NEW YORK CITY—New York's “Buy American” legislation will require American-made steel and iron products in the construction of all MTA and state transportation agencies' road and bridge projects that cost over $1 million.

Private companies bid for work on such projects, including for example, the replacement of the upper roadways of the Queensboro Bridge. However, the bid due date for this project is Jan. 12, 2018. The legislation comes into effect on April 1, 2018 and will only apply to contracts signed after that date.

The “Buy American” Act which Gov. Andrew Cuomo signed into law on Friday had passed the legislature in June 2017. Originally, the bill was stricter, calling for the US-made requirement for projects exceeding $100,000.

Gov. Cuomo says the law will “support hardworking men and women, revitalize infrastructure across the state, bolster the strength of our manufacturing industries and cement our status as a global economic leader.”

Gary LaBarbera, president of the Building and Construction Trades Council of Greater New York, which primarily represents unions, tells GlobeSt.com that the council strongly supports the initiative which puts America first. “This will undoubtedly help working families across this great state and nation and keep tax dollars here rather than overseas. This is bold leadership that will help spur the growth of needed manufacturing and other production,” he says.

Goulston & Storrs construction attorney, Jonathan Grippo, tells GlobeSt.com that generally contractors like the status quo. Under the new law, vendors and suppliers that a contractor had been working with may not be able to fulfill requests—or may require different arrangements or more time. “The general concept is that anytime you do something different, that's going to cost you more money,” he says.

For bidding contractors, in addition to the possibilities of driving up supply costs by eliminating the competition of cheaper, foreign-sourced steel, the new law will require additional legal work, which increases fees. Lawyers would need to review the law, check and revise additional documents including those involving subcontractors and suppliers, and inform clients about potential penalties.

Grippo notes that the main contractor would want to revise contracts to pass costs down to subcontractors. For example, with penalties, if there is a requirement to rip out the non-conforming steel from a project and replace it with US-made steel or to pay a monetary fine, contractors should negotiate these terms to be covered by subcontractors, he says. Subcontractors might need to be educated about this new law, and many may not have attorneys.

At the federal level there are several “Buy America” provisions with requirements to use US-produced iron and steel for public works with funds administered by federal agencies. Comparable to those regulations, Grippo says serious concerns with non-compliance could be debarment, suspension or prevention from bidding on future state projects.

“As a contractor, you do sign contracts, so you could face civil penalties. If with a public project, you certified that what you've done is accurate and complied with contract documents, if you lie, then you're entering into the criminal world, with perjury,” says Grippo.

Similar to those in the federal program, the New York law also contain waivers and carve-outs. These include immediate or emergency situations, such as wartime needs, the unavailability of American products to meet project specifications, delays that would pose a risk to public welfare, and reciprocal trade agreements. An exception can also be made if sourcing American-made materials would increase the contract cost by an unreasonable amount.

Grippo notes with public funds, the state has to be very careful that the cost does not become too prohibitive. If bids from contractors become monumental, a carve-out can help the state pursue a different direction. According to Grippo, the new law would likely result in the contractor's charging higher fees—which ultimately the state, meaning the taxpayers, will bear.

The “Buy American” law is focused on governmental contracts and does not directly apply to private construction contracts. However, as the industry is interconnected, the requirements of US-sourced steel can create pressures for this material, which can cause shifts in resources, affecting availabilities in the marketplace.

Grippo advises contractors and builders: “Pay attention. You have to keep your eyes and ears open because things are fluid. Start building relationships. Expand your Rolodex because you may have to go to different suppliers, maybe different subs. But don't panic. This isn't a major shift of things.”

Instant Insights /

NY Transportation Projects Require US-Made Iron and Steel

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