BILL ANALYSIS �
AB 1097
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CONCURRENCE IN SENATE AMENDMENTS
AB 1097 (Skinner)
As Amended August 29, 2011
Majority vote
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|ASSEMBLY: |78-0 |(May 19, 2011) |SENATE: |35-0 |(August 31, |
| | | | | |2011) |
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Original Committee Reference: TRANS.
SUMMARY : Requires the Secretary of the Business, Transportation and
Housing Agency to specifically authorize a state or local agency
receiving federal funds for transit purposes to provide a bidding
preference to a bidder if the bidder exceeds Buy America
requirements applicable to federally funded transit projects. Makes
findings and declarations as specified.
The Senate amendments :
1)Eliminate the terms "meets or" thereby allowing a state or local
agency to provide a bidder preference only if the bidder exceeds,
and not just meets, the federal Buy America requirement.
2)Provide that the California Department of General Services has the
sole authority to establish policies and procedures for
establishing transit bid preferences for state agencies, excluding
the California State University system.
EXISTING LAW :
1)Requires state and local governmental entities, for the
construction or repair of public works or for the purchasing of
materials and supplies for public use, to utilize, with certain
exceptions, materials produced in the United States.
2)Requires, under federal Buy America laws applicable to rolling
stock, including rail vehicles, that the cost of components and
subcomponents produced in the United States total at least 60% of
the cost of all components in the rolling stock, and that final
assembly of the rolling stock occur in the United States.
3)Allows, under federal "Buy America" regulations, states to impose
contracting preference provisions based on more stringent domestic
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content requirements than those set forth in the federal law, but
the Federal Transit Administration (FTA) will not participate in
the funding of state and local contracts with those preference
provisions if they are not explicitly set out under state law.
(49 Code of Federal Regulations 661.21). The State of California
currently has no such preference law.
4)Requires a "Buy California" provision in state contracts for the
purchase of supplies for state or local government use that
prefers supplies grown, manufactured, or produced in California.
Authorizes the use of the preference when in-state products and
supplies do not exceed more than 5% of the price of the lowest bid
for goods and supplies manufactured out-of-state.
5)Establishes procedures for competitive bidding of certain
contracts by public entities and requires them to give California
companies preference on construction contracts against nonresident
contractors. The preference is equal to any preference that the
nonresident contractor receives on public works contracts in its
state of residency.
6)Prohibits, under the federal American Resource and Recovery and
Reinvestment Act of 2009 (ARRA), the use of grant funds for a
project involving the construction, alteration, maintenance, or
repair of a public building or public facility, unless all of the
iron, steel, and manufactured goods used in the project are
produced in the United States. In addition, it requires that
this prohibition be applied in a manner consistent with U.S.
obligations under international agreements pertaining to
procurement. Lastly, ARRA establishes conditions for waivers of
requirements.
AS PASSED BY THE ASSEMBLY , this bill was substantially similar to
the version passed by the Senate.
FISCAL EFFECT : According to the Assembly Appropriations Committee,
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.
The California Department of Transportation (Caltrans) indicates
that, for its intercity rail program, they are funded by the Federal
Railroad Administration, which has a more stringent 100% Buy America
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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 : The federal government's "Buy American" policy requires
the awarding of federal funds to prioritize products that are made
in the United States. The FTA specifically requires that transit
agencies receiving federal funds 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 little choice for transit and public works agencies,
who must buy trains and other products from companies headquartered
overseas. Further, 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 explicitly spelled out in statute.
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."
Supporters of this bill indicate that projects that promote domestic
manufacturing will put people back to work and contribute to the
healing of our economy and support the use of federal transportation
monies as a vehicle for job creation.
Analysis Prepared by : Ed Imai / TRANS. / (916) 319-2093
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