or manufactures components for qualified freight railcars, that is not an entity that would be ineligible for an award of a contract or subcontract under 49 U.S.C. 5323(u) . (7) Qualified freight railcar (A) In general The term qualified freight railcar means a freight railcar that— (i) is either acquired or modernized by the taxpayer after the date of the enactment of this section, (ii) meets the significant improvement requirements for capacity, fuel efficiency, or performance of subparagraph (B), (iii) originates from a qualified railway supply company and was built in a qualified facility, and (iv) with respect to which no credit under this section has been previously claimed by any taxpayer. (B) Significant improvement requirements (i) In general A freight railcar shall be treated as meeting significant improvement requirements for capacity, fuel efficiency, or performance if— (I) in the case of a newly built replacement railcar, the taxpayer certifies— (aa) such railcar is owned by the taxpayer, and (bb) that— (AA) such railcar replaces two freight railcars owned by the taxpayer that were in service within the 48 months preceding the taxable year, and (BB) such freight railcars were scrapped and permanently removed from the AAR Umler System master file during the taxable year, and (II) in the case of a freight railcar that is modernized, the taxpayer certifies that the modernization has resulted in a significant improvement in capacity, fuel efficiency or performance. (ii) Significant improvement For purposes of this paragraph, an improvement in capacity or fuel efficiency and performance with respect to a modernized freight railcar shall be treated as a significant improvement if— (I) such capacity or fuel efficiency, as the case may be, is increased by at least 8 percent, or (II) in the case of performance, the qualified freight railcar meets the requirements of the Association of American Railroads Standard S–286 or is modernized to meet the design standards set forth in final rule HM–251 of the