Material State or Local Preference

General
For projects involving federal funding, the LG may not impose any requirement or enforce any procedure requiring the use, or providing a price differential in favor, of articles or materials produced within a state or other political subdivision. This includes requirements prohibiting, restricting or discriminating against the use of articles or materials shipped from or prepared, made or produced in any state, territory or possession of the United States. Materials produced within a designated area may not be favored to the exclusion of comparable materials produced outside of the area on federal-aid projects.
For projects with only state and/or local funding, state and local material preferences may apply. State and local preference clauses give particular advantage to the designated source and, thus, restrict competition. However, local and state material preference provisions may not be used on any federal-aid construction projects.
This policy also applies to preference actions against materials of foreign origin, except as otherwise permitted by federal law. The LG may not give preference to in-state material sources over foreign material sources on federal-aid projects. Under the Buy America provisions, the state or LG is permitted to expand the Buy America restrictions provided the state or LG is legally authorized under state law to impose more stringent requirements.
Federal Requirements
  1. 23 CFR §635.409
    – Prohibits any contract provisions requiring the use of or providing a price differential in favor of articles or materials produced within the state.
  2. 23 CFR §635.410
    – Requires all iron and steel products to be of domestic origin. Waivers may be approved by FHWA.
State Requirements
  1. Texas Government Code §2155.444
    – Requires state agencies to give preference to goods produced in Texas if the cost and quality are equal.
  2. Texas Government Code §2155.449
    – Requires state agencies to give preference to goods produced in economically depressed or blighted areas if the cost and quality are equal.
  3. Texas Government Code §2252.002
    – Prohibits governmental entities from awarding a contract to a non-resident bidder unless the non-resident bidder underbids the lowest resident bidder by a reciprocal percentage.
  4. Texas Transportation Code §223.045
    – Provides that contracts for the state highway system without federal funds must contain the same preference provisions for steel and steel products required under federal law for an improvement made with federal funds.
Required Practices
The LG must comply with state and/or federal statutes, as applicable for the source of funding on a project. The
LGPM Guide
provides the required practices related to contracting with material state or local preferences.