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.