Date Requested: January 26, 2015
Time Requested: 10:20 AM
Agency: Administration
CBD Number: Version: Bill Number: Resolution Number:
1844 Introduced SB260
CBD Subject: Labor


FUND(S):

0210

Sources of Revenue:

General Fund

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    The purpose of this bill is to: (1) require state agencies to include a provision in contracts for construction or purchase of supplies, materials, equipment and other articles mandating that the lessor of $25,000 or 5% of the contract cost be attributed to goods or equipment that are American-made, (2) prohibit contract awards to vendors that fail to meet the American-made requirement, and (3) require the Purchasing Division Director to grant waivers from this requirement in certain circumstances. The waiver determination would require the Purchasing Director to find that the goods or equipment relate to public safety and no comparable American-made product exists, that sufficient quantities of the goods and equipment are not produced in the United States, or that the cost of the American-made commodities or services exceed the foreign counterparts by more than 10%.
    
    The Department of Administration is not aware of any source that could be utilized to certify products were actually American-made; therefore, the West Virginia Purchasing Division would have to develop a process to certify whether products were or were not American-made.
    
    Although the cost us unknown, without a doubt additional staffing would be required. The Department of Administration conservatively estimates the cost for additional staff, office space and equipment would exceed $300,000 per year.
    
    The Purchasing Division is an expert on the state procurement process and current laws, rules and procedures relating to the purchase of commodities and services. The expertise of components and assembly of all supplies, materials, equipment, articles and things that could possibly be procured by state agencies is not present in the Purchasing Division or in any state agency. In essence, West Virginia and particularly the Purchasing Division would have to become a certifying authority for products manufactured around the world.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2015
Increase/Decrease
(use"-")
2016
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 0
Personal Services 300,000 300,000 300,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


    The potential cost is unknown, but, likely, significant. Without known costs, this agency cannot speculate exact expenses in terms of short- or long-term effects.



Memorandum


    The passage of this legislation could have potential unintended consequences such as: prohibiting the state from buying certain products that may be required to maintain capability with systems currently in existence; delays in work and services; protests and other litigation over the percent of American made, reduction of constructions jobs due to less projects being able to be done.
    
    Language in the legislation requires determinations to be made without proper resources to perform these analyses. The components and assembly of many types of supplies, materials, equipment, articles and things would be difficult to determine that the substantial portion of the total bid is American made.
    
    By placing this requirement in ยง5A-3 of the West Virginia Code, entities exempt from this section of the Code would not be impacted or be required to purchase American-made materials, supplies, equipment, articles or things. There are more than 35 exempt entities, including, but not limited to, higher education, Division of Highways road construction, School Building Authority, Water Development Authority, and local governments.
    
    A taskforce of various agency representatives and other stakeholders met two years ago during the legislative interims to discuss the Buy American issue as it related to construction. Generally, the consensus and final report indicates that most agencies already purchase mostly American-made products. There is no way to determine whether the increased administrative costs to the State would increase the percentage of products made in America.
    
    Additionally, this legislation does not address penalties when agencies fail to purchase American-made products.
    



    Person submitting Fiscal Note: Donna Lipscomb Spano
    Email Address: donna.m.lipscombspano@wv.gov