BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 1097
                                                                  Page  1

          Date of Hearing:   May 11, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                   AB 1097 (Skinner) - As Amended:  April 25, 2011 

          Policy Committee:                              
          TransportationVote:14-0 (Consent)

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:               

           SUMMARY  

          This bill requires the Secretary of Business, Housing, and 
          Transportation to authorize a state or local agency receiving 
          federal funds for transit purposes to provide a bid preference 
          for meeting or exceeding the 60% Buy American requirement 
          applicable to federally funded transit projects.

           FISCAL EFFECT  

          To the extent a state or local agency would elect to use a Buy 
          America bid preference exceeding the minimum federal 
          requirement, and applying this enhanced bid preference results 
          in awarding contracts to other than the lowest responsible 
          bidder, the contracting agency will incur higher costs. 

          Caltrans indicates that, for its intercity rail program, they 
          are funded by the Federal Railroad Administration, which has a 
          more stringent 100% Buy America requirement, and a waiver must 
          be filed to obtain relief from this requirement. It is unknown 
          at this time whether applicable federal funding will be involved 
          in the purchase of rolling stock for the state's high-speed rail 
          program. Since the bill is permissive, any additional costs to 
          local agencies would be nonreimbursable. 

           COMMENTS  

           1)Background  . The federal government's "Buy American" policy 
            specifically requires transit agencies receiving federal funds 
            to procure products, such as new vehicles, with 60% domestic 
            content and that are assembled in the United States. However, 
            the absence of American-based manufacturers has resulted in 








                                                                  AB 1097
                                                                  Page  2

            little choice for transit and public works agencies, who must 
            buy trains and other products from companies headquartered 
            overseas. Further, Federal Transit Administration (FTA) 
            guidelines make it difficult to encourage a greater-than 60% 
            level for American-made products because the FTA prohibits 
            agencies from assigning more credit (in a bidding situation) 
            to domestic products unless a higher "Buy American" provision 
            is in state law.  

           2)Purpose  . According to the author, "this is a permissive bill 
            that would allow and encourage state transit agencies to seek 
            greater American made products by rewarding those contractors 
            who can provide products with high domestic content.  By 
            encouraging state transit agencies to seek a higher level of 
            American products, AB 1097 would assist in stimulating more 
            manufacturing in this country in ways that will ultimately 
            support transit needs and create jobs in America and 
            California."
           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081