BABA Waiver MH HVAC Upgrade Proposed Findings.pdf

PROPOSED FINDINGS FOR A WAIVER OF

ORS 279C.303 BUY AMERICA REQUIREMENTS

OregonBuys No. REQ-10700-00085348

Before the State Chief Procurement Officer of the

Department of Administrative Services of the State of Oregon

Request for Waiver of ORS 279C.303 ) Buy America Requirements for Procurement of ) Draft Findings Residential Variable Refrigerant-Flow Zoning or ) Inverter-Driven Ductless Mini- and Multi-Split ) HVAC Systems for Mahonia Hall. )

Department of Administrative Services, Procurement Services, is conducting a Public Works contract on behalf of Mahonia Hall. The contract has an estimated price exceeding $250,000.

The project includes HVAC System Upgrades including high efficiency heat pumps.

ORS 279C.303 requires, unless a waiver is granted, that the Department of Administrative Services (“DAS”) must:

1) Require in each Public Improvement Contract or Contract for Public Works with an estimated contract price of $250,000 or more that steel, iron, coatings for steel and iron and manufactured products that a contractor purchases for or uses in the Public Improvement or Public Works, and that become part of a permanent structure, must be produced in the United States;

2) Note clearly and conspicuously in all Solicitation documents for any Procurement related to the Public Improvement Contract or Contract for Public Works, that any Public Improvement Contract or Contract for Public Works that results from the Procurement will include the ORS 279C.303 Buy America requirement; and

3) Must reject any Bid or Proposal that does not affirmatively attest that the Bidder or Proposer read and understood the requirement.

ORS 279C.303 permits the Director of the Department of Administrative Services (“DAS”), as the primary public contract review authority for the State of Oregon, to grant a waiver from the ORS 279C.303 Buy America requirement if the Director finds in writing that:

• The requirement is inconsistent with the public interest;

• Steel, iron, coatings for steel and iron and manufactured products required for the Public

Improvement or Public Works are not produced in the United States in sufficient and reasonably available quantities and with satisfactory quality; or

• Using steel, iron, coatings for steel and iron or manufactured products produced in the United States for the Public Improvement, or the Public Works will increase the cost of the Public Improvement or Public Works by more than 25 percent.

Before making the finding, the Director must:

• Issue a draft finding that includes a detailed written explanation of the basis for waiving the requirement;

• Give public notice of the draft finding at the earliest practicable time, in a manner that the director determines will give adequate notice to the public and to Contractors that intend to submit, or have submitted, Bids for the Public Improvement or Public Works;

• Allow seven (7) calendar days for public comment on the draft finding; and

• If, after considering any public comment, the Director determines to waive the requirement set forth in the rule, the Director shall provide public notice of the Director’s finding using the same method the Director used to provide public notice of the draft finding.

The Director must:

• Indicate the duration and applicability of the finding in the document that waives the requirement; and

• Review any waiver, at least every five years.

The Director may

• make a finding under ORS 279C.303 and OAR 125-249-0170 that applies to a single Public Improvement Contract or Contract for Public Works, to a class of Public Improvement Contracts or Contracts for Public Works, or to a class of iron or steel products, coatings, or manufactured products; and

• review and continue, amend, or rescind the finding at any time.

Before continuing, amending, or rescinding a waiver, the Director must provide for public notice and comment using the same method used to provide public notice of the waiver.

Under OAR 125-246-0170(3)(a)(S) the Director has delegated the Direct’s authority under ORS 279C.303 to the State Chief Procurement Officer of DAS Procurement Services (“DAS PS”).

Background The research conducted by DAS PCM and HydroTemp Mechanical, Inc, the Trade Service contractor, found that there are currently no manufacturers who presently produce residential variable refrigerant-flow zoning or inverter-driven ductless mini- and multi-split HVAC systems which meet the requirements of the “… 55 percent of the total cost of all components of the product” as required by items Produced in the United States, as defined by ORS 279C.303 and OAR 125-249-0170 (1)(b), specifically (B)(ii).

(b) “Produced in the United States” means:

(A) For iron and steel products, other than manufactured products, that all manufacturing processes, from the initial melting stage through the application of coatings, occurred within the United States; and

(B) For manufactured products, that:

(i) The manufacture of the product occurred within the United States; and

(ii) The cost of the components of the product that are mined, produced or manufactured in the United States is more than 55 percent of the total cost of all components of the product. The Oregon Department of Administrative Services or the Oregon Department of Transportation may establish, by Rule, a different standard for determining the minimum amount of the product that must be manufactured within the United States.

Proposed Findings

The following findings support an ORS 279C.303 Buy America waiver for the class of variable refrigerant-flow zoning or inverter-driven ductless mini- and multi-split HVAC systems used in all Public Improvement or Public Works projects under DAS Procurement Authority for the next five years.

• The design approach for Mahonia Hall, which is on the National Register of Historic Places, is to share the existing hot water boiler system pathways with the new refrigerant system lines to limit the impact on the finishes of the house. It is a ‘surgical’ solution to minimize the physical impact that a ducted system or other large vertical shafts.

• The exterior impact will be limited to six exterior units and small refrigerant connections exiting the house discretely.

• The multi-split system is more energy efficient than other traditional design strategies, providing multiple points of cooling, and zoned by use and location.

• Operates at a lower noise level that traditional systems.

• Other design strategies would reduce the usable footprint of the basement with equipment and require new vertical shaft runs on the interior of the house or have piping running down the exterior of the house to connect with exterior units. The latter strategy would have a significant visual impact with 16 exterior units placed around the residence and require an approval by the historic landmarks committee.

• The proposed solution uses equipment that is ‘on the shelf,’ not custom, and suitable for the residential application.

• Two federal government waivers for these products:

o In a May 24, 2010 Memorandum of Decision of U.S. Department of Energy, Assistant Secretary of Energy Efficiency and Renewable Energy Cathy Zoi details the investigation undertaken by her department, and announces her determination that, for purposes of projects funded by her department, the Buy American provision of the American Reinvestment and Recovery Act of 2009 are inapplicable to variable-refrigerant-flow zoning and/or inverter-driven ductless mini-split systems, because such equipment is not available from any domestic manufacturer.

Link to Memorandum 2010-15030.pdf (govinfo.gov) o More recently, on June 4, 2015, the Acting Administrator of the U.S. Department of Transportation, Federal Railroad Administration, announced her determination that, based on an investigation undertaken by her department of the availability of domestically manufactured variable refrigerant flow HVAC systems, for purposes of projects funded by her department, a waiver of the Buy American requirement of 49 U.S.C. Section 24405(a) is appropriate with respect to such equipment due to the fact that “no company manufactures VRF systems domestically”.

• Letters from three manufacturers, LG, Daikin, Mitsubishi and Carrier conveying that their products have many components that are made in the US but do not meet the https://www.govinfo.gov/content/pkg/FR-2010-06-22/pdf/2010-15030.pdf requirements set forth by ORS 279C.303 and OAR 125-249-0170 (1)(b), specifically (B)(ii).

Proposed Findings and Waiver Procedure:

1) DAS PS will issue a public notice of these proposed findings on the OregonBuys eProcurement system for a period of at least seven (7) calendar days.

2) The public notice will include that any affected party may comment on the proposed findings by contacting Jay Jackson, Procurement Policy Officer at:

Jay.Jackson@das.oregon.gov.

3) After considering any public comment received, DAS PS will issue a public notice of any approved findings on the OregonBuys eProcurement system for a period of at least seven

(7) calendar days.

mailto:Jay.Jackson@das.oregon.gov