Request By:
Mr. Robert W. Keats
Legal Counsel
Louisville and Jefferson County
Metropolitan Sewer District
400 South Sixth Street
Louisville, Kentucky 40202
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
On behalf of the Louisville and Jefferson County Metropolitan Sewer District (MSD), you request our opinion on the following question:
"Whether MSD may adopt and include in its purchasing contracts and bid specifications a provision that in the performance of the work the contractor or supplier shall furnish only goods manufactured in America ('Buy American' clause)."
This question was prompted as a result of an effort by MSD board members to devise a way to aid the American economy by restricting MSD purchases of goods to only American made products. You cite 41 U.S.C. § 10a, which requires the federal government to purchase American-produced goods and supplies.
A joint Metropolitan Sewer District is described in KRS 76.010 as a public body corporate and political subdivision. In Louisville & Jefferson County Met. Sew. Dist., Ky., 197 S.W.2d 413 (1946), a MSD is characterized as a "separate municipality", and its obligations are not those of the city or county.
Pursuant to KRS 76.080(5), a MSD is empowered to acquire and hold the personal property the board deems necessary for its purposes. Subsection (8) of that statute authorizes a MSD to make contracts and execute all instruments necessary or convenient. Thus the power of procurement is clearly spelled out in KRS 76.080.
Regardless of whether the MSD is operating under KRS 424.260 or KRS 45A.345 to 45A.460 (Model Procurement Code), we can find no statute restricting the MSD from adopting as a standing policy the purchasing only of American-made goods.
If the MSD decides to adopt the "Buy American" clause as a standing procurement policy, we know of no law that would prohibit it. In such case the MSD, under its general powers of procurement, is not restricted in adopting such a policy. See 91 C.J.S., United States, § 71, p.p. 141-143.
While the competitive bidding principle is generally mandatory under KRS 424.260 and KRS Chapter 45A, we doubt that the courts would hold that "buying American" would tend to prevent competition (see Board of Education of Floyd County v. Hall, Ky., 353 S.W.2d 194 (1962); and Kentucky Ass'n of Highway Contractors v. Williams, 213 Ky. 167, 280 S.W. 937 (1926) 940), the point being that the United States is a sufficient area in which to exercise the principle of competition.
As was said in 72 C.J.S. Supp., Public Contracts, § 8, "The purpose of this requirement (competitive bidding) is to protect the taxpaying public against the wasting of public funds and to prevent abuses such as fraud, favoritism, improvidence and extravagance." Thus the public benefit accruing from competitive bidding can be adequately subserved even where a "buy American" clause is adopted in procurement. It is not our purpose nor function to consider the broader aspects of economic or world trade philosophy in this context. We are only concerned here with Kentucky's organic law.