The PA Steel Products Procurement Act was first enacted in 1978. At its core, the Act provides that any steel products used or supplied on a public works project in Pennsylvania must be U.S. steel products. Under the Act, a product that contains both foreign and U.S. steel qualifies as U.S. steel product “only if at least 75% of the cost of the articles, materials and supplies have been mined, produced or manufactured, as the case may be, in the United States.”
The Act does not define the word “cost,” and it has been somewhat of a mystery as to what can be included as a “cost” for purposes of satisfying the 75% rule. It has always been my view of the 75% rule, and my advice to clients, that whatever cost was incurred as part of the mining, production, or manufacturing process to obtain and produce the materials that are incorporated into the finished product should count as a “cost” in determining whether the 75% rule has been satisfied.
Since its enactment, there have been few cases interpreting the Act, leading to great uncertainty and confusion among all affected parties. Now, in a case of first impression, the Pennsylvania Supreme Court has offered much needed guidance on this issue. In United Blower, Inc. v. Lycoming County Water and Sewer Authority, 259 A.3d 960 (Pa. 2021), the question concerned whether air blowers supplied on a public project for the Lycoming County Water and Sewer Authority qualified as U.S. steel products. During the project, the prime contractor provided the Authority with an ST-3 form, attesting that more than 75% of the cost of the air blowers – which contained both foreign and domestic steel – was attributable to U.S.-produced “articles, materials and supplies.” However, the Authority disputed compliance with the Act. Subsequently, a hearing was held before an independent hearing officer to decide whether the air blowers complied with the Act. Read more
Christopher I. McCabe, Esq.
