This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h0619h.SAC
DATE: 2/25/2022
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/HB 619 United States-produced Iron and Steel in Public Works Projects
SPONSOR(S): State Affairs Committee, 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
12 Y, 2 N Lee Topp
4) State Affairs Committee 20 Y, 3 N, As CS Skinner Williamson
SUMMARY ANALYSIS
Florida law specifies procedures that must 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.
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
permanently incorporated in the project be produced in the United States. The bill waives the required contract
term if the governmental entity administering the funds for a public works project or the purchase of such
materials solely determines that any of the following apply:
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; or
Compliance is inconsistent with public interest.
The bill specifies circumstances where the minimal use of foreign steel and iron materials are permitted and
exempts certain electrical components.
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.
The bill grants rulemaking authority to the Department of Management Services and the Department of
Transportation to implement the bill.
The bill has an indeterminate, but likely significant, negative fiscal impact on state and local government
expenditures. See Fiscal Comments.
STORAGE NAME: h0619h.SAC PAGE: 2
DATE: 2/25/2022
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
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 (DMS) is
responsible for establishing 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 Rr. 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 over $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: h0619h.SAC PAGE: 3
DATE: 2/25/2022
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
DMS manages projects throughout the state, including new construction, renovations, and consulting
services for various public works projects. Currently, DMS follows guidelines established by The
Leadership in Energy and Environmental Design (LEED) Green Building Rating System, which
recommends that steel and iron be purchased from within a 500-mile radius. This encompasses a large
portion of the Southeastern United States.
9
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
10
and requires the use of specific United
States made construction materials in certain federally funded infrastructure-related projects.
11
Buy American Act of 1933: Restrictions on Federal Agency Procurement
The Buy American Act of 1933
12
(BAA) generally requires federal agencies to purchase “domestic end
products” and use “domestic construction materials” for public use
13
and contracts above the micro-
purchase threshold
14
(typically $10,000).
15
The standard for what is considered a domestic end product differs depending on whether the end
product in question is unmanufactured or manufactured.
16
In order to qualify as domestic for BAA
purposes, unmanufactured end products and construction materials must be mined or produced in the
United States.
17
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 percent of the cost of all components; or
The items are commercially available off-the-shelf.
18
8
S. 255.0992, F.S.
9
Department of Management Services (DMS), Agency Analysis of 2022 House Bill 619, p. 2 (Jan. 21, 2022).
10
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 February 18, 2022).
11
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 February 18, 2022).
12
41 U.S.C. §§ 8301–8305.
13
41 U.S.C. § 8302.
14
41 U.S.C. § 8302(a)(2)(C); See also 41 U.S.C. § 1902(a)(1).
15
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 February 18, 2022).
16
Id.
17
Id.
18
Id.; See generally 48 C.F.R. § 2.101. STORAGE NAME: h0619h.SAC PAGE: 4
DATE: 2/25/2022
Determining whether a product is “manufactured” is a fact-specific question as this term has not been
defined for BAA purposes.
19
Determining the cost of components is generally based upon certain costs
the contractor incurs when purchasing or manufacturing the components.
20
Under BAA, it generally requires that a construction contract for public buildings or public works include
a requirement that the contractor acquire domestic construction materials.
21
The methodology for
considering whether an end product is domestic under BAA applies to construction materials.
22
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.
23
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;
24
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.”
25
The “unreasonable” standard under BAA is determined by the procuring agency applying a price
preference for domestic construction materials and end products.
26
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;
27
If it is an end product, 30 percent of the low offer, if the lowest domestic offer is from a small
business;
28
or
If it is a construction material, 20 percent of the low offer.
29
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.
30
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
United States trade agreement, or that meet certain other criteria, being treated less favorably than
domestic products and suppliers.
31
19
Id.
20
Id.
21
Id.
22
Id.
23
Id.
24
41 U.S.C. § 8302(a)(2)(C); See also 41 U.S.C. § 1902(a)(1).
25
Id.
26
48 C.F.R. § 25.105(b).
27
Id.
28
Id.
29
48 C.F.R. § 25.204.
30
48 C.F.R. § 25.105(c).
31
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 February 18, 2022). STORAGE NAME: h0619h.SAC PAGE: 5
DATE: 2/25/2022
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.
32
Recipients of federal funds are responsible for
complying with Buy America statutes and regulations.
33
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.
34
Traditionally,
this has applied to airports, aviation, highways, intercity passenger rail, public transportation, and
certain water-related infrastructure projects.
35
Recently, under the Infrastructure Investment and Jobs Act (IIJA),
36
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.
37
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.
38
Laws and regulations governing Buy America requirements differ depending on the specific federal
funding program and administering agency.
39
Waivers may be granted in limited circumstances at the
discretion of the administering agency. Waivers authorized under previous Buy America laws are also
authorized under the IIJA, including waiving Buy America requirements when such requirements are
inconsistent with the public interest, when domestic end products and materials are not available in
sufficient quantities or of satisfactory quality, and if the use of domestic products will increase the
project cost by a specific threshold.
40
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.
41
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.
42
The United
States Environmental Protection Agency (EPA) provides grants to all states to capitalize the loan
programs.
43
The states then contribute an additional 20 percent to match the federal grants.
44
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.
45
The CWSRF
funds a wide range of water infrastructure projects.
46
32
Buy America, Transportation, Infrastructure, and American Manufacturing, Congressional Research Service, available at
https://www.everycrsreport.com/reports/IF10628.html (last visited February 18, 2022).
33
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 February 18, 2022).
34
Id.
35
Id.
36
Infrastructure Investment and Jobs Act of 2021, Pub. L. No. 117-58, H.R. 3684, 117th Cong. (Nov. 15, 2021).
37
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 February 18, 2022).
38
Id.
39
Buy America, Transportation, Infrastructure, and American Manufacturing, Congressional Research Service, available at
https://www.everycrsreport.com/reports/IF10628.html (last visited February 18, 2022).
40
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 February 18, 2022).
41
23 U.S.C. § 313(d); 49 U.S.C. § 5323(j)(9); 49 U.S.C. § 22905(8).
42
United States Environmental Protection Agency, Clean Water State Revolving Fund (CWSRF), available at
https://www.epa.gov/cwsrf (last visited February 18, 2022).
43
Id.
44
Id.
45
Id.
46
Id. STORAGE NAME: h0619h.SAC PAGE: 6
DATE: 2/25/2022
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.
47
This program provides low interest loans to eligible recipients.
48
Assistance
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.
49
An AIS requirement has been applied to these programs through various appropriations acts.
50
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.
51
Federal law provides circumstances where the EPA may waive AIS requirements.
52
The agency may
issue waivers where it finds:
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.
53
Other federal programs are subject to an AIS requirement as well.
54
Effect of the Bill
The bill requires a governmental entity
55
entering into a contract for a public works project, or for the
purchase of materials for a public works project, to include in the contract a requirement that any iron or
steel product
56
permanently incorporated in the project be produced in the United States.
57
The bill
waives this requirement if the governmental entity administering the funds for the public works project
solely determines that any of the following apply:
Iron or steel products produced in the United States are not produced in sufficient quantities,
reasonably available, or of satisfactory quality;
The use of United States produced iron or steel products will increase the total cost of the
project by more than 20 percent; or
Compliance is inconsistent with public interest.
47
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 February 18, 2022).
48
Id.
49
Id.
50
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 February 18, 2022).
51
Id.
52
33 U.S.C. § 1388.
53
Id.
54
See generally United States 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 February 18, 2022).
55
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.
56
The bill defines the phrase “iron or steel products” to mean products made primarily of iron or steel, including, but not limited to, lined
or unlined pipes and fittings, bars and rods, wire, wire ropes and link chains, forgings, grating and drainage products, access covers,
hatches, manhole covers and other castings, hydrants, electric transmission and distribution poles, tanks, flanges, pipe clamps and
restraints, valves, structural steel and other steel mill products, materials made primarily of iron and steel within precast concrete, and
other construction materials made primarily of iron or steel.
57
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. STORAGE NAME: h0619h.SAC PAGE: 7
DATE: 2/25/2022
The bill defines “public works projects” to mean an activity paid for with any state-appropriated funds or
state funds administered by the state 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.
The bill permits the minimal use of foreign steel and iron materials if such materials are incidental or
ancillary to the primary product and are not separately identified in the project specifications and the
cost
58
of such materials does not exceed one-tenth of one percent of the total contract cost or $2,500,
whichever is greater. Additionally, the bill provides that electrical components, equipment, systems, and
appurtenances, including supports, covers, shielding, and other appurtenances related to an electrical
system, necessary for operation or concealment, except transmission and distribution poles, are not
considered iron or steel products and are exempt from the requirements of the bill.
Further, the bill provides that this law 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.
The bill requires DMS to develop guidelines and procedures by rule to implement the bill, except in
public works projects administered by DOT, in which case DOT must develop guidelines and
procedures by rule.
Lastly, the bill provides a legislative declaration that the act fulfills an important state interest.
B. SECTION DIRECTORY:
Section 1. Creates s. 255.0993, F.S., relating to public works projects; definitions, United States-
produced iron and steel products.
Section 2. Declares that the act fulfills an important state interest.
Section 3. 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.
58
The cost of such materials is that shown to be the value of the iron or steel products as they are delivered to the project. STORAGE NAME: h0619h.SAC PAGE: 8
DATE: 2/25/2022
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill will likely have an indeterminate significant positive fiscal impact on domestic entities that
produce iron and steel.
D. FISCAL COMMENTS:
The bill requires governmental entity contracts for a public works project, or for the purchase of
materials for a public works project, to require that any iron or steel product permanently incorporated
in the project be produced in the United States, unless a specified circumstance exists. To the extent
that state and local governments are unable to apply one of the exceptions provided in the bill, overall
project costs will potentially increase due to purchasing iron or steel that may be more expensive.
59
While the amount of potential cost increases is unknown, the bill could result in increases of public
works project costs by up to 20 percent. For example, a $10 million project could increase as much as
$2 million to meet the requirement for United States-produced iron and steel. As such, the bill will have
an indeterminate but likely significant negative fiscal impact on state and local governments.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
The county/municipality mandates provision of article VII, section 18 of the Florida Constitution may
apply, because this bill requires governmental entities, including local governments, to contract for
the use of iron or steel products produced in the United States when contracting for a public works
project. Such requirement may require the governmental entity to spend more funds than they
otherwise would have. An exemption may apply if the fiscal impact of the bill is insignificant. In
addition, an exception may apply because the bill applies to similarly situated governmental entities
and provides an important state interest determination.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The bill requires DMS and DOT to develop guidelines and procedures by rule to implement the bill.
C. DRAFTING ISSUES OR OTHER C OMMENTS:
None.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
On February 23, 2022, the State Affairs Committee adopted a strike-all amendment and reported the bill
favorably as a committee substitute. The amendment:
Defined “iron or steel products.”
Revised the definition of “public works project” to include those specified projects that involve state
funds administered by the state.
Revised the contract term to require that any iron or steel product permanently incorporated in the
project be produced in the United States.
Provided that the governmental entity administering the funds solely determines if a waiver exists.
Clarified that the existence of one of the specified conditions is sufficient to waive the required
contract term.
Specified circumstances where the minimal use of foreign steel and iron materials are permitted.
Exempted certain electrical components from the requirements of the bill.
Required DMS and DOT to develop guidelines and procedures by rule to implement the bill.
Provided a legislative declaration that the act fulfills an important state interest.
59
DMS, supra note 6, at 3. STORAGE NAME: h0619h.SAC PAGE: 9
DATE: 2/25/2022
This analysis is drafted to the committee substitute as approved by the State Affairs Committee.