Is The Separations Act In Danger Of Repeal?

In Pennsylvania, public construction projects are nearly always governed by the Separations Act, a law that was passed in 1913, more than 100 years ago. The Separations Act (variations of which also appear in statutes governing Boroughs, Townships, and other Read more

Philadelphia Voters Approve Best Value Contracting

It's official! Philadelphia voters have voted in favor of the best value ballot question. The Philadelphia City Charter will now be amended to add the following new subsection at section 8-200: (5) In lieu of awarding a contract to the lowest responsible bidder, the Read more

Committee of Seventy Throws Its Weight Behind City Of Philadelphia Best Value Initiative

On Tuesday, May 16, Philadelphia voters will be asked to vote YES or NO to the following ballot question: “Shall The Philadelphia Home Rule Charter be amended to allow for the award of certain contracts based on best value to the City?" The Read more

Best Value Contracting Question On Philadelphia Primary Election Ballot

Is "best value" the next, best thing in City of Philadelphia procurement? We will all know soon enough.  The best value initiative is on the official election ballot for the upcoming Philadelphia primary election. On May 16, 2017, voters in Philadelphia Read more

E-Verify, Revisited

The Pennsylvania Public Works Employment Verification - Act 127 of 2012 but better known as E-verify - has now been the law in Pennsylvania for more than four years, since January 1, 2013. E-verify requires that all public works contractors and subcontractors must utilize the Read more

Is The Separations Act In Danger Of Repeal?

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In Pennsylvania, public construction projects are nearly always governed by the Separations Act, a law that was passed in 1913, more than 100 years ago.

The Separations Act (variations of which also appear in statutes governing Boroughs, Townships, and other government entities) provides as follows:

Hereafter in the preparation of specifications for the erection, construction, and alteration of any public building, when the entire cost of such work shall exceed four thousand dollars, it shall be the duty of the architect, engineer, or other person preparing such specifications, to prepare separate specifications for the plumbing, heating, ventilating, and electrical work; and it shall be the duty of the person or persons authorized to enter into contracts for the erection, construction, or alteration of such public buildings to receive separate bids upon each of the said branches of work, and to award the contract for the same to the lowest responsible bidder for each of said branches.

So, what does this mean? It means that for public building construction in excess of $4,000, all public owners must prepare separate specifications, solicit separate bids, and award separate contracts for general construction, plumbing, heating and ventilating, and electrical work.

Is any public work excluded? The Act applies to work on a “public building” which has been applied broadly to cover potentially any building paid for with public funds.

Over the years, the Separations Act has come under attack on many fronts, with detractors claiming that it is a costly relic that is hardly ever used in the private sector as a project delivery system, and defenders contending that separate contracts reflect lower costs for the public, without the mark-ups of a general contractor.

In March, Jon O’Brien, executive director of the Keystone Contractors Association, wrote an op-ed in the York Dispatch calling for repeal of the Separations Act. Mr. O’Brien argues that the Separations Act perpetuates “an inefficient contract delivery method fraught with problems such as delays and claims, which are two culprits for projects being over-budget. This multiple prime delivery system only exists in three states and this system is not used in the federal, private, residential, and commercial markets.”

In response, Chad M. Jones, Executive Director of the National Electrical Contractors Association of Western Pennsylvania, issued a commentary in favor of the Separations Act, arguing that multiple prime bidding “gives electrical and specialty contractors the ability to stand on their own efficacy and quality with the security of a prime contract, without having to build in the extra costs associated with the risk of payment delays and other problems that often occur as a subcontractor.”

John Baer, a columnist with the Philadelphia Inquirer, recently wrote a column calling for a re-examination of the Separations Act.

Concerned Contractors, a coalition of open shop and union shop contractors organized to represent small business owners and construction workers across the state, maintains a website with resources that support the Separations Act. One resource is a table showing multi-prime vs. single prime bid results.

Time will tell whether the Separations Act survives this latest onslaught which seems to occur every few years in Pennsylvania.

If you need assistance on a Separations Act issue, feel free to call or email me for a no-cost consultation.  I’ll be happy to assist in anyway possible.

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Posted on by Christopher I. McCabe, Esq. in Separations Act Leave a comment

Philadelphia Voters Approve Best Value Contracting

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It’s official! Philadelphia voters have voted in favor of the best value ballot question.

The Philadelphia City Charter will now be amended to add the following new subsection at section 8-200:

(5) In lieu of awarding a contract to the lowest responsible bidder, the Procurement Department may award a contract to the responsible bidder whose proposal provides the City with the best value, only when the Procurement Commissioner has determined in writing that award to the lowest responsible bidder may not yield the best value to the City because the goods, construction, alterations, repairs, maintenance or other services that are the subject of the award have qualitative characteristics that make them better suited to an open, competitive solicitation of proposals. Such characteristics may include the integration of technical or professional service elements, quality differences among proprietary products and services, incorporation of City contracting objectives, including but not limited to, participation in City contracts by disadvantaged business enterprises pursuant to Article 6-109 of this Charter (related to participation goals), or other attributes that make price alone a poor indicator of best value. In such instances, the award of the contract shall be subject to any applicable process established by City Council pursuant to subsection (1), above, applicable generally to contracts not subject to the lowest responsible bidder requirement; and the awarding decision shall be made according to criteria established by the Procurement Department by regulation. For contracts involving an expenditure in excess of the amount set forth in subsection (2), above, as adjusted, the applicable criteria shall be set forth in any solicitation for proposals

The devil is in the details, as they say, and only time will tell whether favoritism will affect the selection and award of “best value” contracts, or whether well-meaning City of Philadelphia officials and their attorneys can insulate the award of such contracts from improper influences, both inside and outside the government.

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Posted on by Christopher I. McCabe, Esq. in Best Value Contracting, City of Phila. Leave a comment

Committee of Seventy Throws Its Weight Behind City Of Philadelphia Best Value Initiative

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On Tuesday, May 16, Philadelphia voters will be asked to vote YES or NO to the following ballot question: “Shall The Philadelphia Home Rule Charter be amended to allow for the award of certain contracts based on best value to the City?”

The ballot question is vague and confusing, and fails to inform voters that the City of Philadelphia now awards contracts on the basis of “lowest responsible bid,” a method that many believe already results in “best value” contracting for the City.

Nonetheless, the nonpartisan Committee of Seventy recently announced its support for the ballot question. The Committee of Seventy is not typically thought of as proficient on matters of public procurement, so it formed a task force comprised of Board members “with contracting experience in the public- and private-sector” to study the issue.

According to its press release, the Committee of Seventy found the proposed Charter amendment “to be a step in the right direction to modernize the city’s procurement system,” even though the efficiency and integrity of the new process will depend upon yet-to-be-issued regulations.

In response to my recent post on this topic, I was also made aware of other pro-best value commentary by Kate Vitasek in Forbes magazine who argues that best value “will open the city’s marketplace to more opportunity for business than ever before, including minority, women, and disabled-owned business.”

My original post on the City’s best value initiative set forth the actual wording of the proposed amendment to the City Charter.

In December, the Philadelphia Inquirer’s editorial against the best value ballot question argued that flexibility and subjective standards can lead to favoritism and breed suspicion about who will really benefit from best value contracting.

After reading the Committee of Seventy and Forbes commentaries, my position remains the same: if all bidders are equally qualified and competent to perform the contract in question, and if the service or product being contracted for is clearly specified, why isn’t price and cost always the best indicator of best value? What else can be obtained through best value contracting, if you have two equally competent contractors competing for the same contract under the same specifications and requirements?

In its press release, the Committee of Seventy states: “The best value amendment would allow the option to award such contracts using other criteria in addition to cost.”  This is a highly misleading statement, as nothing currently prohibits the City from considering “other” criteria in awarding a public contract, provided that such criteria are published prior to receipt of bids and the bidding is conducted on a level playing field.

Further, the notion that best value will allow the City to “weed out” unqualified bidders, or will allow the City to consider “schedule” or “past performance,” or will open up the “marketplace” to other bidders, as suggested by the Committee of Seventy and the Forbes commentator, is wildly overblown. Under its present “lowest responsible bid” procurement rules, the City is perfectly free to consider past performance and can easily eliminate unqualified bidders through a pre-qualification process or by setting forth stringent qualification criteria in the bid specifications. In fact, the Philadelphia Code presently mandates that all City public works bidders be pre-qualified. Moreover, the courts in Pennsylvania have consistently held that public officials have broad discretion to determine who is qualified to perform a public contract, so it is unlikely that any court would second guess a decision by the City to reject an unqualified bidder.

Finally, the suggestion that best value contracting will eliminate change orders is absurd. Change orders occur on public works projects when there are changes to the work, or when unforeseen conditions are encountered. There is no valid reason to believe that change orders will suddenly disappear on a best value contract.

In my considered view, the lowest price obtained from a qualified and competent bidder is the epitome of a “best value” public contract.  Changing from low bid to best value, even for just a few contracts, opens the door to arbitrariness, favoritism, collusion, and corruption, all of which were rampant when the “lowest responsible bid” procurement standard was implemented in 1952.

On May 16, I plan to vote NO on the best value ballot question.

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Posted on by Christopher I. McCabe, Esq. in Best Value Contracting, City of Phila. Leave a comment

Best Value Contracting Question On Philadelphia Primary Election Ballot

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Is “best value” the next, best thing in City of Philadelphia procurement? We will all know soon enough.  The best value initiative is on the official election ballot for the upcoming Philadelphia primary election.

On May 16, 2017, voters in Philadelphia will be asked to answer “yes” or “no” to the following question: “Shall The Philadelphia Home Rule Charter be amended to allow for the award of certain contracts based on best value to the City?”

If passed by the voters, best value will certainly prove to be a momentous change for Philadelphia procurement, though it remains to be seen just how momentous. Only time will tell.

My original post and thinking on the best value initiative can be found here.

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Posted on by Christopher I. McCabe, Esq. in Best Value Contracting, City of Phila. Leave a comment

E-Verify, Revisited

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The Pennsylvania Public Works Employment Verification – Act 127 of 2012 but better known as E-verify – has now been the law in Pennsylvania for more than four years, since January 1, 2013.

E-verify requires that all public works contractors and subcontractors must utilize the federal government’s E-Verify system to ensure that all employees performing work on public works projects are authorized to work in the United States.

Prime contractors are cautioned that the Pa. Department of General Services continues to enforce the requirements of E-verify, as is evident from the formal notices posted on the DGS E-verify webpage.  For example, in 2016, more than 50 contractors received warning letters concerning violations of E-verify.

Prime contractors are also cautioned that they must inform their subcontractors of their duty to comply with E-verify.  If they do this, then prime contractors will not liable for a subcontractor’s failure to comply with E-verify.

DGS has also posted an FAQ for E-verify. This can be found here.  My original post on E-verify can be found here.

If you need assistance on an E-verify issue, call or email me for a no-cost consultation.  I’ll be happy to assist in anyway possible.

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Posted on by Christopher I. McCabe, Esq. in DGS, E-Verify Leave a comment
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