PennDOT Adjusts Procedures for Counting DBE Suppliers

Effective November 15, 2012, the Pennsylvania Department of Transportation (PennDOT) announced in a recent Bulletin on its ECMS website that it was adjusting its procedures for counting DBE suppliers in response to federal guidance.

Under the new procedures, in order for a DBE firm to receive regular dealer (60%) credit for materials supplied on a federally-assisted transportation project, the answer to the following two questions must be “yes”:

First, does the firm “regularly” engage in the purchase and sale or lease, to the general public in the usual course of its business, of products of the general character involved in the contract and for which DBE credit is sought?

Second, is the role the firm plays on the specific contract in question consistent with the regular sale or lease of the products in question, as distinct from a role better understood as that of a broker, packager, manufacturer’s representative, or other person who arranges or expedites a transaction?

In order to assist prime contractors and DBEs, PennDOT has developed a new form for determining the appropriate DBE credit. This form can be found here. PennDOT is also requesting feedback on the form from prime contractors who elect to use it. Comments and suggestions should be submitted to: minorityparticipation@pa.gov.

According to the PennDOT Bulletin, if it is later determined that the DBE misrepresented itself or erroneously concluded that it was acting as a regular dealer, the DBE participation would still have to be revised. However, PennDOT would fully consider the form’s documentation in its good faith efforts review if the prime contractor was unable to replace the DBE participation. Therefore, it would be prudent for prime contractors to start to use this form in order to protect themselves from a later adverse determination on “good faith efforts.”

The complete Bulletin can be found here.

Posted on December 4, 2012 by Christopher I. McCabe, Esq. in DBE/MBE/WBE, PennDOT Comments Off

Public Bidding 101: The RFP

This post is another in my continuing series on the basic tenets of public bidding in Pennsylvania. The subject of today’s post is the Request for Proposal (RFP) and whether, and to what extent, the general rules of sealed, competitive bidding apply to RFPs.

An RFP is a type of invitation to bid. It is typically used where the public entity seeks to enter into a contract in the area of professional services – such as architectural, engineering or legal services. This is because contracts for those services are not governed by the rule of lowest responsive, responsible bidder, and in fact can be awarded, in many instances, without any competition whatsoever and to a bidder whose bid is not the lowest in price.

In Malloy v. Boyertown Area School Bd., 540 Pa. 308, 657 A.2d 915 (1995), a seminal case in this area, the Pennsylvania Supreme Court described the reasons why the “low bid” rule does not apply to professional services contracts:

For those contracts for which the distinctiveness and quality of service is the paramount concern, there exists a special relationship between the property owner and the contractor. In these types of contracts, the contractor owes a special duty of loyalty to the property owner because the contractor in essence becomes the property owner’s agent and, therefore, must act in good faith and always in the furtherance of the property owner’s interests vis-à-vis the other contractors on the project.

The Supreme Court’s statement nicely summarizes why professional services contracts are not subject to the low bid rule. There is an element of trust in such contracts, and this element is not necessarily assumed by the bidder whose bid is the lowest. So, the public entity has discretion in the award of such contracts and can seek to enter into such contract through an RFP process.

However, once the public entity embarks on a course of bidding, even via a more informal RFP process which does allow for negotiation, it is bound to “adhere to that procedure throughout the procurement process.” In Lasday v. Allegheny County, 499 Pa. 434, 453 A.2d 949 (1982), another seminal case in this area, Allegheny County solicited proposals under an RFP for operation of a newstand and gift shop concession. The RFP stated that separate proposals to operate only the newstand would not be accepted. Nonetheless, Allegheny County then allowed one proposer to make such a proposal and to grant the concession to that proposer on the basis of its proposal, without also allowing the existing operator an opportunity to submit such a proposal. The Supreme Court held that this was improper and held that, once an RFP process is undertaken, it must be adhered to in all respects in accordance with its instructions and guidelines.

If you are a respondent to a public RFP, consider these rules carefully, and remember that the public entity cannot act contrary to the instructions of its own RFP.

Posted on November 20, 2012 by Christopher I. McCabe, Esq. in Court Decisions, Public Bidding 101 Comments Off

DGS Announces 765 Small Business Self-Certifications

According to a recent announcement of the Pennsylvania Department of General Services, 765 small businesses have self-certified to participate in Pennsylvania’s new Small Business Procurement Initiative program, all in less than three months after Governor Tom Corbett announced the new program.

The DGS press release can be found here. My earlier post on the new Pennsylvania initiative can be found here.

Posted on November 13, 2012 by Christopher I. McCabe, Esq. in DGS Comments Off

U.S. Department of Transportation Proposes Modifications to DBE Rule

On September 6, 2012, the U.S. Department of Transportation published a Notice of Proposed Rulemaking (NPRM) which proposed various modifications to its Disadvantaged Business Enterprise (DBE) Program.

The U.S. DOT DBE program affects public contractors in Pennsylvania working on Federal-aid highway, Federal Transit Administration, or Federal Aviation Administration funded projects. This would include, for example, PennDOT, airport, Phila. Streets Department, and SEPTA projects. The Associated General Contractors of America has prepared a summary of the significant proposed changes in the NPRM – it can be found here.

The U.S. DOT has also extended the period for comments on the NPRM to December 24, 2012. Information on the NPRM and the extended comment period can be found here and here.

Posted on November 6, 2012 by Christopher I. McCabe, Esq. in DBE/MBE/WBE Comments Off

New Law Directs DGS To Prepare List Of Products Exempt Under Steel Procurement Act

On October 25, 2012, Governor Tom Corbett signed HB 1840 which amends the Pa. Steel Products Procurement Act (first passed in 1978) and which directs the Pa. Department of General Services (DGS) to prepare a list of steel products, such as machinery and equipment, that are not produced in the United States in sufficient quantities and that are therefore exempt from the provision in the Act that local governments purchase steel products manufactured only in the United States.

Once prepared and publicly accessible via the internet, contractors, subcontractors, suppliers, bidders, and public agencies will be able to rely upon the list in preparing bids and entering into contracts. The list of exempt machinery and equipment is to be updated annually on a date selected by DGS. In addition, prior to publication on its website, and in each subsequent year, DGS must publish the list in the Pennsylvania Bulletin and provide for a 30-day public comment period. DGS is also required, via a statement of policy, to establish a process for creating the list and resolving disputes with respect to items on the list raised during the public comment period prior to the publication on its website.

This new law is sure to be welcomed by contractors and suppliers as it will eliminate uncertainty in bidding and will reduce disputes over whether certain steel products are produced in sufficient quantities in the United States.

HB 1840 takes effect in 60 days and can be found here.