Christopher I. McCabe, Esq.

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. Read more

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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

Public Works Payment 101: Final Payment

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Payment issues dominate the world of the public works contractor in Pennsylvania.  When must progress payments be made?  When can the government withhold payment? Is interest due on late payments? When is final payment due? How much retainage can be withheld and when must retainage be reduced and fully released?

Generally, payment obligations on public works contracts are set forth in Part II, Chapter 39, of the Pa. Procurement Code, 62 Pa.C.S. § 3901, et seq.  These provisions control the public owner’s payment obligations, as well as contractors’ obligations for payment to its subcontractors.

This post is the first in a planned series on the payment requirements for public works contracts in Pennsylvania.  Under the Commonwealth Procurement Code, 62 Pa.C.S. § 3941, the public owner’s obligations for final payment are strict.

When retainage is withheld, the public contract must require the architect or engineer to make final inspection within 30 days of receipt of the contractor’s request for final inspection and final payment. If the work is substantially completed, then

the architect or engineer shall issue a certificate of completion and a final certificate for payment, and the government agency shall make payment in full within 45 days except as provided in section 3921, less only one and one-half times the amount required to complete any then-remaining uncompleted minor items, which amount shall be certified by the architect or engineer and, upon receipt by the government agency of any guarantee bonds which may be required, in accordance with the contract, to insure proper workmanship for a designated period of time. [Emphasis added]

Under the terms of the section 3941, once the punch list items are completed, the public owner must make final payment of the amount that was withheld for completion of the punch list .

What does all of this mean in plain English?

Once “substantial completion” is achieved, (1) an inspection must be performed within 30 days after a contractor’s request, (2) the architect must issue a certificate of completion and for payment, (3) the architect must prepare a punch list and assign a value for the punch list items, and (4) payment, less one and a half times the punch list value, must be made to the contractor within 45 days.  Final payment must then be made once all of the punch list items are completed.

If you are public works contractor, it is imperative that you request a final inspection after substantial completion. This request triggers the final payment obligations of the public owner. This request also triggers the public owner’s obligation to release retainage. Contrary to popular practice, a public owner is not permitted to hold 5% retainage (or more) until the literal final completion of the work.

If you need assistance on a public works payment 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 Procurement Code, Public Works Payment Rules Leave a comment

How To Obtain A Copy Of A Payment Bond On A Public Project

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Let’s assume you are a first- or second-tier subcontractor on a public project and you’ve been stiffed by the prime contractor. You qualify as a claimant under the Pa. Public Works Contractors Bond Law of 1967, but, without a copy of the prime contractor’s payment bond, you cannot proceed with a claim against the surety. The prime refuses to cough up a copy of the bond. How do you get a copy of the bond?

The Bond Law provides an answer. A subcontractor on a public project has an absolute right to obtain a certified copy of a payment bond upon submission of an affidavit to the public owner. The affidavit must state that (a) the subcontractor has furnished material or performed labor for completion of the work provided for in the contract, and (b) it has not been fully paid for such labor or material.  The public owner is permitted to charge the subcontractor a fee to cover the actual cost of the preparation of such copy.

Here’s a trick: if you request a copy of a payment bond with the required statements, and add that the statements are also made “subject to the penalties of 18 Pa.C.S. § 4904 (relating to unsworn falsification to authorities),” then the request will double as the required affidavit.

If you need assistance with this 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 Surety and Bonding Leave a comment

Public Bidding 101: Emergency Bidding

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Emergency contracting for repairs, maintenance, and public safety are a routine occurrence with public owners across the Commonwealth. A building in danger of collapse needs to be torn down on an immediate basis to ensure public safety.  A system fails in a public building requiring an emergency repair to restore the system to proper working order. A roadway or bridge is washed out during a storm mandating immediate action to restore access for the public and emergency vehicles. In such dire situations, can a public owner bypass the normal rules of competitive bidding and award a contract an expedited basis? The answer is yes, with some caveats.

Where an emergency threatens the health, welfare, or safety of the citizenry, and does not permit a delay in response, a public owner can dispense with the formal rules of public bidding such as timing of award and public notice. On the other hand, even in an emergency, the public owner cannot simply award a contract without competition.  An emergency may relax the requirement for notice and advertising, but it doesn’t eliminate competition. After all, if a public owner can invite pricing from one contractor in an emergency, there is usually no good reason why it can’t also invite pricing from other contractors at the same time.

This principle is aptly illustrated by the emergency bidding section in the Commonwealth Procurement Code, at 62 Pa.C.S. § 516, which provides:

The head of a purchasing agency may make or authorize others to make an emergency procurement when there exists a threat to public health, welfare or safety or circumstances outside the control of the agency create an urgency of need which does not permit the delay involved in using more formal competitive methods. Whenever practical, in the case of a procurement of a supply, at least two bids shall be solicited. A written determination of the basis for the emergency and for the selection of the particular contractor shall be included in the contract file.

Thus, the Procurement Code recognizes that, even in the face of an emergency, competition and transparency are still required.

Likewise, the Public School Code, at 24 P.S. § 7-751, also allows for emergency contracting but still requires competition:

… Provided, That, if due to an emerency a school plant or any part thereof becomes unusable, competitive bids for repairs or replacement may be solicited from at least three responsible bidders, and, upon the approval of any of these bids by the board of school directors, the school district may proceed at once to make the necessary repairs or replacements in accordance with the terms of said approved bid or bids. …

In Upper Darby Twp. v. Ramsdell Construction Co., a 1943 trial court decision, the court noted that “statutory requirements that municipalities must have contracts in writing and advertise for bids have been held not to apply to a situation where there is an emergency.” But the court also added: “The important thing, therefore, in these cases would seem to be the determination as to whether or not there was an emergency.”

The bottom line is that, in a documented emergency requiring immediate attention, a public owner can dispense with the normal rules of public bidding while still having to seek competition.

If you need assistance on a public bidding 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 Procurement Code, Public Bidding 101, Public School Code Leave a comment

Losing Bids Under Public-Private Transportation Partnership Law Not Subject To Disclosure Under Right-To-Know Law

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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

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

Is Best Value Contracting The Future For The City Of Philadelphia?

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Is “best value” contracting the next, new thing for the City of Philadelphia?

The Philadelphia City Council recently passed a resolution proposing an amendment to the Philadelphia Home Rule Charter that would give the Procurement Department the option to award contracts, which are normally awarded to the lowest, responsible bidder, to “the responsible bidder whose proposal provides the City with the best value.” This amendment would radically alter a provision in Article VIII, Chapter 2, of the Charter that has been in place since the Charter was first enacted in 1952. Read more

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

Pa. Prevailing Wage Act, Revisited

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The Pa. Prevailing Wage Act mandates that workers on Pennsylvania public construction, reconstruction, demolition, alteration, or repair projects costing more than $25,000, other than those involving “maintenance work,” must be paid the general prevailing minimum wage rates. “Maintenance work” is defined in the Act as “the repair of existing facilities when the size, type or extent of such facilities is not thereby changed or increased.”

According to the Pa. Supreme Court’s 2008 decision in Borough of Youngwood v. Pennsylvania Prevailing Wage Appeals Board, the definition of maintenance work must be narrowly construed:

[B]ecause the Act provides that “public work” includes “repair” and that the exception to “public work” (i.e., “maintenance work”) includes “repair” of a specific type, it logically follows that the General Assembly intended that “maintenance work” be considered a lesser or minor form of “repair.” Therefore, we hold that in construing the Act, the focus must fall principally on the Act’s clear mandate that prevailing wages are to be paid to workers on public works projects that meet the criteria of 43 P.S. § 165-2(5), taking into consideration that “maintenance work” is an exception to this mandate and must be narrowly construed. The linguistic construction of “maintenance work,” in turn, must recognize that the Act defines “maintenance work” as a subset of “repair,” and must be accordingly viewed in this narrow manner.

The Commonwealth Court has further held that “maintenance work” is “the repair of existing facilities, that is, facilities that at some point were operating properly but have now failed to do so.” Read more

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Posted on by Christopher I. McCabe, Esq. in Prevailing Wage Leave a comment

Federal Judge Criticizes Mystery Procurement Practices Of Delaware River Port Authority

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A recent federal court decision rescinding a $17.8 million bridge painting contract award to the second low bidder ripped the cover off Delaware River Port Authority (DRPA) procurement practices that were “shrouded in mystery and obscured from public scrutiny.”  Although applying New Jersey law, the reasons underlying the decision of Judge Noel L. Hillman of the U.S. District Court for New Jersey are equally applicable to Pennsylvania bidding disputes.

In May 2016, the DRPA issued a bid for a painting contract for the Commodore Barry Bridge. Seven bids were received. Alpha Painting & Construction Company was the low bidder, with a price of $17,886,000; Corcon, Inc., was second with a price just $10,200 higher. Six weeks later, the DRPA rejected Alpha’s bid as “not responsible” for two reasons: Alpha’s bid was missing OSHA 300 forms, and Alpha did not have reported EMF (experience modification factors) scores that reflect a contractor’s workers’ compensation experience on prior jobs.  The DRPA then awarded the contract to Corcon.

After the DRPA denied Alpha’s protest, Alpha sued the DRPA for an injunction rescinding the award to Corcon and ordering an award to Alpha.  After three days of testimony, Judge Hillman determined that the DRPA’s stated reasons for the rejection of Alpha’s bid were arbitrary and capricious, and ordered the DRPA to award the contract to Alpha. Read more

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Posted on by Christopher I. McCabe, Esq. in Bid Responsiveness, Court Decisions, DRPA Leave a comment