85R8216 JAM-F
By: Kacal H.B. No. 2204
A BILL TO BE ENTITLED
AN ACT
relating to the requirements for construction contracts for certain
water supply projects, treatment works, and flood control measures.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 17.183, Water Code, is amended by
amending Subsections (a), (b), (c), and (d) and adding Subsection
(f) to read as follows:
(a) The governing body of each political subdivision
receiving financial assistance from the board shall require in all
contracts for the construction of a project:
(1) that each bidder furnish a bid guarantee
equivalent to five percent of the bid price;
(2) that each contractor awarded a construction
contract furnish performance and payment bonds that meet the
following requirements:
(A) the performance bond shall include without
limitation guarantees that work done under the contract will be
completed and performed according to approved plans and
specifications and in accordance with sound construction
principles and practices; and
(B) the performance and payment bonds shall be in
a penal sum of not less than 100 percent of the contract price and
remain in effect for one year beyond the date of approval by the
engineer of the political subdivision;
(3) that payment be made in partial payments as the
work progresses;
(4) that each partial payment shall not exceed 95
percent of the amount due at the time of the payment as shown by the
engineer of the project, but, if the project is substantially
complete, a partial release of the five percent retainage may be
made by the political subdivision with approval of the executive
administrator;
(5) that payment of the retainage remaining due upon
completion of the contract shall be made only after:
(A) approval by the engineer for the political
subdivision as required under the bond proceedings;
(B) approval by the governing body of the
political subdivision by a resolution or other formal action; and
(C) certification by the executive administrator
in accordance with the rules of the board that the work to be done
under the contract has been completed and performed in a
satisfactory manner and in accordance with approved plans and
specifications;
(6) that no valid approval may be granted unless the
work done under the contract has been completed and performed in a
satisfactory manner according to approved plans and
specifications;
(7) that, if a political subdivision receiving
financial assistance under Subchapter K of this chapter, labor from
inside the political subdivision be used to the extent possible;
and
(8) that the contract include a requirement that iron
and steel products [and manufactured goods] used in the project be
produced in the United States, unless:
(A) such products [or goods] are not:
(i) available in sufficient quantities;
(ii) readily available; or
(iii) of a satisfactory quality; [or]
(B) the use of such products [or goods] will
increase the total cost of the project by more than 20 percent; or
(C) the use of iron and steel products that are
not produced in the United States is incidental or de minimis and:
(i) the cost of each individual iron or
steel product used in the project that is not produced in the United
States does not exceed one percent of the total cost of the
materials incorporated into the project; and
(ii) the cost of all iron and steel products
used in the project that are not produced in the United States does
not exceed five percent of the total cost of the materials
incorporated into the project.
(b) Plans and specifications submitted to the board in
connection with an application for financial assistance must
include a seal by a licensed engineer affirming that the plans and
specifications:
(1) are consistent with the requirement regarding the
use of iron and steel products under Subsection (a)(8); and
(2) conform to current industry design and
construction standards.
(c) For the purposes of Subsection [Subsections] (a)(8)
[and (d)]:
(1) "Iron and steel products" means iron and steel
products produced as the result of a manufacturing process and:
(A) includes lined or unlined pipes or fittings,
carbon steel fasteners, manhole covers, municipal castings,
hydrant tanks, flanges, pipe clamps and restraints, valves,
structural steel, and reinforced precast concrete; and
(B) does not include mechanical or electrical
components, equipment, controls, or systems or necessary
appurtenances of such components, equipment, controls, or systems
used to process or treat water ["Component" means any article,
material, or supply, whether a manufactured good or raw material,
that is directly incorporated into a manufactured good].
(2) ["Manufactured good" means an item produced as the
result of a manufacturing process.
[(3)] "Manufacturing process" means 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 so that a new end product is produced that is
functionally different from the product that would result from
simple assembly of the materials or elements.
(3) [(4)] "Produced in the United States" means[:
[(A) in the case of] iron and steel products[,
products] for which:
(A) all manufacturing processes, from initial
melting through application of coatings, take place in the United
States, except metallurgical processes that involve the refinement
of steel additives; and
(B) at least 50 [in the case of a manufactured
good, a good for which:
[(i) all of the manufacturing process that
produced the manufactured good takes place in the United States;
and
[(ii) more than 60] percent of the
materials [components of the manufactured good], by cost, originate
in the United States.
(d) For the purposes of Subsection (c)(3)(B)
[(c)(4)(B)(ii), if a component originates in the United States],
the entire cost of the materials [that component] contributes to
the determination of whether the iron and steel products are
produced [the percentage of the components of the manufactured good
that originate] in the United States.
(f) The board shall adopt rules to:
(1) promote compliance with the requirements of this
section; and
(2) establish and administer a system that allows for
the waiver of the requirements of this section as necessary.
SECTION 2. Section 17.183, Water Code, as amended by this
Act, applies only to a contract entered into on or after the
effective date of this Act. A contract entered into before the
effective date of this Act is governed by the law in effect when the
contract was entered into, and the former law is continued in effect
for that purpose.
SECTION 3. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2017.