(a) Turnkey System Projects. - (1) Turnkey system project defined. - In this subsection, the term "turnkey system project" means a project under which a recipient enters into a contract with a seller, firm, or consortium of firms to design and build a mass transportation system or an operable segment thereof that meets specific performance criteria.

Such project may also include an option to finance, or operate for a period of time, the system or segment or any combination of designing, building, operating, or maintaining such system or segment. (2) Selection of turnkey projects. - To advance new technologies and lower the cost of a capital project for a new mass transportation system or an operable segment of a mass transportation system, the Secretary of Transportation shall allow solicitation for a turnkey system project to be financed under this chapter to be awarded conditionally before United States Government requirements have been met on the project if the award is made without prejudice to carrying out those requirements.

Government financial assistance under this chapter may be made available for the project after the recipient complies with Government requirements. (3) Demonstrations. - To develop guidelines applying generally to turnkey system projects, the Secretary may approve at least 2 projects for an initial demonstration phase.

The results of the demonstration projects (and other projects using this procurement method on December 18, 1991) shall be considered in developing guidelines to carry out this subsection. (b) Multiyear Rolling Stock. - (1) A recipient procuring rolling stock with Government financial assistance under this chapter may make a multiyear contract to buy the rolling stock and replacement parts under which the recipient has an option to buy additional rolling stock or replacement parts for not more than 5 years after the date of the original contract. (2) The Secretary shall allow at least 2 recipients to act on a cooperative basis to procure rolling stock in compliance with this subsection and other Government procurement requirements. (c) Acquiring Rolling Stock. - A recipient of financial assistance under this chapter may enter into a contract to expend that assistance to acquire rolling stock - (1) based on - (A) initial capital costs; or (B) performance, standardization, life cycle costs, and other factors; or (2) with a party selected through a competitive procurement process. (d) Procuring Associated Capital Maintenance Items. - A recipient of assistance under section 5307 procuring an associated capital maintenance item under section 5307(b) may enter into a contract directly with the original manufacturer or supplier of the item to be replaced, without receiving prior approval of the Secretary, if the recipient first certifies in writing to the Secretary that - (1) the manufacturer or supplier is the only source for the item; and (2) the price of the item is no more than the price that similar customers pay for the item.