Can a public entity add-on to an existing contract in order to satisfy a need for a new and different service, supply or equipment?
On March 7, WHYY’s Newsworks reported that that is precisely what the City of Philadelphia plans to do under an existing stun gun contract with Taser International. According to the Newsworks report, the City intends to spend more than $200,000 under the Taser contract to purchase police body cameras:
City records show that Philadelphia’s Police Department has a $705,361 contract with Taser that is expected to cover hundreds more cameras, the cost of evidence storage and equipment upgrades. It will also pay for stun guns.
Officials confirm, $210,000 of that will pay for hundreds of new body cameras.
Philadelphia had an existing contract with Taser for the stun guns, so it was easy to piggyback on that for the body cameras.
The City’s intent to spend more than $200,000 to purchase police body cameras under the Taser contract, without open, competitive bidding, may violate the public bidding rules set forth in Article VIII, Chapter 2, of the Phila. Home Rule Charter. When it comes to the purchase of generic items, like body cameras, the bedrock rule for City contracting is sealed, competitive bidding, duly advertised, with the contract being awarded to the lowest responsive, responsible bidder.
The limited exceptions to this rule are where (1) the item being purchased is unique and one-of-a-kind, or (2) the original bid contemplated an option to add other items to the contract with a request for pricing for such items, such that all bidders for the contract had notice and the same opportunity to bid.
A public entity cannot add-on to an existing contract to avoid public bidding as a matter of convenience. If a public entity has a contract for ink pens, it cannot ask the ink pen supplier to also sell it legal pads under a negotiated price, unless the original bid for ink pens informed bidders that the public entity might also buy legal pads in the future and unless a price was also submitted for the legal pads. Rather, the public entity is bound to issue a new bid for a contract to purchase the legal pads and to invite all interested bidders to submit prices for the legal pads.
This view is firmly supported by the 2012 Commonwealth Court decision in Hanisco v. Township of Warminster. In that decision, the Commonwealth Court held that negotiations with a contractor to extend an existing public contract under new terms and prices were improper. The following passage from the Hanisco opinion is worth repeating here:
This Court has emphasized that it “will not condone a situation that reveals a clear potential to become a means of favoritism, regardless of the fact that … officials may have acted in good faith in the particular case.” Conduit, 401 A.2d at 379. The overarching public policy encompassed by the public bidding requirements must take precedence to ensure the integrity of the process, its transparency and fairness, and to engender a greater sense of trust in government among the citizen taxpayers. While we understand that the Township wanted to provide savings to its constituents, the decision not to advertise its waste services contract for competitive bidding has prevented the parties from knowing whether greater savings could have been achieved had the contract been rebid pursuant to the Code.
Likewise, as in Hanisco, spending $200,000 under the Taser contract prevents City taxpayers from knowing whether the City could have achieved a better price for the body cameras it intends to purchase from Taser. We know what the City will pay to Taser. We won’t know what the City might have paid to a different vendor.
Christopher I. McCabe, Esq.
