls from passengers; and, deviated-fixed routes, which are fixed routes that allow for minor route deviations in response to passenger calls.
To provide these services, transit agencies reported that they used a total  of nearly 92,000 buses, representing a wide range of types and sizes. For  the purposes of this report, we categorized buses as follows:
Heavy-duty buses—the largest buses used for public transportation, typically used for fixed-route service (see fig. 1). Almost all heavy-duty buses are made specifically for the transit market, although many major components—including the engine, transmission, axles, and brakes—are also used in heavy-duty trucks.
Cutaway buses—predominately used for demand response (see fig. 1). On cutaways, a bus body is manufactured and mounted on a chassis built by another manufacturer. Virtually all are equipped to accommodate wheelchairs.
Buses most commonly use diesel as a fuel source, but alternative fuel  options are used, including compressed natural gas, biodiesel, and hybrid  electric.
Table 1 compares various characteristics of the types of buses used by  transit agencies.
Transit agencies procure new buses to replace aging existing fleets or  when expanding service and FTA policies specify how agencies manage,  use, and dispose of buses acquired with federal funds. For example, FTA  has established a minimum useful life for buses, in terms of years in  service or accumulation of miles, and requires that buses are maintained  and remain in use for at least their minimum life. To avoid the purchase of  unnecessary vehicles, FTA policy limits the size of each agency’s bus  fleet to those the agency needs to provide its services. Thus, for each  new replacement bus purchased, FTA requires agencies to provide plans  for disposition of the vehicle to be replaced.
While some transit agencies purchase buses frequently, most do not  make purchases every year and some go years between purchases.  When transit agencies purchase buses using federal funds, there are four  procurement methods recognized by FTA that they typically use,  depending on their needs:
Stand-alone procurement—conducted by a single agency and resulting in a contract between it and a bus manufacturer or vendor.
Joint procurement—conducted by two or more agencies where each is a party from the outset to a single contract with a bus manufacturer or vendor.
Assignment of options (also referred to as “piggybacking”)— conducted by two or more agencies where one agency with an existing bus procurement contract determines that it inadvertently contracted to purchase more buses than it needs. The agency may assign the rights to purchase some or all of its unneeded buses to other transit agencies.
Purchasing from a state schedule—many states create purchasing schedules by which the state and its subsidiaries may acquire goods, including buses. Some subsidiaries—including cities and counties— are also transit agencies and purchase buses from the state’s purchasing schedule. FTA approves of this procurement method as long as the state ensures that procurement contracts include any clauses required by federal law.
Recipients of FTA assistance are required to conduct procurements in  accordance with FTA procurement rules including, for example, that all  procurement transactions, such as stand-alone, joint, and assignment of  options, be conducted in a manner that provides full and open  competition and that recipients agree to purchase a finite number of  vehicles based on the agency’s needs. Purchases from a state schedule  also must follow FTA procurement rules such as the inclusion of FTA- required clauses and certifications but are typically completed by the state  and not a transit agency.
section_title: The Number of Bus Manufacturers Has Declined, but Bus Production Has Remained Constant
subsections: section_title: The Number of Heavy- duty Manufacturers Has Declined
paragraphs: Over the last decade, the number of heavy-duty transit bus manufacturers  in the U.S. has declined due to business failures and consolidation. The  final assembly of heavy-duty buses purchased by transit agencies using  funds from FTA generally takes place in the U.S., in order to meet Buy  America requirements. In 2013, four companies produced virtually all  heavy-duty buses used in the U.S.
Transit agencies that receive federal funds are required to report  operational data at least annually to the NTD, including information on the  agencies’ bus fleets. Using these data, we identified the year and  manufacturer of buses that transit agencies reported they owned or used  in 2004 and 2013 and compared the two time periods. Our analysis of  this data shows:  The number of heavy-duty manufacturers declined—in 2004, 10 manufacturers produced almost all of the reported buses; by 2013, four manufacturers produced almost all of the buses.
Smaller manufacturers stopped bus production—most manufacturers that stopped producing heavy-duty buses between 2004 and 2013 were relatively small, with each making 4 percent or fewer of the 2004 reported buses, although one manufacturer made 11 percent.
The market share for the largest manufacturers increased —in 2004, the largest three manufactures produced 68 percent of the reported heavy-duty buses; in 2013, the same three manufacturers produced 81 percent of the buses.
section_title: The Number of Cutaway Manufacturers Has Remained Consistent
paragraphs: In contrast with heavy-duty manufacturers, the number of manufacturers  of cutaway transit buses has remained about the same. As with heavy- duty buses, final assembly of cutaway buses purchased by transit  agencies using funds from FTA generally takes place in the U.S., to meet  Buy America requirements.  According to FTA, transit agencies generally  procure cutaways through dealers representing the manufacturers; each  bus is to be produced to an agency’s specifications. There is also a  substantial private market for cutaway buses. Specifically, hotels, rental  car agencies, and universities also purchase cutaway buses. In 2007,  FTA estimated that sales to these entities surpassed transit-related sales.  Our analysis of bus information reported by transit agencies in 2004 and  2013 shows that:
Almost all cutaway bus manufacturers continued to produce buses— of the 13 largest manufacturers in 2004, all continued to produce transit buses in 2013.
At least two companies started producing buses—two companies not identified in 2004 each produced about 4 percent of the cutaway buses in 2013.
Market share is more evenly distributed—in 2004, the three largest manufacturers made 64 percent of the cutaway buses; in 2013, the three largest manufacturers made 47 percent. In general, because the market share of the largest manufacturers declined, other  manufacturers had larger shares.
section_title: Production of Transit Buses Has Remained Constant
paragraphs: The decline in the number of heavy-duty bus manufacturers has not  affected the number of buses produced. Excluding buses purchased  with funds from the Recovery Act, the number of buses procured by  transit agencies annually varied slightly from 2009 through 2013 (see  table 2). Approximately half of the bus purchases were for heavy-duty  buses and half were for cutaway buses, although the percentages vary  from year to year. The Recovery Act provided additional funds for capital  projects, including bus procurement, in 2009 and 2010. Specifically,  transit agencies and others purchased 7,544 buses using Recovery Act  funds over those 2 years.
The number of transit buses produced annually is relatively small  compared to heavy-duty trucks. Specifically, there are approximately  2,500 heavy-duty buses produced each year and approximately 300,000  heavy-duty trucks. Similarly, of the 370,000 cutaway chassis sold  annually, 2,500 are purchased and modified for transit use. According to  a 2007 FTA report, this situation is both beneficial and problematic for the  transit industry. Components shared by multiple industries likely make  their costs lower than if they were used only for transit. Conversely, the  transit industry as a whole exerts little influence on availability of  components or their design.
section_title: FTA Funds Bus Procurements through Grant Programs and Provides Oversight and Guidance to Transit Agencies
paragraphs: FTA provides support for public transportation by awarding federal  funding—about $11 billion in 2013—to transit agencies in the form of  grants. Grant recipients have specific responsibilities associated with the  use of this funding. For example, transit agencies are required to conduct  procurements involving federal funds in compliance with applicable  federal requirements. FTA is responsible for ensuring compliance with  these requirements and for ensuring that these agencies use the funding  prudently. In addition, FTA describes its role as one where, in general,  FTA does not substitute its judgement for that of its recipients by making  contract decisions for recipient transit agencies entering into procurement  contracts with third parties, such as bus manufacturers or vendors.
subsections: section_title: Federal Funding Used for Bus Procurement Increased from 2009 through 2013
paragraphs: There were at least 11 federal grant programs in fiscal year 2013 that  allowed funds to be used for bus procurement. The rules associated with  use of grant money vary by program, but generally transit agencies have  flexibility in deciding how to use these funds. For example, an agency  may use most of its grant funding one year on a commuter rail project and  use most of its funding for bus procurement in the next year. Transit  providers may, and often do, receive funding from more than one  program. Further, in each year, FTA may obligate funds—that is, enter  into a grant agreement with a transit agency to, for example, procure  buses—that were appropriated in that year or in prior years. As a result,  the amount obligated by FTA in any given year is not the same as is  appropriated. Four federal grant programs provide 95 percent of the  funding awarded to transit agencies for bus procurement:
Urbanized Area Formula Program (49 U.S.C. §5307)—provides funds to urban areas, defined as those with a population of at least 50,000 based on census information. Funds provided under this program may be used for capital projects, such as purchasing buses, planning, job access and reverse commute projects, and operating and other expenses.
Bus and Bus Facilities Formula Program (49 U.S.C. §5339)—provides funds to allow transit agencies to overhaul and retrofit their buses as well as purchase new buses and construct bus-related facilities, such as bus maintenance facilities.
Enhanced Mobility of Seniors and Individuals with Disabilities Program (49 U.S.C. §5310)—provides funds to transit agencies and other organizations for transportation programs for seniors and individuals with disabilities that go beyond the scope of public transportation fixed-route service as well as providing funds for ADA complementary paratransit services. At least 55 percent of these funds must be used on capital expenses, such as bus procurement.
Rural Area Formula Program (49 U.S.C. §5311)—provides funds to states and tribal areas for use in areas with populations of less than 50,000. States distribute these funds to non-urban and rural areas. Funds can be used to support public transportation in rural areas in order to support the needs of rural areas such as access to healthcare, education, employment, public services, and recreation. Funds can also be directed towards capital, operating, and other expenses.
Transit agencies have recently used increasing amounts from their grant  funds to purchase buses. Specifically, from fiscal years 2009 to 2013, the  most recent year data are available, obligations made by FTA to transit  agencies for bus procurement increased (see table 3). These figures  represent only the money that transit agencies have decided to use  towards bus purchases and do not represent all other forms of transit  spending. In addition, transit agencies have used funds from other  sources to procure buses. For example, transit agencies and others used  approximately $1.7 billion provided by the Recovery Act for procuring  7,544 buses from 2009 to 2010.
Some of these grant programs changed over this 5-year period. For  example, the Bus and Bus Facilities program was a discretionary program  through fiscal year 2012, after which it became a formula program  pursuant to changes made by the Moving Ahead for Progress in the 21st  Century Act (MAP-21).
section_title: Transit Agencies Are Responsible for Complying with FTA’s Bus Procurement Requirements
paragraphs: When using federal funds from FTA to procure buses, transit agencies  must comply with a range of federal requirements that include  government-wide requirements, such as complying with the ADA, as well  as FTA-specific requirements, such as providing a local funding match for  federal grants. FTA includes federal requirements in the FTA Master  Agreement, which contains the terms and conditions applicable to each  grant. Some of the relevant clauses that apply to bus procurements are  shown in table 4.
section_title: FTA Oversees Transit Agencies’ Procurement Process through Agency Self-Certification and Various Reviews
paragraphs: FTA is responsible for ensuring that grant recipients comply with federal  bus procurement requirements. According to FTA, it relies on transit  agencies to annually certify, for each grant, that its procurement system  meets all federal requirements and that those requirements are also met  by third party contractors.
FTA conducts periodic reviews to assess transit agencies’ performance  and adherence to FTA requirements and policies. For example, FTA  conducts triennial reviews of transit agencies receiving Urbanized Area  grant funds. According to FTA officials, about 600 transit agencies  receive Urbanized Area funds and approximately one-third of these  agencies (200) undergo a triennial review each year. These triennial  reviews include a review of an agency’s procurement system but may  also include an Enhanced Review Module (ERM) with a specific focus on  procurement. ERMs can be triggered by factors including high funding  levels, open or repeated findings from previous reviews, unusual or  complex procurements, a large number of change orders, bid protests, or  Buy America issues. Based on its own risk assessment findings, FTA  may also conduct a Procurement System Review (PSR). According to  FTA officials, these PSRs examine at least 56 different elements of a  transit agency’s procurement system plus its Buy America certifications to  determine if it meets FTA procurement requirements and to identify  needed corrective actions.
FTA has found errors in the way transit agencies procure buses. For  example, in 2013, FTA found that several bus procurement contracts did  not comply with federal procurement requirements that limit the number of  buses an agency may purchase to those needed for its public  transportation services. According to FTA, these contracts, in which the  parties contracted to buy more buses than they currently or could  reasonably be expected to need, were apparently specifically designed  for piggybacking—or assigning contract rights to other transit agencies— at a later date. Under FTA rules, piggybacking is allowed only when an  agency inadvertently contracts for more buses than it needs. FTA also  found that agencies procured buses from a Minnesota state contract even  though the agencies were located outside that state, in violation of FTA  rules. FTA noted that under this contract, to purchase a bus, a transit  agency needed only to submit a simple, one-third page application to the  State of Minnesota, receive a membership permit number, and send a  purchase order to the vendor of its choosing listed in the contract. While  some states have established purchasing schedules for use by state  agencies and other authorized entities, FTA prohibits transit agencies  using federal funds from FTA to procure buses from out-of-state  contracts. Despite that, at the time of the FTA review, at least 13 transit  agencies located outside of Minnesota had pending orders to procure  buses through the Minnesota state contract with a single bus  manufacturer, according to FTA. In both the piggybacking and Minnesota  state contract cases, FTA prohibited future purchases but allowed  pending purchases to stand.
section_title: FTA Provides Guidance to Transit Agencies on Bus Procurement, but Some Is Outdated
paragraphs: FTA provides guidance and technical assistance to help transit agencies  comply with federal bus procurement requirements. Transit agencies  access this guidance through FTA’s website or by contacting officials in  FTA regional offices. According to FTA, the primary source of  procurement guidance from FTA is FTA Circular 4220.1F – Third Party  Contracting Guidance, which describes how transit agencies can comply  with federal requirements when using federal funds for procurements,  such as for buses. FTA issued the current version of the circular in  November 2008, and revised it most recently in March 2013. In addition,  individual circulars for some of the grant programs used for bus  procurement provide guidance related to that program. For example, the  circular for the Urbanized Area grant program provides information on the  eligible uses of funding, such as for bus replacement, overhaul, or  expansion of service. Further, FTA periodically issues Administrator’s  Policy Letters to clarify FTA procedures or indicate changes to an existing  policy. For example, FTA issued a policy letter in March 2013 to clarify  the conditions under which transit agencies could piggyback off another  transit agency’s contract.
FTA also provides supplemental guidance through its Best Practices  Procurement Manual (BPPM), Third Party Procurement Frequently Asked  Questions (FAQ), and an online tool that transit agencies can use to  assess their procurement systems. This supplemental guidance is  designed to assist transit agency officials throughout the procurement  process and facilitate their compliance with FTA regulations. However,  this guidance is outdated.
The BPPM addresses each step in the procurement process using a standardized format consisting of requirements, discussion, and best practices. Requirements include relevant sections from FTA circulars, the Master Agreement, federal laws and regulations, and FTA Administrator’s Policy Letters. The discussion sections provide definitions and guidance concerning the meaning or purpose of the topic being presented, and the best practices section describes practices that have proved to be effective in the past, according to FTA. Although FTA states that it envisions the BPPM to be an ongoing and expanding document that will be updated periodically, FTA has not updated sections of the manual in at least 10 years. As a result, the manual includes outdated references to important procurement policy documents. For example, it includes a previous  version of FTA Circular 4220.1E, which was replaced by the current  version, FTA Circular 4220.1F, in 2008. Moreover, the fiscal year  2015 FTA Master Agreement notes that the BPPM may lack the  necessary information for compliance with certain federal  requirements. In June 2015, an FTA official told us that FTA made  draft revisions to the BPPM but FTA is awaiting internal approval  before releasing it and has not set a time frame for approval.
The FAQs on FTA’s website is an online resource for transit agencies to review FTA’s answers to frequently asked procurement-related questions. Visitors to the site can also submit questions to FTA. FTA adds new answers to the website but also retains undated answers with outdated guidance. For example, the bus procurement category includes answers added in 2014 but undated answers refer to the outdated Circular 4220.1E.
FTA’s online Procurement System Self-Assessment Guide can be used by transit agencies to assess whether their own procurement system complies with FTA procurement requirements in 10 common areas of deficiency. However, the guide also includes outdated information. For example, the guide references the BPPM for additional guidance; as discussed previously, the BPPM includes outdated information. Furthermore, the guide does not include instructions for completing the self-assessment or obtaining results, and a user is not able to answer the self-assessment questions online. Although there is an area that allows for electronic submission of the self-assessment form to FTA, any form submitted this way would be blank because the form does not allow a user to enter any text.
It is important to have updated guidance because transit agencies and  state departments of transportation rely on the guidance when procuring  buses to ensure compliance with federal requirements. Standards for  Internal Control in the Federal Government states that management  should ensure that there are adequate means of communicating with  external stakeholders that may have a significant impact on the agency  achieving its goals. Without updated guidance, transit agencies may not  be able to purchase buses as efficiently as possible; for example, they  may need to spend additional time researching the guidance or they may  have to repeat a required step in the procurement process. As discussed  in the next section, transit agency officials in four of our six discussion  groups identified outdated guidance as a challenge in bus procurement.
FTA also provides technical assistance and training on bus procurement.  According to FTA, the National Transit Institute (NTI) developed two-day  training on bus procurements in 2011 and held 12 training sessions from  2011 through 2013. The training is now held annually and transit  agencies can use FTA grant funds to send personnel to the training. In  addition, an FTA headquarters official stated that he provides in-person  bus procurement trainings to transit agencies approximately 8 times per  year. FTA and APTA developed a standardized format for transit  agencies to use for bus procurements. This format is designed to  provide a common method of contracting and is intended to save time  and effort for the parties to a particular transaction. According to APTA,  industry stakeholders such as bus manufacturers and transit agencies  contributed to the standard’s development. Use of the standardized  format is not required but FTA and APTA encourage its use.
Finally, the National Rural Transit Assistance Program (RTAP) offers  technical assistance and training, including for procurement, to transit  agencies in rural areas. For example, RTAP developed and made  available a free web-based application that is designed to guide agencies  through FTA procurement procedures as well as provide required federal  clauses and certifications.
section_title: Selected Transit Agencies Identified an Array of Bus Procurement Challenges and Potential Strategies to Address Them
subsections: section_title: Transit Agencies Identified a Wide Range of Procurement Challenges
paragraphs: Transit agency officials we spoke to told us that they face an array of  challenges in procuring buses. A 2006 FTA report concluded that “the  greatest challenges cited by both transit agencies and bus manufacturers  were related to bus procurement and contracting.” As discussed  previously, to identify and understand procurement challenges faced by  transit agencies, we conducted six discussion groups with officials of 36  rural and urban transit agencies. We recruited discussion group  participants through mass e-mail solicitation and allocated participants  into homogeneous groups based on their location and size of the transit  agency. Our six discussion groups included the following:  two groups of officials from small, rural transit agencies; two groups of officials from small, urban transit agencies; one group of officials from medium, urban transit agencies; and one group of officials from large, urban transit agencies.
subsections: section_title: Compliance with Federal Procurement Requirements
paragraphs: Participants in all six discussion groups identified some aspect of FTA’s  guidance, as well as some federal legal and regulatory requirements, as  posing challenges to procuring new buses. For example:  FTA guidance: Participants from four groups noted that some FTA guidance is outdated, as discussed in the previous section. Participants in three groups also cited that getting technical assistance from FTA was challenging. For example, a participant said that they contacted FTA officials about the applicability of a particular requirement but FTA officials would not provide a specific answer, leaving it to the transit agency to interpret. Participants in two rural groups said that they do not have the resources or experience to interpret these FTA requirements. While some participants appreciated the assistance from FTA regional staff, other participants in the large and small urban groups reported variation in the assistance received from FTA; some participants stated that FTA staff gave inconsistent advice or showed a lack of technical expertise. Participants in one group mentioned that FTA could be more proactive and provide more assistance to agencies during the procurement process.
Requirements: Participants from two groups described instances where procurement requirements are seemingly unnecessary or not relevant. For example, participants in the discussion groups representing large and medium urban-transit agencies said that some FTA requirements do not reflect the reality of the transit bus market. According to these participants, FTA requires transit agencies to conduct a price analysis to ensure the price is reasonable, but this requirement seems unnecessary when there is only a single manufacturer that builds a specific type of bus. However, FTA does not require a price analysis when there is only a single manufacturer of a bus but does require a different type of analysis. This discrepancy illustrates that some transit agency officials are confused about FTA requirements. Participants in the medium urban group said  they find a lack of potential bidders when they attempt to procure  buses, and also have difficulty demonstrating that pricing is fair and  reasonable, which is required by federal regulations.
Buy America: Participants from four groups told us that the Buy America certification requirements can be burdensome, complex, and costly. FTA requires transit agencies procuring buses with federal funds from FTA to certify compliance with Buy America requirements through pre-award and post-delivery reviews of bus manufacturers.Participants in two discussion groups from rural and medium urban transit agencies explained that their agencies needed consultants’ help with required pre- and post-award audits for the Buy America certification.
Contract Length: Participants in one small urban group told us that a federal requirement intended to encourage competition among manufacturers creates challenges. Specifically, the federal statutory provision prohibits transit agencies from entering into multiyear rolling- stock contracts with options to buy additional rolling stock or replacement parts for longer than 5 years if federal funds are used. Although FTA officials told us that the requirement is in place to ensure that the market is fair and open, participants told us that the restriction is burdensome; if they decide to procure new buses after the 5th year, they must initiate the procurement process all over again, which can be lengthy and costly.
Joint Procurement and “Piggybacking:” While participants in some of the groups we spoke with said piggybacking in particular is a useful procurement tool, other participants cited challenges and limitations associated with piggybacking. For example, one small urban agency said that piggybacking was the only way they could procure a small quantity of buses—such as one or two—because they did not receive any bids in response to a request for proposal. Participants in three groups from rural, small, and medium urban-transit agencies said that  the opportunities for joint procurement and piggybacking may be  limited because there is no formal mechanism to identify mutually  beneficial opportunities for joint procurement or piggybacking and the  regulations regarding piggybacking are confusing. As a result, some  participants who had previously used piggybacking began to handle  their own procurements. Participants in two groups told us that transit  agencies are not generally aware of other transit agencies’  procurement plans, and there is no entity to formally help facilitate  joint purchases. Some participants said they have learned of these  types of procurements through informal means, such as existing  relationships with other agencies or at industry conferences, and  through representatives of bus manufacturers. In addition, even if  agencies identify piggybacking opportunities, some participants found  the rules confusing. For example, officials in three discussion groups  (rural, small, and medium urban) were confused about whether FTA  allows agencies to participate in piggybacking options. FTA officials  told us that piggybacking options are allowed as long as an agency  unintentionally orders more buses than it requires. Transit agency  officials in two groups stated that piggybacking rules limit agencies’  options related to the buses to be procured. These rules allow some  changes to the buses originally ordered that are within the general  scope of the contract—such as seat fabric or exterior paint color—but  prohibit changes outside the scope of the contract. One small urban  participant said these rules effectively prevent them from  piggybacking because the features his agency prefers to include in  their buses—such as an extra wheel-chair securement location—are  not features most other agencies include in contracts. Instead, the  participant said his agency prefers to conduct its own procurement so  it can get the features it needs.
In addition to the challenges above, some transit agency officials in our  discussion groups cited challenges that specifically affect rural, urban  small and medium-sized agencies:
Participants in four groups noted that the procurement process is difficult and resource intensive. Participants in four groups (rural, small, and medium urban) noted that smaller agencies tend to have few or no dedicated procurement staff and lack technical, engineering, or specification-writing expertise needed for bus procurement. Several participants noted that the procurement process can take from 6 months to a year. Further, small agencies said that they procure buses infrequently, such as every few years, so it is difficult for them to become familiar with the process. In addition, these procurements are often for 1–3 buses and sometimes generate few bids from manufacturers.
Participants in three groups stated that procurement training opportunities through the NTI are not always designed to meet the needs of smaller agencies. Some participants told us that the material in the training courses is targeted to larger agencies, for example by assuming a level of support staff similar to what a larger transit agency would have. When these participants asked questions specific to their situations, they said the course instructors were not able to answer them. Additionally, participants in the rural group explained that with their limited staff resources, it was difficult to spare anyone to attend off-site training for multiple days.
section_title: Challenges Related to Transit Bus Industry Changes
paragraphs: Participants in all six discussion groups cited the following challenges  stemming from changes in the transit bus industry:
Participants in all six discussion groups said there is limited competition to produce heavy-duty buses. Specifically, participants told us that there are currently three heavy-duty bus manufacturers and one that makes 60 foot buses. According to participants in one small urban group, the limited number of heavy-duty bus manufacturers has led to a longer delivery time (18 months) and the price of new buses has increased faster than inflation.
Furthermore, participants also noted a lack of vendors for vehicle components. Specifically, participants told us that there is currently only one engine manufacturer for heavy-duty buses that complies with Buy America requirements. Participants in four discussion groups stated that Buy America and DBE requirements and consolidation of the industry have contributed to the lack of available vehicle  component vendors.
section_title: Funding Challenges
paragraphs: Participants in four discussion groups stated that it was a challenge to  secure funding for transit buses. Transit agencies may use federal, state,  and local funds to purchase or replace buses but must weigh these  purchases against other capital and operating needs. Transit agencies  also told us that the federal surface transportation authorizations and  appropriations process creates year-to-year uncertainty that can be a  challenge for long-term planning. Obtaining state or local funding to meet  federal local match requirements was identified as a challenge by  participants in three discussion groups. Constrained state and local  budgets can make securing these funds difficult. We have previously  found that some states provide limited or no state funds for rural transit, a  process that increases the pressure on rural transit agencies to secure  local funds.
section_title: Transit Agencies’ Access to Federal Sources of Supply Could Address Many Challenges
paragraphs: Participants in all six discussion groups offered ideas about possible ways  that the federal government could address some of the procurement  challenges they identified (see table 5).
Participants in four discussion groups from rural, urban-medium, and  urban small-transit agencies suggested that FTA develop a national  procurement schedule similar to that of the GSA’s.  GSA establishes  long-term government-wide contracts for millions of products with  commercial firms and provides federal agencies and others with access  to these sources of supply.  According to GSA officials, GSA negotiates  volume discounted prices and its policies and procedures are designed to  ensure that vendors comply with federal procurement requirements.  Transit agencies are not permitted to purchase through GSA because  they are not federal agencies or other authorized users. In the past,  entities other than federal agencies have been authorized to purchase  items through GSA. For example, states and units of local government  have been authorized pursuant to statute to purchase equipment,  including vehicles, in support of counter-drug, homeland security, and  emergency response activities.  Purchasing through GSA could allow  for more streamlined procurement for transit agencies and potentially cost  savings because GSA would be responsible for ensuring that any bus  procured through GSA complies with federal and FTA requirements. As a  result, transit agency officials would not need to develop their own  specifications or procurement requirements and would not be required to  ensure the buses comply with the Buy America certification. In addition,  GSA officials noted that they are usually able to secure very good pricing  because the purchasing power of the federal government results in  volume discounts. For example, they said the price of vehicles they  procure averages 17 percent below the dealer invoice price. Officials said  these prices compare favorably to prices paid by other large capacity  vehicle purchasers, such as rental car companies. According to FTA and  GSA officials, both agencies have explored the feasibility of establishing a  process to allow transit agencies to procure buses through GSA and both  agencies support the concept. GSA officials said they have the capability  to provide a streamlined procurement process to transit agencies that  complies with federal and FTA requirements. However, GSA officials told  us that Congress would have to authorize transit agencies to purchase  through GSA. Neither agency has submitted a legislative proposal to  Congress.
section_title: Conclusions
paragraphs: Buses are an important part of public transit. Transit agencies maintain a  fleet of buses to provide transit service. In order to do so, transit agencies  purchase buses to either replace their existing fleet or expand service. In  2013, transit agencies used over $1 billion of federal funding to purchase  buses. While some large agencies purchase buses each year and have a  dedicated procurement staff for doing so, other transit agencies purchase  buses only occasionally.  Moreover, participants in our discussion groups  explained that smaller agencies tend to have few or no dedicated  procurement staff and lack expertise needed for bus procurement. Thus,  they are challenged to knowledgably and efficiently complete all of the  steps required to procure buses with FTA funds. Therefore, FTA guidance  and assistance in helping transit agencies procure buses is important.  While this guidance is widely available on-line, some FTA guidance is out  of date and refers to incorrect regulations and information. As a result,  transit agencies may not be able to purchase buses as efficiently as  possible, as they may need to spend additional time researching the  guidance or they may have to repeat a required step in the procurement  process.
While transit agencies face several challenges in procuring buses, many  of these challenges could be alleviated if agencies were allowed to  purchase buses through GSA. By purchasing through GSA, agencies  would know that they are getting a bus that complies with federal  procurement requirements. In addition, transit agency staff—particularly  those at smaller agencies who may lack procurement expertise—would  be able purchase buses more easily and efficiently.  Specified non-federal  entities have been authorized to purchase through GSA in the past.  Specifically, states and local governments have been authorized under  federal statute to purchase through GSA for emergency equipment and  homeland security-related items, among other things. Transit agencies  could experience cost savings if they were able to purchase buses  through GSA, as agencies will not need to spend as much time on the  procurement process. Allowing transit agencies to make such purchases  could also lead to cost savings because GSA staff have expertise in price  negotiation and they have procured vehicles that, given the volume of  purchases, are on average 17 percent below the invoice price. Ultimately,  the efficient purchasing of buses may also save money for the federal  government, as transit agencies may require fewer federal funds to  operate their transit programs.
section_title: Recommendations for Executive Action
paragraphs: To ensure that transit agencies have appropriate and current guidance to  assist them when procuring transit buses, we recommend that the  Administrator of FTA update its Best Practices Procurement Manual and  assess its other related guidance identified in this report and update that  guidance as needed.
To provide a more efficient and cost-effective way for transit agencies to  procure transit buses while complying with federal procurement  requirements, we recommend that the Administrator of FTA, in  conjunction with the Administrator of the General Services Administration,  submit a legislative proposal to Congress that would authorize transit  agencies that are recipients of FTA grants to access GSA sources of  supply for the purchase of transit buses.
section_title: Agency Comments
paragraphs: We provided a draft of this report to the Department of Transportation and  the General Services Administration for review and comment prior to  finalizing the report. The Department of Transportation provided written  comments, which are reprinted in appendix II, and agreed with our  recommendations. The General Services Administration provided written  comments, which are reprinted in appendix III, and agreed with our  recommendations.  GSA also provided technical comments on the draft  that we incorporated as appropriate.
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date.  At that time, we will send copies to the Department of  Transportation and the General Services Administration. In addition, the  report is available at no charge on the GAO website at  http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-2834 or wised@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix IV.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: The objectives of this report were to examine (1) the characteristics of the  U.S. transit bus market, including manufacturing capacity and the  production of new buses; (2) the federal role in transit bus procurement,  including funding, procurement requirements, and oversight and  guidance; and, (3) the views of selected transit agencies on challenges, if  any, that they face when procuring new buses and any federal actions  that could address those challenges.
To address all three of our objectives, we reviewed relevant literature  from the Federal Transit Administration (FTA), industry, and academia  and interviewed officials representing FTA; General Services  Administration (GSA); American Public Transportation Association  (APTA); Community Transportation Association of America (CTAA);  transit agencies; and bus manufacturers.
To determine the characteristics of the U.S. transit bus market, we  reviewed FTA’s Annual Statistical Summaries from fiscal years 2009 to  2013, the latest year data are available, and American Recovery and  Reinvestment Act (Recovery Act) Statistical Summaries.  We reviewed  data from the National Transit Database (NTD) for the years 2004 and  2013 to evaluate changes to transit agencies’ bus fleets over time. We  chose those years because 2013 was the latest data available and 2004  represented data 10 years earlier, which we believe to be sufficient to  show any changes in the industry. We included vehicles used for fixed- route, demand-response, and deviated-fixed route services and excluded  vehicles used for other services—commuter buses, inter-city buses,  trolley or specialty buses, vanpool vans, and automobiles—because  these vehicles represent a small portion of all vehicles used. To assess  the reliability of data from NTD, we interviewed officials about data quality  control procedures and reviewed relevant documentation and determined  that the data were sufficiently reliable for the purposes of this report.
We categorized buses generally and for the purposes of this report as  heavy-duty or cutaway. FTA also uses these categories as well as three  others, which we did not include for ease of reporting and because the  heavy-duty and cutaway categories encompassed over 95 percent of  transit buses, according to FTA in 2006.
To identify bus manufacturers, the number of buses produced, and any  changes over time, we reviewed NTD urban vehicle inventory reports  from 2004 and 2013, the most recent year data are available. Transit  agencies receiving federal grant funding from FTA are required to report  operating information to NTD, including detailed information on their bus  fleet. For each year, we limited the data to reported vehicles that are 1)  used to provide bus or demand response transportation services; 2)  shown as bus and articulated bus vehicle types; and 3) within a 5-year  model range of the year of the data report (2004 to 2000 model years for  the 2004 data and 2013 to 2009 for the 2013 data). We further grouped  the data set by vehicle length: generally, vehicles 30 feet in length or  greater (heavy-duty buses) and vehicles less than 30 feet (cutaway  buses). For each group, we identified the number of vehicles from each  manufacturer and calculated an approximate market share by dividing  that number by the total number of vehicles.
Within the data set, some records included missing data, particularly for  manufacturer’s name and for model year. We excluded these records  from our analysis. The number of vehicles associated with missing data  records represented 11 percent of the total number of vehicles in the  2004 data and 10 percent in the 2013 data. We also manually reviewed  all records and identified some information that appeared to be incorrect  based on other data in the record. Most commonly, vehicles were  categorized as a vehicle type van when other evidence, such as the  manufacturer name, indicated they should be categorized as a bus. We  included these vehicles in our analysis. In more limited cases, vehicles  were categorized as a bus when other evidence indicated they should be  categorized as a van. We excluded these vehicles from our analysis. The  net change in vehicles because of these changes represented less than 3  percent of the total number of vehicles in the 2004 and 2013 analyses.
To determine the federal government’s role in procurement of transit  buses—including funding, oversight and guidance, and procurement  requirements—we reviewed applicable federal law, regulations, guidance,  and FTA documentations on federal grant programs including FTA’s  Master Agreement; Circular 4220.1E; Circular 4220.1F; Administrator’s  Policy Letters; Best Practices Procurement Manual; Triennial, State  Management, and Procurement Systems reviews; and APTA’s Standard  Bus Procurement Guidelines.
To identify any challenges transit agencies face when procuring transit  buses and federal actions that could address those challenges, we  conducted six discussion groups with 36 rural and urban transit agencies.  We recruited discussion group participants through mass e-mail  solicitation to approximately 1,900 transit agencies that report to the NTD.  In our email, we requested participation from transit agencies that had  received funding from FTA since 2009 and that were interested in  speaking with us on challenges they faced regarding transit bus  procurement. We also solicited the help of three national transit industry  groups to send our solicitation e-mail to rural transit agencies— APTA,  CTAA, and American Association of State Highway and Transportation  Officials (AASHTO) —that work closely with transit and state  transportation agencies.
For each volunteer received, we identified whether it was an urban or  rural recipient, the number of buses each reported, and their NTD  identification number to identify the FTA region. From our pool of  volunteers, we recruited participants based on a range of criteria,  including: agencies that purchase and operate buses; a mix of urban and  rural FTA grantees; a mix of the size of bus fleet and type of bus used;  and geographic diversity of various FTA regions. In order to include a  wide geographical distribution of participating agencies, we conducted all  six discussion groups remotely via WebEX. We established three size  categories to ensure we received input from a range of sizes of urban  agencies: large (more than 100 buses); medium (50–100 buses), and  small (less than 50 buses). We did not group rural agencies into size  categories because 97 percent of these agencies have less than 50  buses. After grouping the full list of volunteers, we allocated transit  agency participants into six homogeneous groups. Our six discussion  groups included the following:  two groups of rural transit agencies (total of 9 agencies); two groups of small, urban transit agencies (total of 13 agencies); one group of medium, urban transit agencies (total of 6 agencies); one group of large, urban transit agencies (total of 8 agencies).
In order to ensure the appropriateness of the questions for the  discussions, we pretested our moderator guide with three transit agencies  and modified the guide based on those pretest results as needed. We  conducted four of the six groups with rural and small urban transit  agencies due to the proportion of rural and small agencies in the total  population of transit agencies. As we were unable to accommodate all  volunteers with our discussion groups, we gave the non-selected  volunteers the opportunity to send us written responses to the discussion  questions; nine transit agencies provided written responses about the  challenges they faced procuring transit buses. Based on our findings from  the discussion groups, written responses and a review of literature, we  summarized the challenges related to bus procurement into general  categories. While these challenges were consistently identified across  agencies we spoke with, our findings are based on a self-selecting, non- representative sample of transit agencies, and thus the results are not  generalizable to all transit agencies.
We conducted this performance audit from October 2014 to September  2015 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: Comments from the Department of Transportation
section_title: Appendix III: Comments from the General Services Administration
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, John W. Shumann (Assistant  Director), Melissa Bodeau, Timothy Guinane, Geoffrey Hamilton, Rosa  Leung, Erik Shive, Travis Thomson, Elizabeth Wood and William T.  Woods made key contributions to this report.