85R8216 JAM-F
 
  By: Perry S.B. No. 1416
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the requirements for construction contracts for certain
  water supply projects, treatment works, and flood control measures.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 17.183, Water Code, is amended by
  amending Subsections (a), (b), (c), and (d) and adding Subsection
  (f) to read as follows:
         (a)  The governing body of each political subdivision
  receiving financial assistance from the board shall require in all
  contracts for the construction of a project:
               (1)  that each bidder furnish a bid guarantee
  equivalent to five percent of the bid price;
               (2)  that each contractor awarded a construction
  contract furnish performance and payment bonds that meet the
  following requirements:
                     (A)  the performance bond shall include without
  limitation guarantees that work done under the contract will be
  completed and performed according to approved plans and
  specifications and in accordance with sound construction
  principles and practices; and
                     (B)  the performance and payment bonds shall be in
  a penal sum of not less than 100 percent of the contract price and
  remain in effect for one year beyond the date of approval by the
  engineer of the political subdivision;
               (3)  that payment be made in partial payments as the
  work progresses;
               (4)  that each partial payment shall not exceed 95
  percent of the amount due at the time of the payment as shown by the
  engineer of the project, but, if the project is substantially
  complete, a partial release of the five percent retainage may be
  made by the political subdivision with approval of the executive
  administrator;
               (5)  that payment of the retainage remaining due upon
  completion of the contract shall be made only after:
                     (A)  approval by the engineer for the political
  subdivision as required under the bond proceedings;
                     (B)  approval by the governing body of the
  political subdivision by a resolution or other formal action; and
                     (C)  certification by the executive administrator
  in accordance with the rules of the board that the work to be done
  under the contract has been completed and performed in a
  satisfactory manner and in accordance with approved plans and
  specifications;
               (6)  that no valid approval may be granted unless the
  work done under the contract has been completed and performed in a
  satisfactory manner according to approved plans and
  specifications;
               (7)  that, if a political subdivision receiving
  financial assistance under Subchapter K of this chapter, labor from
  inside the political subdivision be used to the extent possible;
  and
               (8)  that the contract include a requirement that iron
  and steel products [and manufactured goods] used in the project be
  produced in the United States, unless:
                     (A)  such products [or goods] are not:
                           (i)  available in sufficient quantities;
                           (ii)  readily available; or
                           (iii)  of a satisfactory quality; [or]
                     (B)  the use of such products [or goods] will
  increase the total cost of the project by more than 20 percent; or
                     (C)  the use of iron and steel products that are
  not produced in the United States is incidental or de minimis and:
                           (i)  the cost of each individual iron or
  steel product used in the project that is not produced in the United
  States does not exceed one percent of the total cost of the
  materials incorporated into the project; and
                           (ii)  the cost of all iron and steel products
  used in the project that are not produced in the United States does
  not exceed five percent of the total cost of the materials
  incorporated into the project.
         (b)  Plans and specifications submitted to the board in
  connection with an application for financial assistance must
  include a seal by a licensed engineer affirming that the plans and
  specifications:
               (1)  are consistent with the requirement regarding the
  use of iron and steel products under Subsection (a)(8); and
               (2)  conform to current industry design and
  construction standards.
         (c)  For the purposes of Subsection [Subsections] (a)(8)
  [and (d)]:
               (1)  "Iron and steel products" means iron and steel
  products produced as the result of a manufacturing process and:
                     (A)  includes lined or unlined pipes or fittings,
  carbon steel fasteners, manhole covers, municipal castings,
  hydrant tanks, flanges, pipe clamps and restraints, valves,
  structural steel, and reinforced precast concrete; and
                     (B)  does not include mechanical or electrical
  components, equipment, controls, or systems or necessary
  appurtenances of such components, equipment, controls, or systems
  used to process or treat water ["Component" means any article,
  material, or supply, whether a manufactured good or raw material,
  that is directly incorporated into a manufactured good].
               (2)  ["Manufactured good" means an item produced as the
  result of a manufacturing process.
               [(3)]  "Manufacturing process" means the application
  of a process to alter the form or function of materials or elements
  of a product in a manner that adds value and transforms the
  materials or elements so that a new end product is produced that is
  functionally different from the product that would result from
  simple assembly of the materials or elements.
               (3) [(4)]  "Produced in the United States" means[:
                     [(A)  in the case of] iron and steel products[,
  products] for which:
                     (A)  all manufacturing processes, from initial
  melting through application of coatings, take place in the United
  States, except metallurgical processes that involve the refinement
  of steel additives; and
                     (B)  at least 50 [in the case of a manufactured
  good, a good for which:
                           [(i)     all of the manufacturing process that
  produced the manufactured good takes place in the United States;
  and
                           [(ii)  more than 60] percent of the
  materials [components of the manufactured good], by cost, originate
  in the United States.
         (d)  For the purposes of Subsection (c)(3)(B) 
  [(c)(4)(B)(ii), if a component originates in the United States],
  the entire cost of the materials [that component] contributes to
  the determination of whether the iron and steel products are
  produced [the percentage of the components of the manufactured good
  that originate] in the United States.
         (f)  The board shall adopt rules to:
               (1)  promote compliance with the requirements of this
  section; and
               (2)  establish and administer a system that allows for
  the waiver of the requirements of this section as necessary.
         SECTION 2.  Section 17.183, Water Code, as amended by this
  Act, applies only to a contract entered into on or after the
  effective date of this Act. A contract entered into before the
  effective date of this Act is governed by the law in effect when the
  contract was entered into, and the former law is continued in effect
  for that purpose.
         SECTION 3.  This Act takes effect immediately if it receives
  a vote of two-thirds of all the members elected to each house, as
  provided by Section 39, Article III, Texas Constitution.  If this
  Act does not receive the vote necessary for immediate effect, this
  Act takes effect September 1, 2017.