BuyAmericaWaiverFindings.pdf

DRAFT FINDINGS FOR A WAIVER OF

ORS 279C.303 BUY AMERICA REQUIREMENTS

OregonBuys # S-10700-00010331

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 ) Draft Findings Procurement of Solar Panels )

Department of Administrative Services, Procurement Services, is conducting a Public Improvement Solicitation on behalf of the Oregon Youth Authority. The Solicitation is currently posted to OregonBuys and has an estimated price exceeding $250,000. The project includes steel and iron coatings as part of the solar panel replacement. Only portions of the solar panels will be replaced.

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 the A&E Consultant, DLR Group, shows the solar panels to date confirms the best option available is about 40 percent American-made, which does not 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 solar panels used in all Public Improvement or Public Works projects under DAS Procurement Authority for the next five years.

• The ORS 279C.303 Buy America requirement is inconsistent with the public interest.

o State of Oregon Executive Order No. 17-20 outlines reduction in greenhouse gases and addresses climate change. Energy efficiency is a critical and growing portion of the State's clean energy economy. As a renewable source of power, solar energy has an important role in reducing greenhouse gas emissions and mitigating climate change. Due to lack of U.S. production, the Buy America requirement on manufactured solar panels will limit the State’s ability to efficiently implement solar power improvements to help reduce greenhouse gases by producing clean energy.

• 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.

o Based on information from marketwatch.com:

The largest American solar panel manufacturers include Silfab Solar, Mission Solar and First Solar. Additionally, Tesla Energy, Canadian Solar and Qcells produce some solar panels in the United States. Although solar panels manufactured in the U.S. are not necessarily higher quality than panels made elsewhere, investing in American-made solar panels supports domestic solar research and helps create jobs.

U.S.-made solar panels, especially those with exclusively American-made components, are difficult to find, and overseas production still leads the market. Panels produced overseas are not necessarily of poorer quality.

o Based on information from OilPrice.com:

China accounted for 83% of the world’s solar-panel production and the

U.S. less than 2% in 2023.

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

o Based on information from OilPrice.com:

China's advantage in solar panel production stems from lower costs in materials, electricity, and labor, resulting in a 44% price difference compared to the US.

The US lags significantly behind China in every stage of the solar manufacturing process, from polysilicon production to solar panel assembly.

Efforts by the US to impose tariffs on Chinese imports aim to level the playing field but may lead to higher costs for consumers and further complications in achieving renewable energy goals.

The primary building block for some 97% of the world’s solar panels is high-purity silicon, or polysilicon. Making that silicon is the first big step in the solar manufacturing process. It is the most energy- and capital-intensive piece because of the high temperatures and expensive equipment used in refining. Until around 2005, polysilicon manufacturing was dominated by companies from the U.S., Europe and Japan. With China’s huge expansion and investment into solar, that has flipped. In 2023, roughly 91% of the polysilicon for solar panels was produced in China.

The solar-grade silicon is melted in furnaces then cooled into big rod-shaped crystals called ingots. The ingots are sawed into thin slices called wafers. China makes more than 97% of the world’s solar ingots and wafers. The U.S. makes none. Ingot manufacturing is very energy-intensive due to the high temperatures used. China has built many factories in areas with cheap power from coal or hydroelectric plants. The bulk of China’s solar manufacturing is in provinces where electricity costs are nearly 30% below the global industrial average.

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