A recent Commonwealth Court decision has clarified what is required from a bidder for a City of Philadelphia (City) contract in order to be afforded the 5% bid preference for a certified local business entity (LBE) under the City’s local bidding preference ordinance.
Under the City of Philadelphia local bidding preference ordinance, an LBE receives a 5% reduction/preference from its bid price for purposes of determining the lowest bidder for award. According to the ordinance, and the City’s local bidding preference regulations, the LBE is entitled to the LBE 5% preference so long as it will perform at least 51% of the work with its own forces, or with the forces of its certified LBE subcontractors. Pursuant to the local bidding preference ordinance, and the regulations, the bidder is required to submit with its bid its LBE certification and annual affidavit, as well as the LBE certification and annual affidavit of any LBE subcontractors it intends to use to satisfy the 51% requirement.
However, notwithstanding the plain language in the ordinance and regulations, the City’s standard bid instructions normally required only submission of the bidder’s own LBE certification, even where the bidder intended to use LBE subcontractors to satisfy the requirement that the bidder will perform at least a majority of the work under the contract.
In April 2019, the City awarded a Water Department contract to Thomas P. Carney, Inc. (Carney), an LBE whose bid price was the second lowest, but was the lowest after the local preference was applied. Carney included with its bid its own LBE certification and affidavit, but did not include any LBE paperwork for its subcontractors, even though the work involved would have been performed by Carney’s LBE subcontractors.
C. Abbonizio Contractors, Inc. (Abbonizio), the low bidder, filed for a preliminary injunction to stop the contract award to Carney, claiming that Carney’s bid was defective because it failed to include a current LBE certification and affidavit for its subcontractors. The trial court refused to enter an injunction. On appeal, the Commonwealth Court reversed, finding that:
Based upon this Court’s strict reading of Section 17-109(5)(a) of the Philadelphia Code, Carney had to fulfill the requirements in Section 17-109(5)(a)(.1), (.2), (.3) and (.4) of the Philadelphia Code when it submitted its bid in order to receive the LBE preference in accordance with the Philadelphia Code. It being undisputed that Carney did not satisfy the specific LBE preference requirements, Carney should not have received the benefit thereof. Without the LBE preference, Carney was not the lowest bidder. Rather, Appellants submitted the Project’s lowest bid. Accordingly, Appellants are likely to prevail on the merits and their right to relief is clear.
The Commonwealth Court found that Abbonizio satisfied all of the requirements for the issuance of a preliminary injunction, and that a preliminary injunction against the contract award to Carney should have been entered by the trial court:
Under the circumstances presented to the trial court, an injunction would have ensured the public’s confidence that the Philadelphia Code’s express provisions were upheld, that contractors cannot gain an advantage by disregarding the LBE preference criteria, and that taxpayers’ funds are being protected, and there were no apparently reasonable grounds on which the trial court could have held otherwise.
Accordingly, it is now clear that, on all City bids where the local bidding preference is at issue, the City cannot award the contract to an LBE unless the LBE paperwork is complete and covers not only the bidder, but also any of the bidder’s subcontractors who will be used to satisfy the 51% work requirement.
The Commonwealth Court’s opinion can be found here.
If you need assistance with a public contracting issue, feel free to call or email me. I’ll be happy to assist in anyway possible.
Christopher I. McCabe, Esq.
