This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h0619c.LAV
DATE: 1/19/2022
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 619 United States-produced Iron and Steel in Public Works Projects
SPONSOR(S): Rodriguez and others
TIED BILLS: IDEN./SIM. BILLS: SB 1336
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Government Operations Subcommittee 17 Y, 0 N Skinner Toliver
2) Local Administration & Veterans Affairs
Subcommittee
16 Y, 0 N Leshko Miller
3) State Administration & Technology
Appropriations Subcommittee
4) State Affairs Committee
SUMMARY ANALYSIS
Florida law specifies the procedures to be followed in the procurement of construction services for public
property and public owned buildings and directs the Department of Management Services to establish certain
applicable procedures.
Federal law and regulations impose numerous restrictions requiring federal agencies to procure, in certain
circumstances, domestic end products and construction materials produced or manufactured in the United
States and require the use of specific United States made construction materials in certain federally funded
infrastructure-related projects. Such laws and regulations permit waivers under specific circumstances.
Federal law and regulations authorize states to enact equivalent or stricter domestic preference requirements
than under federal law that apply to federal financial assistance. In addition, several states have enacted their
own domestic preference laws.
The bill requires a governmental entity entering into a contract for a public works project or for the purchase of
materials for a public works project to include in such contract a requirement that any iron or steel product used
in or purchased for the project must be produced in the United States.
The bill waives the required contract term if the governmental entity entering into the contract for a public works
project or the purchase of such materials determines the following:
Iron or steel products produced in the United States are not produced in sufficient quantities,
reasonably available, or of satisfactory quality.
The use of iron or steel products produced in the United States will increase the total cost of the project
by more than 20 percent.
Compliance is inconsistent with public interest.
Lastly, the bill provides that it must be applied in a manner consistent with the state’s obligations under any
international agreement and may not be construed to impair any such obligations.
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DATE: 1/19/2022
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
State of Florida Public Works Projects
Procurement of Construction Services
Chapter 255, F.S., specifies the procedures to be followed in the procurement of construction services
for public property and public owned buildings. The Department of Management Services is
responsible for establishing the following by rule:
Procedures for determining the qualifications and responsibility of potential bidders prior to
advertising for and receiving bids for building construction contracts;
Procedures for awarding each state agency construction project to the lowest qualified bidder;
Procedures to govern negotiations for construction contracts and contract modifications when
such negotiations are determined to be in the best interest of the state; and
Procedures for entering into performance-based contracts for the development of public
facilities when those contracts are determined to be in the best interest of the state. These
procedures include prequalification of bidders, criteria for developing requests for proposals,
accelerated scheduling, and evaluation of proposals and award of contracts considering factors
such as price, quality, and concept of the proposal.
1
State contracts for construction projects that are projected to cost in excess of $200,000 must be
competitively bid.
2
A county, municipality, special district, or other political subdivision seeking to
construct or improve a public building must competitively bid the project if the estimated cost is in
excess of $300,000.
3
Current law requires the solicitation of competitive bids or proposals for any state construction project
that is projected to cost more than $200,000 to be publicly advertised in the Florida Administrative
Register (FAR) at least 21 days prior to the established bid opening. If the cost of the construction
project is projected to exceed $500,000, the advertisement must be published in the FAR at least 30
days prior to the bid opening, and at least once in a newspaper of general circulation in the county
where the project is located at least 30 days prior to the bid opening.
4
In contrast, construction projects under the Department of Transportation (DOT) are governed by
Chapter 337, F.S. Any person who wants to bid for a construction contract in excess of $250,000 must
be certified by DOT as qualified.
5
Certification is also required to bid on a road, bridge, or public
transportation construction project of more than $250,000.
6
The purpose of certification is to ensure
professional and financial competence relating to the performance of construction contracts by
evaluating bidders “with respect to the equipment, past record, experience, financial resources, and
organizational personnel of the applicant necessary to perform the specific class of work for which the
person seeks certification.”
7
1
S. 255.29, F.S.
2
See s. 255.0525, F.S.; see also chapters 60D-5.002 and 60D-5.0073, F.A.C.
3
S. 255.20(1), F.S. For electrical work, local governments must competitively bid projects estimated to cost more than
$75,000.
4
For counties, municipalities, and political subdivisions, similar publishing provisions apply. See s. 255.0525(2), F.S.
5
S. 337.14(1), F.S. and ch. 14-22, F.A.C.
6
S. 337.14(2), F.S.
7
S. 337.14(1), F.S. STORAGE NAME: h0619c.LAV PAGE: 3
DATE: 1/19/2022
Public Works Projects
Current law prohibits the state and political subdivisions from taking certain actions when procuring for
public works projects except as required by federal or state law. The state and political subdivisions
may not:
Prevent a certified, licensed, or registered contractor, subcontractor, or material supplier or
carrier, from participating in the bidding process based on the geographic location of the
company, offices, or residences of employees;
Require the contractor, subcontractor, or material supplier or carrier to pay employees a
predetermined amount of wages or prescribe any wage rate; provide a specified type, amount,
or rate of employee benefits to employees; control, limit, or expand staffing; or employ
individuals from a designated, restricted, or single source; or
Prohibit a contractor, subcontractor, or material supplier or carrier who is able, qualified,
licensed, or certified to perform such work from receiving information about public works
opportunities or from submitting such bids.
8
Federal Laws and Regulations
Federal law and regulations impose numerous restrictions (domestic preference restrictions) requiring
federal agencies to procure, in certain circumstances, domestic end products and construction
materials produced or manufactured in the United States
9
and requires the use of specific United
States made construction materials in certain federally funded infrastructure-related projects.
10
Buy American Act of 1933: Restrictions on Federal Agency Procurement
The Buy American Act of 1933
11
(BAA) generally requires federal agencies to purchase “domestic end
products” and use “domestic construction materials” when for public use
12
and on contracts above the
micro-purchase threshold
13
(typically $10,000) performed in the United States.
14
The standard for what is considered a domestic end product differs depending on whether the end
product in question is unmanufactured or manufactured.
15
In order to qualify as domestic for BAA
purposes, unmanufactured end products and construction materials must be mined or produced in the
United States.
16
Generally, manufactured end products and construction materials qualify as domestic if
manufactured in the United States and either:
The cost of the components mined, produced, or manufactured in the United States exceeds
55% of the cost of all components; or
The items are commercially available off-the-shelf.
17
Determining whether a product is “manufactured” is a fact-specific question as this term has not been
defined for BAA purposes.
18
Determining the cost of components is generally based upon certain costs
the contractor incurs purchasing or manufacturing the components.
19
8
S. 255.0992, F.S.
9
The Buy American Act and Other Federal Procurement Domestic Content Restrictions, Congressional Research
Service, available at https://crsreports.congress.gov/product/pdf/R/R46748 (last visited January 6, 2022).
10
Congress Expands Buy America Requirements in the Infrastructure Investment and Jobs Act, Congressional Research
Service, available at https://crsreports.congress.gov/product/pdf/IF/IF11989 (last visited January 6, 2022).
11
41 U.S.C. §§ 8301–8305.
12
41 U.S.C. § 8302.
13
41 U.S.C. § 8302(a)(2)(C); See also 41 U.S.C. § 1902(a)(1).
14
The Buy American Act and Other Federal Procurement Domestic Content Restrictions, Congressional Research
Service, available at https://crsreports.congress.gov/product/pdf/R/R46748 (last visited January 6, 2022).
15
Id.
16
Id.
17
Id.; See generally 48 C.F.R. § 2.101.
18
Id.
19
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DATE: 1/19/2022
Under BAA, it is also generally required that a construction contract for public buildings or public works
include a requirement that the contractor acquire domestic construction materials.
20
The methodology
for considering whether an end product is domestic under BAA applies to construction materials.
21
Further, federal law has established numerous exceptions to BAA where a federal agency may waive
BAA requirements and purchase non-domestic end products or allow the use of non-domestic
construction materials.
22
These exceptions apply when:
Compliance would be impracticable or inconsistent with public interest;
Domestic end products or construction materials are not available “in sufficient and reasonably
available commercial quantities and of a satisfactory quality;”
The goods are acquired specifically for commissary resale;
The agency procures information technology that is a commercial item;
The value of the procurements is at or below the micro-purchase threshold;
23
The items are procured for use outside the United States; and
The procuring agency determines that the cost of domestic end products or construction
materials would be “unreasonable.”
24
The “unreasonable” standard under BAA is determined by the procuring agency applying a price
preference for domestic construction materials and end products.
25
If the domestic offer is not the
lowest offer and BAA restrictions apply to the lowest offer, the procuring agency must determine the
reasonableness of the cost of the domestic offer by adding to the price of the low offer (non-domestic
offer):
If it is an end product, 20 percent of the low offer, if the lowest domestic offer is from a large
business;
26
If it is an end product, 30 percent of the low offer, if the lowest domestic offer is from a small
business;
27
or
If it is a construction material, 20 percent of the low offer.
28
The domestic offer’s price is determined reasonable if it does not exceed the price of the low offer
following the calculation with the appropriate percentage.
29
Further, pursuant to the Trade Agreements Act of 1979 (TAA), BAA requirements may also be waived.
The TAA generally authorizes the waiver of “the application of any law, regulation, procedure, or
practice regarding government procurement” that would result in eligible products from countries with a
U.S. trade agreement, or that meet certain other criteria, being treated less favorably than domestic
products and suppliers.
30
Buy America
Buy America, in contrast to BAA, does not refer to one specific law but concerns several statutes and
regulations that apply to federal financial assistance used to support certain infrastructure-related
projects carried out by state and local governments.
31
Recipients of federal funds are responsible for
20
Id.
21
Id.
22
Id.
23
41 U.S.C. § 8302(a)(2)(C); See also 41 U.S.C. § 1902(a)(1).
24
Id.
25
48 C.F.R. § 25.105(b).
26
Id.
27
Id.
28
48 C.F.R. § 25.204.
29
48 C.F.R. § 25.105(c).
30
The Buy American Act – Preferences for “Domestic” Supplies: In Brief, Congressional Research Service, available at
https://sgp.fas.org/crs/misc/R43140.pdf (last visited January 6, 2022).
31
Buy America, Transportation, Infrastructure, and American Manufacturing, Congressional Research Service, available
at https://www.everycrsreport.com/reports/IF10628.html (last visited January 6, 2022). STORAGE NAME: h0619c.LAV PAGE: 5
DATE: 1/19/2022
complying with Buy America statutes and regulations.
32
Historically, Buy America has generally
required the procurement and use of United States made iron and steel and the domestic production
and assembly of certain other manufactured goods in covered federally funded projects.
33
Traditionally,
this has applied to airports, aviation, highways, intercity passenger rail, public transportation, and
certain water-related infrastructure projects.
34
Recently, under the Infrastructure Investment and Jobs Act (IIJA), Buy America requirements have
expanded to apply to other federally funded infrastructure projects, including broadband infrastructure,
real property and buildings, structures and equipment of electric utilities, and transmission facilities.
35
The IIJA also expanded requirements to apply not only to iron, steel, and certain manufactured goods,
but to other construction materials, such as nonferrous metals, plastic and polymer-based products,
glass, lumber, and drywall.
36
Laws and regulations governing Buy America requirements differ depending on the specific federal
funding program and administering agency.
37
Waivers may be granted in limited circumstances at the
discretion of the administering agency. The IIJA authorizes waivers allowed under previous Buy
America laws, such as when applying Buy America requirements would be inconsistent with the public
interest, domestic end products and materials are not available in sufficient quantities and/or of
satisfactory quality, and if the use of domestic products will increase the project cost by a specific
threshold.
38
Several Buy America laws and regulations prohibit the administering agency from imposing funding
restrictions on federal assistance that restricts a state’s ability to impose stricter requirements on the
federal financial assistance.
39
In addition, several states have enacted their own Buy America laws.
State Revolving Fund American Iron and Steel (AIS) Requirement
The Clean Water State Revolving Fund (CWSRF) is a federal-state partnership that provides
communities low-cost financing for a wide range of water quality infrastructure projects.
40
The United
States Environmental Protection Agency (EPA) provides grants to all states to capitalize the loan
programs.
41
The states then contribute an additional 20 percent to match the federal grants.
42
States
are responsible for operating their program and may provide various types of assistance, including
loans, refinancing, purchasing, or guaranteeing local debt and purchasing bond insurance, and have
flexibility to target financial assistance to their community and environmental needs.
43
CWSRFs fund a
wide range of water infrastructure projects.
44
The Drinking Water State Revolving Fund (DWSRF) is also a partnership between the EPA and states
where the EPA provides grants to the states and then states contribute an additional 20 percent to
match the federal grants.
45
This program provides low interest loans to eligible recipients.
46
Assistance
32
Congress Expands Buy America Requirements in the Infrastructure Investment and Jobs Act, Congressional Research
Service, available at https://crsreports.congress.gov/product/pdf/IF/IF11989 (last visited January 6, 2022).
33
Id.
34
Id.
35
Id.
36
Id.
37
Buy America, Transportation, Infrastructure, and American Manufacturing, Congressional Research Service, available
at https://www.everycrsreport.com/reports/IF10628.html (last visited January 6, 2022).
38
Congress Expands Buy America Requirements in the Infrastructure Investment and Jobs Act, Congressional Research
Service, available at https://crsreports.congress.gov/product/pdf/IF/IF11989 (last visited January 6, 2022).
39
23 U.S.C.A. § 313(d); 49 U.S.C. § 5323(j)(9); 49 U.S.C. § 22905(8).
40
United States Environmental Protection Agency, Clean Water State Revolving Fund (CWSRF), available at
https://www.epa.gov/cwsrf (last visited January 6, 2022).
41
Id.
42
Id.
43
Id.
44
Id.
45
United States Environmental Protection Agency, How the Drinking Water State Revolving Fund Works, available at
https://www.epa.gov/dwsrf/how-drinking-water-state-revolving-fund-works#tab-1 (last visited January 6, 2022).
46
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DATE: 1/19/2022
through this program has been provided for improving drinking water treatment, fixing leaky or old
pipes, improving source of water supply, replacing or constructing finished water storage tanks, and
other public health infrastructure projects.
47
An AIS requirement has been applied to these programs through various appropriations acts.
48
As
such, CWSRF and DWSRF assistance recipients are required to use United States produced iron and
steel products for projects for the construction, alteration, maintenance, or repair of a public water
system or treatment works.
49
Federal law provides circumstances where the EPA may waive AIS requirements.
50
The agency may
issue waivers where it finds the following:
Compliance would be inconsistent with public interest;
Iron and steel products are not produced in the United States in sufficient and reasonably
available quantities and of a satisfactory quality; or
Use of iron and steel products produced in the United States will increase the cost of the overall
project by more than 25 percent.
51
Other federal programs are subject to an AIS requirement as well.
52
Effect of the Bill
The bill requires a governmental entity
53
entering into a contract for a public works project
54
or for the
purchase of materials for a public works project to include in such contract a requirement that any iron
or steel product used in or purchased for the project must be produced in the United States.
55
The bill waives the required term if the governmental entity entering into the contract in this specific
circumstance determines the following:
Iron or steel products produced in the United States are not produced in sufficient quantities,
reasonably available, or of satisfactory quality;
47
Id.
48
United States Environmental Protection Agency, State Revolving Fund American Iron and Steel (AIS) Requirement,
available at https://www.epa.gov/cwsrf/state-revolving-fund-american-iron-and-steel-ais-requirement (last visited January
6, 2022).
49
Id.
50
33 U.S.C. § 1388.
51
Id.
52
See generally U.S Department of Agriculture, American Iron and Steel Requirement Overview (AIS), available at
https://www.rd.usda.gov/water-and-waste-disposal-programs-american-iron-and-steel-requirement (last visited January 6,
2022).
53
The bill defines “governmental entity” to mean the state, or any office, board, bureau, commission, department, branch,
division, or institution thereof, or a separate agency or unit of local government created or established by law or ordinance
and the officers thereof. The bill specifies that the term includes counties, cities, departments, commissions, authorities,
school districts, taxing districts, water management districts, boards, public corporations, institutions of higher education,
and other public agencies or bodies thereof authorized to expend public funds for the construction, maintenance, repair,
renovation, remodeling, or improvement of public works.
54
The bill defines “public works projects” to mean an activity paid for with any state-appropriated funds or funds
administered by a governmental entity that consist of the construction, maintenance, repair, renovation, remodeling, or
improvement of a building, road, street, sewer, storm drain, water system, site development, irrigation system, reclamation
project, gas or electrical distribution system, gas or electrical substation, or other facility, project, or portion thereof that is
owned in whole or in part by any governmental entity.
55
The bill defines the phrase “produced in the United States” to mean to require all manufacturing processes, from initial
melting through application of coatings, to occur in the United States. The bill provides an exception under this definition,
excluding metallurgical processes to refine steel additives. Accordingly, the bill also defines “manufacturing process” to
mean the application of a process to alter the form or function of materials or elements of a product in a manner that adds
value and transforms the materials or elements into a new finished product that is functionally different from a finished
product produced merely from assembling materials or elements into a product without applying such process.
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The use of United States produced iron or steel products will increase the total cost of the
project by more than 20 percent;
Compliance is inconsistent with public interest.
Lastly, the bill provides that it must be applied in a manner consistent with the state’s obligations under
any international agreement and may not be construed to impair any such obligations.
B. SECTION DIRECTORY:
Section 1 creates s. 255.0993, F.S., relating to definitions, United States produced iron and steel
requirements, and international agreements.
Section 2 provides an effective date of July 1, 2022.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
See Fiscal Comments.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
See Fiscal Comments.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill will likely have a positive fiscal impact on domestic entities that produce iron and steel.
D. FISCAL COMMENTS:
The bill requires governmental entities’ contracts for a public works project or for the purchase of
materials for a public works project to require use of only iron and steel products produced in the United
States, unless a specified circumstance exists. As such, the bill will have an indeterminate but
potentially negative fiscal impact on state and local governments.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not Applicable. This bill does not appear to require counties or municipalities to spend funds or take
action requiring the expenditures of funds; reduce the authority that counties or municipalities have
to raise revenues in the aggregate; or reduce the percentage of state tax shared with counties or
municipalities.
2. Other:
None. STORAGE NAME: h0619c.LAV PAGE: 8
DATE: 1/19/2022
B. RULE-MAKING AUTHORITY:
None.
C. DRAFTING ISSUES OR OTHER COMMENTS:
As drafted, lines 57-68 of the bill provide three conditions for waiver of the contract requirement but do
not clarify whether all three conditions must exist, or whether the existence of any one of the three
conditions alone is sufficient to create an exemption from the requirement laid out in paragraph (2)(a),
that the contract must include a term that any iron or steel product used in or purchased for the project
be produced in the United States.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
None.