Transit Equipment Warranties Should Be Enforced

The Urban Mass Transportation Administration (UMTA) either distributed or approved for distribution more than $10.3 billion in capital assistance to state and local authorities through fiscal year 1978 and has made operating assistance grants to many authorities which have provided up to 50 percent of operating loss in providing transit service. Contracts for the purchase of transit vehicles normally include warranties in which the contractor agrees to correct certain defects in material or workmanship for a stipulated time or mileage period. Also, billback agreements generally enable transit authorities to make necessary repairs in-house and be reimbursed by the contractor for the costs of labor and materials use. GAO reviewed nine projects which were estimated to cost $882 million with $655 million of that sum coming from federal sources.