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

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

City Of Philadelphia Contractor Charged With Mail Fraud

Add yet another contractor to the list of victims of the investigative prowess of the City of Philadelphia’s Office of the Inspector General (OIG).

On May 19, 2014, as a result of an OIG investigation, the U.S. Attorney’s Office charged Airmatic, Inc., a woman-owned, Malvern-based firm doing business with the City of Philadelphia, with defrauding the City of approximately $556,633.03. It is alleged that Airmatic supplied “unapproved, off-contract products” to various City departments in violation of its contracts with the City. If convicted, Airmatic faces a maximum possible sentence of five years of probation, a $500,000 fine, or twice the pecuniary gain/loss, a $400 special assessment, and restitution to the City of Philadelphia.

The takeaway on this latest prosecution against a City contractor? If you are thinking of pulling a fast one by the City, don’t. You will get caught, and you will be punished.

The FBI press release on the charges against Airmatic can be found here. The Information against Airmatic can be found here. The Philly.com article on the charges against Airmatic can be found here.

Posted on May 22, 2014 by Christopher I. McCabe, Esq. in City of Phila., Phila. Inspector General Comments Off

Philadelphia Inspector General Investigation Leads To Arrest Of City Contractor

Add arrest to the long list of risks facing City of Philadelphia contractors who fudge their bids and obtain City contracts by lying on their paperwork.

As a result of an investigation by the Office of Inspector General (OIG), John Hart, owner of Hart Enterprises & Associates, a City contractor and general contracting firm, was arrested and is facing prosecution on ten felony counts of forgery and four misdemeanor counts of unsworn falsifications to authorities. The OIG investigation discovered that Hart Enterprises made numerous misrepresentations in paperwork submitted to the City for five contracts awarded between 2011 and 2012 for work at the Philadelphia International Airport. The OIG also found that the City did not properly screen the paperwork for potential fraud. Hart Enterprises allegedly forged ten surety bonds submitted to the City, and also allegedly misrepresented its financial history and City tax status. The OIG has also recommended that the City debar Hart Enterprises.

The investigation also prompted the OIG to issue a policy recommendation report noting several apparent weaknesses in the City’s contracting process. The report points out that many of the representations made by potential contractors are never independently verified by City officials, allowing dishonest companies to hide negative information and secure City contracts. The report also found “communication and coordination problems” across City departments, which prevent the City from recouping money from contractors for outstanding wage or tax obligations. Among the report’s recommendation are more stringent review of contractor qualifications, better communication in the payment hold process, and independent verification of supporting documentation. According to the OIG, the Hart Enterprises investigation and the policy report are the work of the OIG’s new Contract Compliance Unit, an initiative which is focused on protecting the integrity of the City’s contracting process.

An article in the Philadelphia Inquirer on the OIG investigation and report can be found here.

The OIG policy recommendation report can be found here.

Posted on October 29, 2013 by Christopher I. McCabe, Esq. in City of Phila., Phila. Inspector General Comments Off

City Of Philadelphia Ordinance Imposes New Disclosure Requirement For City Contractors

City of Philadelphia contractors now have yet another requirement to contend with before they can be awarded a City contract. This time, contractors must disclose the gender makeup of their boards and executive staff.

On September 6, 2013, Philadelphia Mayor Nutter signed Bill No. 13045701 which amends section 17-104 of the Philadelphia Code and which mandates that prospective contractors for the City disclose the current percentage of female executive officers in the company and the current percentage of females on the company’s executive and full boards; the company’s aspirational goals for the inclusion of females in executive positions and on the executive and full boards; and the intended efforts by the contractor to achieve the aspirational goals.

Bill No. 13045701 can be found here.

The bill was sponsored by Councilwoman Blondell Reynolds Brown who issued a press release touting the bill. According to the press release, the bill was a recommendation from a 2013 report produced and sponsored by Councilwoman Reynolds Brown and reported out of the City Council Committee on Commerce and Economic Development. In the press release, Councilwoman Reynolds Brown is quoted as follows:

“We cannot manage what we cannot measure. This bill will offer us the transparency needed to determine if a contractor values diversity in the workplace and in leadership positions. It requires prospective contractors to put the gender of their leadership in writing, which tells them up front that gender diversity matters. We want to encourage companies to increase the number of women seated at those tables where major decisions are made, because we know that if women are not at the table, issues that are important to us end up on the menu.”

For what it’s worth, the purpose of this new contractor requirement escapes me. What if a City contractor has no women on its board or on its executive staff? How does the City intend to use this information? For example, the City cannot, in a constitutional manner, mandate that only contractors that have women on their staffs or boards be eligible for City contracts or receive preferential treatment in the award of City contracts. This new requirement is just one more burden added to already burdened City contractors.

Posted on October 23, 2013 by Christopher I. McCabe, Esq. in City of Phila. Comments Off

Subcontractor Officially Debarred From City Of Phila. Contracts

On June 21, 2013, the City of Philadelphia debarred a subcontractor (and its owner) for violation of the City’s minority contracting rules. The subcontractor, JHK, Inc., a subcontractor to prison health contractor Corizon Health Services, Inc., was debarred for two years for falsely representing its role as a woman-owned subcontractor in an agreement with Corizon. JHK was supposed to provide first-aid services to prison inmates as a subcontractor to Corizon. In fact, JHK provided no services.

Philadelphia Inspector General Amy L. Kurland had this to say about the debarment:

“This debarment sends a strong and definitive message: The City of Philadelphia will not tolerate businesses that circumvent the City’s antidiscrimination policies. We will continue working with Procurement, Finance and the Law Department to ensure that legitimate M/W/DSBEs have a fair shot at the contracting opportunities they deserve.”

Corizon itself previously entered into a $1.85 million settlement with the City and agreed to strengthen its corporate compliance program by reviewing all of its subcontracting agreements to ensure compliance with City anti-discrimination policies. My post on that action can be found here. The Inspector General’s executive summary of its investigation into Corizon and JHK can be found here.

In its press release, the Inspector General claims that this is the first involuntary debarment in the City’s history. However, based on my own personal experience with the City’s Law Department, this claim is probably mistaken as I believe that, during the tenure of the late Procurement Commissioner Louis Applebaum, the City officially debarred a City prime contractor for falsifying invoices on a number of City contracts.

The lesson here? At the risk of beating a dead horse, don’t lie or cheat on public contracts, not to mention on any contract. The risk is too great and the reward too little.

Posted on July 16, 2013 by Christopher I. McCabe, Esq. in Bidder Responsibility, City of Phila., DBE/MBE/WBE, Phila. Inspector General Comments Off

Philadelphia Inspector General Shines Spotlight On Use Of MBE Pass-Through

The City of Philadelphia continues its crackdown on abuses in its minority subcontracting program.

On May 6, the Philadelphia Office of the Inspector General (OIG) announced that a former certified, minority-owned business, JHS & Sons Supply Co., was improperly used by ten other prime contractors on City contracts. The OIG previously exposed the improper arrangement between prime contractor William Betz Jr. Inc., and JHS, which resulted in a two-year debarment of the Betz firm. My earlier post on the OIG enforcement action against Betz can be found here.

The ten other contractors identified by the OIG are: Burke Plumbing & Heating, Inc.; Clements Brothers and Sister, Inc.; DMC Environmental Group, Inc.; Buzz Duzz Plumbing, Heating, & Air Conditioning, Inc.; Edward Hughes and Sons, Inc.; Martin Johnson Plumbing and Heating, Inc.; Paragon Contracting; J.J. Magnatta, Inc.; John Stevenson, Inc.; and S. Murawski & Sons. The contracts ranged in value from $100k to $350k. The OIG has reached agreements with eight of these ten prime contractors. JHS has also been removed from the City’s registry of certified, minority-owned contractors.

Inspector General Amy L. Kurland said of her office’s recent action:

It was clear from the beginning that this problem was widespread. These settlements meet our goal of ensuring that companies comply with our antidiscrimination requirements. Our mission is to bring companies into compliance, not to put them out of business.

This latest OIG enforcement action again illustrates the extreme peril that prime contractors face in using “pass-through” entities to satisfy the City’s minority subcontracting requirements. If you think you can get away with it, think again. The City will eventually catch up with you, and by then it will be too late to protect yourself.

Posted on May 9, 2013 by Christopher I. McCabe, Esq. in City of Phila., DBE/MBE/WBE, Phila. Inspector General Comments Off

City of Phila. Contractors Pay $400K To Settle Alleged Violations of M/W/DSBE Contracting Requirements

The City of Philadelphia has once again taken enforcement action in connection with its M/W/DSBE contracting requirements.

Under a no-fault settlement agreement signed with the City on December 13, 2012, two City contractors, Aramark Correctional Services and Strother Enterprises, Inc., have agreed to pay a total of $400,000 to settle the City’s claim that the companies circumvented the City’s minority-business requirements and anti-discrimination policies by submitting inaccurate invoices to the City for payment under food services contracts with the Philadelphia Prisons.

The City’s investigation confirmed that Strother was a City-certified MBE and performed actual work in connection with the Prison food services contracts, and that the arrangement between Aramark and Strother did not increase the amounts paid by the City under the Prison food services contracts. Nonetheless, the City found that Aramark overreported the participation of Strother on the food services contracts. The City alleged that, instead of paying at least 20% of the contract value to Strother, as specified in the contract, Aramark, through the use of a circular billing arrangement, in effect paid Strother approximately 4% of the contract value, an overstatement of more than $2 million.

This is the fourth enforcement action taken by the City this year. My posts on the City’s earlier enforcement actions can be found here, here and here.

If you are a City contractor and you think you can evade the City’s M/W/DSBE contracting requirements, think again! The City’s Inspector General is deadly serious about enforcing the City’s M/W/DSBE contracting rules. If you violate them, you will eventually get caught. When that happens, you will pay a hefty price. Don’t make that mistake! Get sound legal advice before you proceed down a path of no return and potential debarment and significant fines and penalties.

The executive summary of the settlement can be found here. The settlement agreement can be found here.

Posted on December 18, 2012 by Christopher I. McCabe, Esq. in City of Phila., DBE/MBE/WBE Comments Off

City of Phila. Reaches Settlement With City Contractor for Violation of M/W/DSBE Contracting Rules

The City of Philadelphia has yet again taken action against a City contractor – William Betz Jr. Inc., a plumbing supply firm – for violation of the City’s minority contracting program and anti-discrimination policy (now re-authorized in Executive Order No. 3-12). This is the third enforcement action taken by the City this year. My posts on the City’s earlier enforcement actions can be found here and here.

The City and the Betz firm signed a “no-fault” agreement under which the firm agreed not to participate on City contracts for two years, effective October 23, 2012, essentially a two-year debarment. The City found that the Betz firm had committed violations on at least 15 City contracts. The agreement resulted from debarment proceedings which were instituted by the City earlier this year and which stemmed from a claim by the City that the Betz firm had colluded with two other firms to make it appear that a City-certified minority vendor had provided equipment and supplies for a government-funded weatherization project when the minority vendor was paid only for the use of its name and minority certification. As part of its agreement with the City, the Betz firm also agreed to pay the City $128,000 within 90 days.

As I have stated previously, if you are a City contractor or supplier and you think you can evade the City’s M/W/DSBE contracting requirements, think again! There is very good chance that you will get caught eventually, and, when that happens, you will likely pay a hefty price. Don’t make that mistake. Get sound legal advice before you proceed down a path of no return and potential debarment and significant fines.

The City’s full press release on its agreement with the Betz firm can be found here.