While the Pennsylvania Right-To-Know Law (RTKL) generally provides that, after the conclusion of public bidding, all bids are potential public records subject to disclosure, this is not always the case in all public procurements.  A recent decision of the Pennsylvania Commonwealth Court, Com. v. Walsh/Granite JV, made this point clear when the Court denied a RTKL request to obtain copies of the losing bids on a Pennsylvania Department of Transportation (PennDOT) Public-Private Transportation Partnership Law (3P Law) project known as the Pennsylvania Rapid Bridge Replacement Project. Read more

I am happy to report that PA Public Contracts has been selected to compete in The Expert Institute’s Best Legal Blog Competition. From a field of hundreds of potential nominees, PA Public Contracts has received enough nominations to join the one of the largest competitions for legal blog writing online today.

Now that the blogs have been nominated and placed into their respective categories, it is up to their readers to select the very best. With an open voting format that allows participants one vote per blog, the competition will be a true test of the dedication of each blog’s existing readers, while also giving up-and-coming players in the legal blogging space exposure to a wider audience.  Each blog will compete for rank within its category, while the three blogs that receive the most votes in any category will be crowned overall winners.

The competition will run from now until the close of voting at 12:00 am on November 14, 2016, at which point the votes will be tallied and the winners announced.

So, if you like what you see on this blog, please cast a vote for PA Public Contracts here.

Thank you for your support and continued readership!

Effective January 1, 2016, the thresholds for public bidding by Pennsylvania state authorities and municipalities will remain unchanged from 2015 and are as follows:

• Purchases and contracts below $10,500 require no formal bidding or written/telephonic quotations
• Purchases and contracts between $10,500 and $19,400 require three written/telephonic quotations
• Purchases and contracts over $19,400 require formal bidding

Bidding thresholds are adjusted annually for inflation by the Pa. Department of Labor & Industry under Act 90 of 2011. The Pa. Bulletin announcement announcing the 2016 bidding thresholds can be found here.

I’m happy to report that PA Public Contracts was quoted today by business reporter Joseph N. DiStefano in his Philly Deals column in the business section of The Philadelphia Inquirer.

The column, “Is state in the clear in loan dispute?”, discusses the Telwell, Inc. v. PSERS Board of Claims decision which I blogged about here.  The Inquirer article can be found here (a subscription may be required) or here.

In a recent decision interpreting the Pa. Right-to-Know Law, the Pennsylvania Supreme Court ruled that the Law required the disclosure of public bids received by a private contractor standing in the shoes of a public entity.

In SWB Yankees, LLC v. Wintermantel, 45 A.3d 1029 (2012), the Supreme Court held that documents in the possession of a private entity serving as the management agent for a municipal authority in the operation of a minor league baseball stadium were subject to disclosure under the newly enacted Right-to-Know Law.

In 2008, the Multi-Purpose Stadium Authority of Lackawanna County entered into a management agreement with a private entity, which vested the private entity with the overall management and control of the day-to-day operations of a municipal-owned baseball club, the Scranton/Wilkes-Barre Yankees, and a municipal-owned minor league stadium.

When the SWB Yankees awarded a new contract for concessionaire operations at the stadium, a newspaper reporter for sought copies of the concessionaire bids from the Stadium Authority.  The Authority’s solicitor denied the Right-to-Know request, stating that the Authority did not possess such information. While the Right-to-Know Law applies to certain records in the possession of third parties, like the SWB Yankees, the solicitor claimed that the SWB Yankees was not performing a governmental function on behalf of the Authority and refused to disclose the bids.

The section of the Right-to-Know Law that cover public records in the hands of private parties states as follows:

A public record that is not in the possession of an agency but is in the possession of a party with whom the agency has contracted to perform a governmental function on behalf of the agency, and which directly relates to the governmental function and is not exempt under this act, shall be considered a public record of the agency for purposes of this act.

The Supreme Court rejected the solicitor’s interpretation of the Right-to-Know Law, and held that the Authority was required to disclose any written concessionaire bids for the stadium.

This decision could have far-reaching consequences for public contractors across the Commonwealth.  If you are a contractor performing a core and traditional government function – as opposed to simply doing work for the government – then the records of bidding and your performance will likely be subject to disclosure under the Right-to-Know Law.  On the other hand, if you are a contractor performing services or work for a public entity, there is still the chance that the records of your work will be subject to disclosure.

A full copy of the Supreme Court’s decision can be found here.

In November 2011, Act No. 92 was signed into law, increasing the monetary thresholds for public contracts awarded by Pennsylvania boroughs.

Sealed competitive bidding is now required with appropriate advertisement for all contracts in excess of $18,500 (an increase from $10,000).  Written or telephonic quotes from at least three bidders is now required for all contracts in excess of $10,000 (an increase from $4,000), but not more than $18,500.  The Act provides for adjustments to these threshold amounts due to inflation per the “Consumer Price Index for All Urban Consumers” (CPI-U).

The Act became effective January 1, 2012.  The full Act can be found here.

In November 2011, Act No. 88 was signed into law, increasing the monetary thresholds for the bidding of flood control contracts by Pennsylvania municipalities.

Sealed competitive bidding is now required with appropriate advertisement  for all contracts in excess of $18,500 (an increase from $10,000).  Written or telephonic quotes from at least three bidders is now required for all contracts in excess of $10,000 (an increase from $4,000), but not more than $18,500.  The Act provides for adjustments to these amounts due to inflation per the “Consumer Price Index for All Urban Consumers” (CPI-U).

The Act became effective January 1, 2012.  The full Act can be found here.

Don’t let the era of SuperPACs and free corporate election spending fool you – even proper contributions to candidates can still bar contractors from receiving future government contracts.

The recent U.S. Supreme Court case, Citizens United v. FEC (2010), struck down prohibitions against independent expenditures made by corporate entities toward influencing an election.  In the wake of the Citizens United decision, Pennsylvania’s Department of State officially refused to enforce state restrictions on corporate expenditures.    The age of free corporate election spending dawned.

But not all spending is equal. Prior to Citizens United, Pennsylvania law prohibited both election expenditures and contributions by corporations.  Accordingly, even as it freed corporations to make election expenditures, the State Department clung to its prohibition on campaign contributions.

The main difference between an expenditure and a contribution is not who gives, but who receives.  Generally, a permitted expenditure includes any independent spending not coordinated with or given to a candidate, a candidate’s committee, or a PAC.  Thus, corporations may freely spend on TV or internet ads, billboards, websites, or mailings to support or oppose a candidate (with minor restrictions). However, it may not give that same money to a candidate, a candidate’s committee, or a PAC – even if the money would be spent in the very same way.  The former is an  independent expenditure: OK.  The latter is a contribution: not OK.

So, for now, who can make contributions to candidates in Pennsylvania?  Only individuals, sole proprietorships, and partnerships.  But it is these contributions that can place future public contracts at risk – primarily at the local level.

The Philadelphia Code limits yearly contributions to city office candidates, including Mayor.  Contributors exceeding these limits, currently $2,900 for individuals, will forfeit all non-competitively bid City contracts for the candidate’s term of office.  The ordinances cover contributions by business PACs, partnerships, principals, and even immediate family.  “Attribution rules” link businesses with the individual contributors – meaning that, in theory, if a CEO exceeds the limits, the CEO’s company will forfeit all City contracts.  A list of FAQ on the City’s limitations can be found here.

The City of Pittsburgh recently followed suit – with a narrow City Council vote this Spring to approve limits of $2,000 per election by individuals or partnerships, and $5,000 by political committees.  It supplants prior legislation deemed ineffective.  However, the bill is not yet signed by Pittsburgh Mayor Luke Ravenstahl.

Across the bridge, New Jersey maintains a statewide public contract forfeiture law – similar in concept to Philadelphia’s law.  At the state level, Pennsylvania requires holders of “non-bid” public contracts to formally report all yearly contributions by principal individuals, including officers, directors, partners, and their immediate family.

Liam Y. Braber, Esq.

  Guest blogger Liam Y. Braber, Esq., practices law in PA and NJ with the firm Jacoby Donner, P.C.  

  This blog post is for informational purposes only, and shall not be considered legal advice.

In Pennsylvania, a general rule of public bidding is that a disappointed bidder cannot recover lost profits or other costs for the reason that the bidding laws are for the benefit of the taxpayers and not the bidders themselves.

But what of the disappointed bidder, whose bid is wrongfully rejected but where injunctive relief is denied to the taxpayer who has sought such relief?  If it is later determined that the taxpayer was indeed correct, but it is too late for the wrongful decision to be undone and for the contract to be awarded to the bidder instead, or at least enjoined, should the disappointed bidder be allowed to recover, if not its lost profits, at least its bid preparation costs?

In the case of Meccon, Inc. v. Univ. of Akron, the Ohio Supreme Court held in 2010 that, when a rejected bidder establishes that a public entity violated competitive-bidding laws in awarding a public contract, the bidder may recover reasonable bid preparation costs as damages if (a) the bidder promptly sought, but was denied, an injunction to suspend work on the project, pending resolution of the bid dispute, and (b) it is later determined that the bidder was wrongfully rejected and injunctive relief is no longer available.

The Ohio Supreme Court’s reasoning in support of its decision is powerful:

If, for instance, a rejected bidder alleges that a public authority failed to comply with competitive-bidding laws and promptly seeks injunctive relief to delay the public-improvement project pending resolution of the dispute, denial of the requested injunctive relief means that determination of the allegation of wrongful conduct by the public authority will not take place until much later in the litigation. Under our precedent, once the public-improvement work commences or is completed, the rejected bidder will not be able to perform the public contract even if the bidder demonstrates that its bid was wrongfully rejected.  In such circumstances, the wrongfully rejected bidder is left with no remedy for the public authority’s unlawful conduct, and injunctive relief will no longer serve to deter the public authority’s unlawful conduct.

Of course, this rule has never been applied by the Pennsylvania courts. The general rule here is that only injunctive relief is available and only if sought by a taxpayer.  The disappointed bidder itself has no standing as a bidder to seek any relief against a public entity for the reason that the bidding laws are for the benefit of the taxpayers and general public.

In view of the Ohio decision, there may come a time that such a limited claim is asserted on behalf of a disappointed bidder.  To allow such a claim, the rule on standing would need to be modified in Pennsylvania.

There are numerous instances where injunctive relief is denied to a taxpayer, but where there is a strong claim that the public entity acted in a wrongful manner (thereby harming the interests of the public, the taxpayers, and the participating bidders). And certainly, for many large public works projects, the costs of preparing a bid, for what the bidder believed would be a fair and open process, can be quite significant.  If such costs cannot recouped and the public entity faces no threat of injunctive relief, how are the interests of taxpayer served, especially where the bidder is a taxpayer itself?

If the bid process is found to be unfair and wrongful, but if injunctive relief is no longer available, there is no real deterrent to the public entity if it chooses to repeat its same conduct on future bids.  In such a case, should the potential remedy be limited solely to injunctive relief for a taxpayer, even where such relief is unavailable as a practical matter, because the project has already commenced, and where the bidder, in reliance upon what was expected to be a fair and open process, has expended significant costs?  In such a case, it could be argued that a limited exception to the standing rule should be carved out to permit the disappointed bidder to at least recover its bid preparation costs.

The Meccon decision can be found here.