Investigators to Probe Whether Chinese State-Owned CRRC is Meeting Buy America Requirements for Philadelphia Rail Cars

CRRC already has big problems in Boston. Now the Department of Transportation Inspector General is launching an audit of the Chinese firm’s contract in Philadelphia.

We’ve spent a lot of time so far in 2023 examining the boondoggle in Boston, where Chinese state-owned firm China Railway Rolling Stock Corporation (CRRC) is facing a slew of difficulties manufacturing rail cars for the city’s subway system, including serious safety concerns and major delivery delays.

But now the company now finds itself in the center of a government investigation some 300 miles to the south, where the Department of Transportation Inspector General (DOT IG) is launching an audit of the Southeastern Pennsylvania Transportation Authority (SEPTA) contract with CRRC to make rail cars for Philadelphia’s subway system. Specifically, investigators will examine whether CRRC is meeting Federal Transit Administration Buy America requirements for “rolling stock procurements over the course of this contract and will continue to do so as the contract progresses.”

The investigation comes via a September 2022 request from Republican Members of Congress on the House Transportation and Infrastructure Committee. Those members were prompted by coverage in the Philadelphia Inquirer that featured photographs posted on social media of SEPTA rail cars built by CRRC in China that looked pretty far along in the manufacturing process:

“It has come to our attention that the state-owned China Railway Rolling Stock MA Corporation (CRRC MA) is fully building passenger railcars in China and plans to ship them to SEPTA—apparently in contrast with FTA’s Buy America requirements for rolling stock procurement,” wrote Reps. Sam Graves (R-Mo.), Rodney Davis (R-Ill.) and Rick Crawford (R-Ark.) in a letter to the DOT IG.

They continued: “The Inquirer reported that the first cars from the SEPTA–CRRC MA contract were being built in China. The photos published alongside the story appear to show nearly completed railcars. Furthermore, the Inquirer article states that CRRC MA is planning to ship finished shells for the passenger cars to Massachusetts for final assembly. In other words, the article raises questions about how complete these cars are when they arrive in the United States.”

As the congressmen noted in their letter, Buy America requires that the “cost of the components and subcomponents for rolling stock produced in the United States must total more than 60 percent for fiscal years 2016 and 2017, more than 65 percent for fiscal years 2018 and 2019 and more than 70 percent for fiscal year 2020 and beyond.” Final assembly must also take place in the United States.

While the DOT IG determines whether SEPTA rail cars do indeed meet Buy America, it is clear that CRRC’s assembly work in the United States isn’t going well.

CRRC maintains a production facility in Springfield, Mass., where it has faced numerous struggles in delivering rail cars for Boston’s T subway system and is years behind schedule. It is also years delayed in delivering rail cars for SEPTA, and the Boston Globe reported that the agency sent a February 2022 letter to CRRC raising “continuing concerns about delays and production shortcomings” at the Massachusetts plant.

According to the Globe, that letter listed problems like “repeated failures of water tightness tests and CRRC’s refusal, over the past [four] years, to provide required as-built drawings and a Structural Repair Manual . . . faulty interior panels, the need for changes to plans for electrical locker wiring, repeated failed friction brake dynamometer tests and unsafe emergency exit windows.”

A SEPTA spokesperson told the Globe that the agency has met Buy America requirements is fully cooperating with the DOT IG probe. A CRRC spokesperson also said it is meeting Buy America requirements.

It’s worth noting that while Republicans on the House Transportation and Infrastructure Committee wrote to the DOT IG requesting the audit, criticism of CRRC has been a bipartisan affair. In fact, SEPTA’s decision to contract with CRRC was among the factors that led to the introduction of the bipartisan Transit Infrastructure Vehicle Security Act (TIVSA), which eventually became law. TIVSA effectively bans CRRC and other Chinese state-owned companies from bidding on federally funded contracts to build rail cars and buses. CRRC was allowed to complete the contracts already underway, including those in Boston and Philadelphia.