1 to 3). In particular, the U.S. transit rail car fleet constitutes about 5 percent  of the worldwide total. This level of  specificity in transit rail car design is more common in the U.S. market  than it is in other countries’ markets. Transit Agencies’ Rail Car Orders Have Implications for the Price of Rail Cars

According to rail car manufacturer and transit agency officials, certain  characteristics of U.S. transit agencies’ rail car orders have implications  for the per-car prices that transit agencies pay for their cars. These characteristics include the following:    Small orders and customized designs: U.S. rail car orders tend to be small  and customized, which results in higher per-car costs. Federal Government Is Involved to Varying Degrees in Funding and Setting Design Standards for Transit Rail Car Procurement

		Federal Government Funds Pay for a Portion of Most Transit Agencies’ Rail Car Purchases

Most of the transit agencies we contacted used some type of federal  funding, such as the New Starts program, to purchase rail cars for their  systems. However, there are certain  limitations and procedures that must be followed. The Federal Government Has a Limited Role in Setting Design Standards for U.S. Transit Rail Cars That Varies Depending on the Type of Rail System

According to FTA officials, their input into transit rail car design is limited  to ensuring that Americans with Disabilities Act of 1990 (ADA)  requirements are met and does not include applying uniform design  standards for commuter, heavy, or light transit rail cars. However, in December  2009, the Secretary of Transportation proposed legislation that would give  FTA the authority to establish and enforce minimum federal safety  standards for rail transit systems that received federal transit funding. In  February 2010, legislation was introduced that would provide that  authority. Although Procuring Rail Cars Can Be Challenging, Standardization and Joint Purchasing Have the Potential to Reduce Costs

		Rail Car Purchases Compete for Existing Funding with Transit Agencies’ Other Needs

Many of the transit agency officials we interviewed said that securing  funding is one of the main challenges that they face when procuring transit  rail cars. For example, some officials told us that while  they support the need for ADA requirements, these requirements can be  costly to implement. Industry associations—including APTA and the Institute of Electrical and  Electronics Engineers—continue to promote standardization in transit rail  car procurement to make transit rail car procurement more cost-effic As part of its standards development program, APTA convened two  working groups in 2009 to develop (1) technical standards and (2) a set of  standard terms and conditions for transit agencies to use when procuring  light rail vehicles. A joint procurement means that rail  cars are purchased by two or more agencies under the same contract. As part of  this study, FTA implemented a pilot program for joint procurement of  buses. 2. 3. Conclusions

Rail transit offers society a number of benefits, including reduced  congestion and pollution and increased mobility. However, the relatively small and erratic  market for transit rail cars in the United States can hamper transit  agencies as they purchase rail cars for commuter, heavy, and light rail  transit systems, including streetcars, by increasing the cost and difficulty  of procuring transit rail cars. Since FTA helps fund  many procurements, it may be in the best position to help transit agencies  identify joint procurement opportunities. Develop a process to systematically identify and communicate  opportunities for transit agencies with similar needs to participate in  joint procurements of transit rail cars. Identify additional opportunities for standardization, especially for  new systems, such as light rail and streetcar systems. Agency Comments

We provided a draft of this report to the Department of Transportation for  review and comment. The department provided comments via e-mail,  generally concurred with the report, and agreed to consider the  recommendations. Appendix I: Scope and Methodology

To determine the key characteristics of the U.S. market for passenger  transit rail cars, we reviewed rail car databases, interviewed transit agency  officials, and spoke with officials representing  the Federal Transit Administration (FTA),  the American Public Transportation Association (APTA),    existing and potential transit rail car manufacturers, and  transit agency consultants. We also interviewed APTA officials regarding the federal  government’s role in setting design standards.
Why GAO Did This Study

Rail transit offers society a number of benefits, including reduced congestion and pollution and increased mobility. However, rail systems and cars are costly: Transit agencies can pay more than $3 million per car, often using federal funds. As requested, this report describes (1) characteristics of the U.S. market for transit rail cars, (2) the federal government's role in funding and setting standards for transit rail cars, and (3) challenges transit agencies face when procuring rail cars. GAO analyzed U.S. and worldwide rail car market data for commuter, heavy, and light rail systems and interviewed Department of Transportation (DOT) officials and domestic and international industry stakeholders, including the American Public Transportation Association (APTA).

What GAO Found

U.S. demand for transit rail cars is limited and erratic and orders tend to be for customized cars. Transit rail cars in the U.S. comprise about 5 percent of the worldwide fleet. Transit agencies' purchases vary considerably over time: A large transit agency may replace its entire fleet in 1 year, contributing to a spike in the market, whereas in other years, there may be only a fraction of that demand for the U.S. market. Transit agencies often request custom car designs to address not only legacy infrastructure requirements and interoperability issues with existing fleets, but also preferences. Rail car orders of small size and demand for customized cars can increase the price per car by, for example, concentrating design costs among fewer cars. The federal government provides some funding for transit rail cars and has varying levels of involvement in setting design standards for transit rail cars. More than half of the transit agencies GAO interviewed purchased rail cars with some type of federal funding, such as formula or discretionary capital funds. When transit agencies use federal funds to purchase rail cars, certain requirements apply, such as "Buy America"--which requires, among other things, that rail cars be assembled in the United States. The Federal Transit Administration (FTA) ensures that these requirements are met by overseeing new transit projects and through periodic reviews. The federal government's role in setting design standards for transit cars depends on the type of rail. For commuter rail, the Federal Railroad Administration has established safety standards that must be met, since these cars are intended to run on the same tracks as freight rail traffic. For other rail transit, FTA provided funds to help APTA--the standard-setting industry group--develop voluntary standards, including those for safety. However, the Secretary of Transportation proposed legislation in December 2009, which was introduced in Congress in February 2010, to give FTA more regulatory authority in relation to safety. Transit agency officials identified several challenges in procuring rail cars, including securing funding, given all of their competing needs. Manufacturers and transit agencies also face legal and regulatory requirements, such as "Buy America" requirements, but have generally adapted to challenges posed by them. However, market challenges still exist, including the small size of many orders that may affect price. Joint procurements, whereby transit agencies combine orders, can help them increase their order sizes; however, they can only combine orders if a design exists that meets both agencies' needs. While a few transit agencies have become aware of opportunities to jointly procure rail cars through informal mechanisms, such as industry meetings, there is currently no formal mechanism to identify mutually beneficial opportunities for joint procurement. As FTA helps fund many procurements, it may be in the best position to help transit agencies identify joint procurement opportunities. Furthermore, FTA and APTA have efforts under way to standardize light rail cars to make rail car procurement more efficient and cost-effective. Standards also might be beneficial for other types of systems, such as streetcars, particularly for those without existing infrastructure limitations.

What GAO Recommends

GAO recommends that the Secretary of Transportation direct DOT to work with APTA to (1) develop a process to systematically identify and communicate opportunities for transit agencies with similar needs to participate in joint procurement and (2) identify additional opportunities for standardization, especially for new systems. DOT reviewed a draft of this report, generally concurred with its contents, and agreed to consider the recommendations.