On cutaways, a bus body is manufactured and mounted on a chassis built by another manufacturer. The Number of Bus Manufacturers Has Declined, but Bus Production Has Remained Constant

		The Number of Heavy- duty Manufacturers Has Declined

Over the last decade, the number of heavy-duty transit bus manufacturers  in the U.S. has declined due to business failures and consolidation. At least two companies started producing buses—two companies not identified in 2004 each produced about 4 percent of the cutaway buses in 2013. 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). FTA Funds Bus Procurements through Grant Programs and Provides Oversight and Guidance to Transit Agencies

FTA provides support for public transportation by awarding federal  funding—about $11 billion in 2013—to transit agencies in the form of  grants. 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). 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. Transit Agencies Are Responsible for Complying with FTA’s Bus Procurement Requirements

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. For example, FTA  conducts triennial reviews of transit agencies receiving Urbanized Area  grant funds. 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. FTA also provides technical assistance and training on bus procurement. 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. 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. In the past,  entities other than federal agencies have been authorized to purchase  items through GSA. 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. 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. In  2013, transit agencies used over $1 billion of federal funding to purchase  buses. Recommendations for Executive Action

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. Appendix I: Objectives, Scope, and Methodology

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 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.
Why GAO Did This Study

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.

What GAO Found

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.

What GAO Recommends

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