85R8216 JAM-F     By: Kacal H.B. No. 2204       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.