The General Assembly passed changes to the Pennsylvania Steel Products Procurement Act that Governor Corbett recently signed. The legislation (HB 1840), which will go into effect this month, effectively creates an exemption from the law’s requirement for certain listed items and directs the Department of General Services to issue a list on its website for those in the construction industry to check.
The Steel Products Procurement Act requires that steel being used in public works projects in the Commonwealth be made in the U.S. To qualify as “made in the U.S.A.”, 75% of the cost to mine, produce, or manufacture the product must be incurred in the United States. The statutory definition of “public works” is broad and includes construction of all types as well as maintenance.
The changes to the law create a range of exceptions to the “made in the U.S.A.” requirement for certain machinery and equipment. To be exempt, the DGS must certify in writing that an item qualifies for the exemption list because there are insufficient amounts of the steel product made in the U.S. to allow contractors to meet the requirement. The new provisions also charge the DGS with conducting an annual review of the list and the industry to update the list and to subsequently post that list on a publicly accessible website so that those putting in bids for public works projects can access it.
Contractors involved in public works projects should be aware of this statute and not assume it can be skirted. The Pennsylvania Attorney General’s office is presently prosecuting a case against a McKeesport company and its owners for violating this statute. In addition to those accusations they have been sued for violation of state racketeering laws and the Unfair Trade Practices and Consumer Protection law. Some of the potential remedies would be fines, money damages, and as much as a 5 year debarment from public work. In another case, the Third Circuit upheld PennDOT’s decision to cancel four bridge contracts with a different contractor for failing to meet the requirements of the act.
If your company does public work and you know steel is going to be part of an upcoming project’s scope of work, be aware of this statute and the changes to it. It could make the difference between a smooth, profitable project and one with large headach