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Allows recipients of federal transit grants to make advance payments to purchase bus rolling stock without requiring manufacturer pre-approval or a manufacturer performance bond, subject to specified conditions. Advance payments are capped at 20% of the purchase order value and recipients must meet the statute’s conditions and requirements before using the authority.
A recipient may use assistance under this chapter to make an advance payment on a bus rolling stock vehicle without obtaining pre-approval or requiring a performance bond or other form of security from the transit vehicle manufacturer.
Before making an advance payment, the recipient shall have a signed purchase order and an executed contract with the transit vehicle manufacturer that includes advance payment provisions.
Before making an advance payment, the recipient shall have preaward authority.
Before making an advance payment, the recipient shall have met the requirements under subsection (m) and section 5318(e) of this title.
A recipient shall not provide an advanced payment that is more than 20 percent of the total purchase order value.
Who is affected and how:
Recipients of federal transit funds (transit agencies, local governments, and other eligible recipients) are directly affected: they may now provide up-front payments to secure bus purchases, which can help reserve production slots and accelerate procurement timelines. The 20% cap limits how much of a vehicle purchase price can be advanced.
Vehicle manufacturers and contractors are affected commercially because recipients may remit partial payments earlier in contract performance; the change removes a statutory need for manufacturer pre-approval or a performance bond, which can simplify transactions and lower administrative cost but can increase manufacturer cash management responsibilities.
Federal grant administrators and auditors are affected operationally: they must ensure recipients comply with the statute’s conditions and continue to meet federal procurement, reporting, and audit requirements when advance payments are used.
Taxpayers and local governments face modestly increased financial exposure if a manufacturer fails after receiving an advance, but the 20% limit and existing contract/oversight tools are intended to limit that risk.
Overall effect: the change facilitates earlier partial payments to secure rolling stock while imposing a fixed cap and leaving other federal oversight and procurement controls in place. It balances procurement flexibility against a bounded increase in financial risk for recipients.
Expand sections to see detailed analysis
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Introduced February 20, 2025 by Tina Smith · Last progress February 20, 2025
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Introduced in Senate