Public Contracting 101: Steel Products Procurement Act

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This post is one in a series on the basic concepts and tenets of public contracting in Pennsylvania.  Today’s post concerns the Pa. Steel Products Procurement Act, a virtual relic of public contracting in Pennsylvania, one that has been around for more than 30 years, but is still of important relevance today.

The Act was passed in 1978 with a stated purpose to protect the U.S. market for steel production and supply.  The Act provides that any steel products used or supplied on a Pennsylvania public works contract must be made in the U.S.  If the steel product contains any foreign steel, it is a U.S. product only if 75% of the cost of the product has been mined, produced, or manufactured in the U.S.

A public works contract is one for the construction, reconstruction, alteration, repair, improvement, or maintenance of public works.  In turn, “public works” has a broad definition as follows:

Any structure, building, highway, waterway, street, bridge, transit system, airport or other betterment, work or improvement whether of a permanent or temporary nature and whether for governmental or proprietary use.  The term includes, but is not limited to, any railway, street railway, subway, elevated and monorail passenger or passenger and rail rolling stock, self-propelled cars, gallery cars, locomotives, passenger buses, wires, poles and equipment for electrification of a transit system, rails, tracks, roadbeds, guideways, elevated structures, buildings, stations, terminals, docks, shelters and repairs to any of the foregoing.

Contractors performing general construction work for public entities in the Commonwealth must be especially vigilent in their compliance with the requirements of the Act.  There are grave consequences for a violation of the Act, including the withholding of payment and, in the case of a willful violation, a 5-year debarment.  An exception in the Act exists where the head of the public agency, in writing, determines that steel products are not produced in the U.S. in sufficient quantities to meet the requirements of the contract.

PennDOT has issued new guidelines for compliance with the Act for PennDOT contracts.  The website of Associated Pennsylvania Constructors has a link to the new PennDOT guidelines here.

Recently, in Mabey Bridge & Shore, Inc. v. Schoch, 666 F.3d 862 (3d Cir. 2012), the Act withstood a federal constitutional challenge from a contractor who had to cancel four contracts for temporary bridges on PennDOT projects, and who has been barred from giving future quotes.  The contractor had supplied PennDOT with temporary bridges for more than 20 years on 50 different PennDOT projects.  But, in 2010, PennDOT notified the contractor that its temporary bridges were prohibited by the Act.  In Mabey Bridge & Shore, the contractor claimed that the the Act was unconstitutional and that it was preempted by the federal Buy America Act.  The U.S. Court of Appeals for the Third Circuit rejected the contractor’s challenges, found that the Act was not preempted, and upheld PennDOT’s decision.

The Third Circuit’s decision in Mabey Bridge & Shore can be found here.

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Posted on by Christopher I. McCabe, Esq. in Public Contracting 101, Steel Products Act Leave a comment