Bid Thresholds for Pa. Municipal Flood Control Contracts Increased

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.

Posted on August 13, 2012 by Christopher I. McCabe, Esq. in General Comments Off

Commonwealth Court: Offer to Negotiate Renders Proposal Non-Responsive

Recently, the Commonwealth Court of Pennsylvania had occasion to reiterate a long-standing rule of public bidding that offering counter-terms in a bid will render the bid non-responsive and will result in rejection of the bid.

In 2011, the Pa. Department of General Services issued an RFP for a design build contract for a power plant to serve a new State Correctional Facility. The RFP sought competitive, sealed proposals. Pepco Energy Services, Inc., submitted a proposal in response to the RFP, but stated that it expected to be afforded an opportunity to negotiate the terms of the contract documents. DGS sought clarification from Pepco regarding its expectation of contract negotiations and further informed Pepco that the contract terms were non-negotiable. Nonetheless, Pepco restated that it expected to negotiate contract terms. In response, DGS rejected Pepco’s bid as non-responsive on grounds that it contained “conditional” language.

Pepco filed a protest with DGS asserting that, because contract negotiations were contemplated as part of the RFP process, DGS erred in finding that its proposal was non-responsive. DGS rejected the protest and Pepco filed an appeal with the Commonwealth Court.

On appeal, DGS argued, in part, that Pepco’s alternate language would have allowed it to negotiate the contract terms, whereas the other prospective proposers submitted their proposals based on an understanding that the contract terms were non-negotiable, thus giving Pepco an unfair advantage, and violating long-standing case law requiring all bidders to be treated equally under a common standard. The Commonwealth Court upheld the DGS decision, and found that Pepco had no right to negotiate the terms of the contract documents, either before DGS found it to be a responsible bidder, or before DGS made a decision as to which proposal was most advantageous.

The lessons here? First, in a competitive sealed bidding situation, the contract forms are set in stone and are not subject to further negotiation. They are issued on a “take it or leave it” basis. To hold otherwise would undermine the basic rule of a level playing field in public bidding. Second, read the RFP! If it states that the contract documents are non-negotiable, then they are non-negotiable, no ifs, ands, or buts. Including a statement that the bidder would like to negotiate the contract terms is only an invitation to be rejected as non-responsive.

The decision in PepcoEnergy Services, Inc. v. Department of General Services can be found here.

Posted on August 7, 2012 by Christopher I. McCabe, Esq. in Bid Responsiveness, Court Decisions, DGS Comments Off

Paid Sick Leave Now A Requirement for Some Phila. Contractors and Subcontractors

Some City of Philadelphia contractors and subcontractors now have a new requirement to contend with, along with all of the other assorted rules and regulations that govern their contracts with the City.

Effective July 1, 2012, under the newly amended “Philadelphia 21st Century Minimum Wage and Benefits Standard,” for profit service contractors or subcontractors on City contracts of $10,000 or more in a 12-month period, who have annual gross receipts of more than $1,000,000, must provide their employees with some level of paid sick leave. A service contractor is one with a City contract “for the furnishing of services to or for the City, except contracts where services are incidental to the delivery of products, equipment or commodities.” This would appear to encompass public works contractors, service providers, and professional firms providing service to the City.

A contractor covered by the new law will be required to provide full-time, non-temporary, and non-seasonal employees with at least one hour of paid sick leave for every 40 hours worked, up to a maximum of 32 hours per year, for employers with more than five but less than 11 employees, and up to 56 hours per year, for employers with at least 11 employees.

However, a contractor can obtain a waiver of the new sick leave requirement by submitting an application to the City’s Office of Labor Standards. The application must set forth detailed reasons for an employer’s inability to comply with the new law. For example, the new requirements may be waived, in whole or in part, by a bona fide collective bargaining agreement. Thus, the many City contractors who are also union contractors will likely be unaffected by the new requirement.

In order to ensure compliance with the new requirements, City contractors should first determine whether it applies to them. If so, these contractors should then amend their leave, record-keeping, and posting policies.

The Philadelphia 21st Century Minimum Wage and Benefits Standard can be found here.

Posted on July 31, 2012 by Christopher I. McCabe, Esq. in City of Phila. Comments Off

Philadelphia Prison Contractor Fined $1.85M for Evading Minority Contracting Rules

The City of Philadelphia has once again taken enforcement action against a City contractor for a violation of the City’s minority contracting rules. The City’s inspector general conducted an investigation of Prison Health Services, the City’s contractor for prison health care services, and charged the contractor with using a woman-owned firm as a mere pass-through entity in order to satisfy the City’s minority contracting rules. Prison Health Services agreed in a settlement to a fine of $1.85 million.

The City’s inspector general, Amy Kurland, was quoted in the Philadelphia Inquirer as follows:

“In reality, that company did nothing except give its name to Prison Health Services so Prison Health Services could get the contract,” she said.

Mayor Nutter had even harsher words:

Mayor Nutter called the PHS settlement “a significant moment that sends a very, very strong message to everyone who does business with the city.” “If you engage in inappropriate or illegal activities,” Nutter said, “we will find you and root you out.”

The settlement with the contractor was the third such enforcement action taken since May 2011, when the City debarred a contractor for violation of minority contracting rules on work at the Philadelphia International Airport. My post regarding the City’s prior enforcement actions can be found here. The Philadelphia Inquirer article on the City’s enforcement action can be found here.

If you are a City contractor and you think you can evade the City’s contracting requirements, think again! You will get caught eventually, and you will likely pay a hefty price. Don’t make that mistake. Get advice before you proceed down a path of no return.

Posted on July 26, 2012 by Christopher I. McCabe, Esq. in City of Phila., DBE/MBE/WBE, Phila. Inspector General Comments Off

New State Initiative Will Set Aside Contracts for Small Businesses

On July 19, 2012, Gov. Corbett officially announced the creation of a new state contracting program which is intended to set aside state contracts for small businesses and small veteran-owned businesses. The Department of General Services has formed the Small Business Procurement Initiative and has expanded the Small Diverse Business Program – formerly the Small Disadvantaged Business Program– to include small veteran-owned businesses. The Small Business Procurement Initiative reserves certain state procurements for competition among only self-certified small businesses – those that employ 100 or fewer employees and meet maximum revenue requirements – and enables these small businesses to participate in state contracting opportunities as prime contractors.

The official press release can be found here. A link to the Small Business Procurement Initiative can be found here. FAQ on the initiative can be found here.