What Rules Govern The Award Of Public Contracts By The Philadelphia Gas Works?

Have you ever wondered what rules govern the award of public contracts by the Philadelphia Gas Works (PGW)? Believe it or not, the answer to this question requires analysis of an ancient Philadelphia Gas Commission document that is more than 50 years old!

PGW is a collection of assets owned by the City of Philadelphia (City) that are used to manufacture and deliver natural gas to citizens residing within the City’s borders. PGW is managed by a non-profit entity, the Philadelphia Facilities Management Corporation (PFMC), pursuant to a 1972 agreement between the City and PFMC. The agreement is itself is authorized by Ordinance No. 455, enacted by the Philadelphia City Council in 1972. The Gas Commission has general oversight over the management and operation of PGW by PFMC.

Posted on May 10, 2016 by Christopher I. McCabe, Esq. in City of Phila., PGW Comments Off

Public Radio Show Interviews Me On City Of Philadelphia No-Bid Purchase Of Police Body Cameras

Yesterday the public radio show, APM Marketplace, aired a business story from a local WHYY reporter, Bobby Allyn, where I was asked to comment on the City of Philadelphia’s recent, no-bid purchase of police body cameras from Taser International.

Here is an excerpt from the story:

Sitting in his office on the 31st floor of a building in Center City Philadelphia, attorney Chris McCabe read the wonky language of a memo prepared by city officials.

“Currently the city has no procurement vehicle for these specific goods and services, and a competitive bid for these services would be time prohibitive,” McCabe said, reading the memo.

It means that the city hasn’t opened up a formal bidding process for a $1.4 million body camera contract expanding a pilot program. Doing so, officials determined, would take too long. McCabe, who negotiated city contracts for more than a decade, said it was unusual, and that the bidding process was there so that contractors win not based on whom they know, but instead on who has the best price.

“You have to protect the taxpayer from fraud, corruption and favoritism, and that’s done through a publicly transparent competitive bidding process,” McCabe said.

You can read and listen to the entire Taser story here.

My earlier post on the City’s no-bid purchase of the police body cameras is here.

Posted on May 4, 2016 by Christopher I. McCabe, Esq. in City of Phila. Comments Off

Pa. Steel Products Procurement Act, Revisited

The Pa. Steel Products Procurement Act became law in 1978 with a stated purpose to protect the U.S. market for steel production and supply.

At its core, the Act provides that, if any steel products are to be used or supplied on a public works project in Pennsylvania, then only “steel products,” as that term is defined in the Act, can be used or supplied on the project.

The Act defines “steel products” as follows:

Products rolled, formed, shaped, drawn, extruded, forged, cast, fabricated or otherwise similarly processed, or processed by a combination of two or more of such operations, from steel made in the United States by the open hearth, basic oxygen, electric furnace, Bessemer or other steel making process and shall include cast iron products and shall include machinery and equipment listed in United States Department of Commerce Standard Industrial Classification 25 (furniture and fixture), 35 (machinery, except electrical) and 37 (transportation equipment) and made of, fabricated from, or containing steel components. If a product contains both foreign and United States steel, such product shall be determined to be a United States steel product only if at least 75% of the cost of the articles, materials and supplies have been mined, produced or manufactured, as the case may be, in the United States. Transportation equipment shall be determined to be a United States steel product if it complies with section 165 of Public Law 97-424 (96 Stat. 2136).

So, what does this mean?

Posted on April 21, 2016 by Christopher I. McCabe, Esq. in Steel Products Act Comments Off

The U.S. DOT Disadvantaged Business Enterprise (DBE) Program

I have posted on numerous occasions about the U.S. Department of Transportation’s disadvantaged business enterprise (DBE) program. The DBE program is especially relevant to public contractors and subcontractors performing work for PennDOT, SEPTA, the Philadelphia International Airport, the Philadelphia Streets Department, the Port Authority of Allegheny County, and other public entities in Pennsylvania that are managing projects funded with federal transportation dollars.

In this post, I’ll provide some limited background information and links about the DBE program and how the program operates and what rules and regulations apply.

Posted on April 5, 2016 by Christopher I. McCabe, Esq. in DBE/MBE/WBE Comments Off

DBE Pass-Through Scheme Alleged On PennDOT Platt Bridge Project In Phila.

According to a criminal information filed in the U.S. District Court for the Eastern District of Pennsylvania, still another fraud scheme involving the U.S. Department of Transportation’s disadvantaged business enterprise (DBE) Program has been uncovered, this time on the federally-funded George C. Platt Memorial Bridge project in Philadelphia.

In April 2011, PennDOT awarded a $42.7M contract to perform structural steel painting and repairs on the Platt Bridge to a joint venture consisting of Hercules Painting Company, Inc., of New Castle, Pa., and Vimas Painting Company, Inc., of Lowellville, Ohio. During the bid process, the Hercules-Vimas JV allegedly committed to subcontract $3.1M in DBE work to Vertech International, Inc., to supply paint materials for the project. Instead, the Hercules-Vimas JV allegedly negotiated contracts and ordered materials for the Platt Bridge project directly with non-DBE suppliers, with Vertech allegedly acting as a pass-through to give the appearance that DBE requirements had been satisfied. PennDOT awarded approximately $1.97M in DBE credit to the Hercules-Vimas JV. Vertech was allegedly paid 1.75% of the face value of the invoices it processed to act as a pass-through.

Posted on March 17, 2016 by Christopher I. McCabe, Esq. in DBE/MBE/WBE, PennDOT Comments Off

Can The City Of Phila. Purchase Police Body Cameras Under An Existing Contract For Tasers?

Can a public entity add-on to an existing contract in order to satisfy a need for a new and different service, supply or equipment?

On March 7, WHYY’s Newsworks reported that that is precisely what the City of Philadelphia plans to do under an existing stun gun contract with Taser International. According to the Newsworks report, the City intends to spend more than $200,000 under the Taser contract to purchase police body cameras:

City records show that Philadelphia’s Police Department has a $705,361 contract with Taser that is expected to cover hundreds more cameras, the cost of evidence storage and equipment upgrades. It will also pay for stun guns.

Officials confirm, $210,000 of that will pay for hundreds of new body cameras.

Philadelphia had an existing contract with Taser for the stun guns, so it was easy to piggyback on that for the body cameras.

The City’s intent to spend more than $200,000 to purchase police body cameras under the Taser contract, without open, competitive bidding, may violate the public bidding rules set forth in Article VIII, Chapter 2, of the Phila. Home Rule Charter. When it comes to the purchase of generic items, like body cameras, the bedrock rule for City contracting is sealed, competitive bidding, duly advertised, with the contract being awarded to the lowest responsive, responsible bidder.

Posted on March 11, 2016 by Christopher I. McCabe, Esq. in City of Phila. Comments Off

City Of Phila. Seeks To Implement Reverse Auction Bidding

The City of Philadelphia has issued a Request for Proposals (RFP) to implement a reverse auction bidding procedure for the purchase of certain supplies, equipment, services, and concessions in lieu of ordinary, sealed paper bids.

In a reverse auction bidding, sellers compete with each other, in a dynamic, real time environment, until the lowest price is reached, thereby accruing to the buyer – here the City of Phila. – potential savings that might otherwise not be achieved with traditional, one-time paper bid submissions.

Posted on March 9, 2016 by Christopher I. McCabe, Esq. in City of Phila., Electronic Bidding Comments Off

DBE Pass-Through Scheme Alleged On Two PennDOT Bridge Projects In Phila.

According to a criminal information filed in the U.S. District Court for the Eastern District of Pennsylvania, still another fraud scheme involving the U.S. Department of Transportation’s disadvantaged business enterprise (DBE) Program has been uncovered on two different federally-funded projects in Philadelphia.

In September 2009, PennDOT awarded a $70.3M contract to a tri-venture consisting of a Philadelphia-based highway contractor, Alpha Painting & Construction Co., Inc., of Baltimore, and Liberty Maintenance, Inc., of Campbell, Ohio, to perform structural steel painting and repairs, and concrete repairs, on the I-95 Girard Point Bridge in Philadelphia. As part of the contract, the tri-venture committed to subcontract $4.7M of work to Markias, a now-defunct certified DBE, to supply materials for use on the the contract. Alpha and Liberty formed a joint venture and allegedly ordered the needed materials directly from non-DBE suppliers, and allegedly used Markias as a pass-through to give the appearance that the DBE requirements had been satisfied. PennDOT awarded approximately $3.26M in DBE credit to the tri-venture based on the DBE work allegedly performed by Markias.

Posted on March 3, 2016 by Christopher I. McCabe, Esq. in DBE/MBE/WBE, PennDOT Comments Off

Pennsylvania Steel Erector Indicted In DBE Pass-Through Scheme And Suspended On Federally Funded Contracts

If you are a prime contractor working on federally-funded transportation projects, beware of fraud involving the U.S. Department of Transportation’s disadvantaged business enterprise (DBE) program. A recently exposed “pass-through” scheme involving $27 million in federally-funded contracts scheme was engineered together by subcontractor Century Steel Erectors Co., and WMCC, Inc., a certified DBE.

Posted on February 25, 2016 by Christopher I. McCabe, Esq. in DBE/MBE/WBE, PennDOT Comments Off

DBE Fraud Guilty Pleas Result In Sentences Of Probation And Restitution Of $1.3 Million

In my post from yesterday, found here, I reported on the DBE “pass-through” fraud scheme engineered by Carl M. Weber Steel Service, Inc., and Karen Construction, Inc.

On January 11, 2016, Dennis and Dale Weber, the owners of Weber Steel, were each sentenced to six months’ home confinement and five years’ probation, and Weber Steel was placed on three years’ probation. All three were also ordered to jointly pay $1 million in restitution to the Federal Highway Administration (FHWA).

On February 3, 2016, Judy Noll, the owner of Karen, was sentenced to three years’ probation and ordered to separately pay $336,219 in restitution to FHWA.

The U.S. Department of Transportation’s Office of Inspector General press release on the sentencing can be found here.