Dive Brief:
- The Federal Transit Administration said in a Feb. 7 letter that it is acting to strengthen the American bus manufacturing industry, reduce vehicle costs and shorten delivery times for transit agencies.
- The letter outlined a series of recommendations for transit agencies to include in bus procurement contracts as officials from the Biden administration, federal agencies, regional transit agencies, labor groups and the bus industry met yesterday at a White House roundtable on clean bus manufacturing.
- The agency also announced today approximately $1.5 billion in competitive grants for fiscal year 2024 under the Low or No Emission grant program and Buses and Bus Facilities program.
Dive Insight:
Since the passage of the Infrastructure Investment and Jobs Act in 2021, the FTA has made over $20 billion in grants available for bus purchases and supporting infrastructure. But as transit agencies jumped on the opportunity to electrify their fleets, manufacturers facing supply chain problems, worker shortages and financial challenges struggled to meet the booming demand for clean buses.
Last year, California-based electric bus maker Proterra filed for Chapter 11 bankruptcy; NFI Group, the Canadian manufacturer of New Flyer buses, undertook a $444 million refinancing plan; and Nova Bus said it would pull out of the U.S. market and close its manufacturing facility in Plattsburgh, New York.
Meanwhile, transit agencies have faced price increases and extended delivery times, the FTA said in its Feb. 7 letter.
“Our industry is at risk with reduced competition and increasing bus acquisition costs,” said Paul Skoutelas, president and CEO of the American Public Transportation Association, in a statement. “The result is reduced cash flow for manufacturers and lengthy delays for transit agencies. This is occurring at the same time that historical and much-appreciated federal investment is available to support public transit’s transition to clean fleets.”
The FTA recommends that transit agencies:
- Modify procurement contracts for price increases, which are allowable in certain circumstances under federally funded contracts.
- Seek additional federal funds to cover price increases.
- Include price adjustment clauses based on cost indexes in procurement contracts.
- Make advance or progress payments to the contractor. FTA grant recipients must obtain security from the contractor in the amount of these payments.
The FTA will also host a webinar on best practices for bus procurement on Feb. 29.
In January, APTA’s recently formed bus manufacturing task force also released recommendations to support a more competitive and stable manufacturing capacity in the U.S. The task force is chaired by Chicago Transit Authority President Dorval Carter, with representatives from transit agencies, bus manufacturers, suppliers and other industry participants.
