City Of Allentown Permitted To Use RFP Process For Waste Services Contract

In a decision issued on July 20, 2017, the Commonwealth Court of Pennsylvania upheld the City of Allentown's use of the Request for Proposals (RFP) process in a contract award. In 2015, Allentown issued an RFP for the award of a Read more

Are RFQs Immune From Protest Under The Procurement Code?

If you respond to a Request for Quotes (RFQ) issued by a Commonwealth department or agency, can you protest if the resulting purchase order is awarded to another bidder? According to the Commonwealth's Office of Administration, the answer is no. Read more

Pennsylvania Initiates Disparity Study For Small Diverse Business Program

In June 2017, the Commonwealth of Pennsylvania initiated a disparity study that will provide information to help the Department of General Services (DGS) implement the Pennsylvania's Small Diverse Business Program. The expected completion date for the disparity study is Read more

Commonwealth Court: Laches Requires Reversal Of Injunction Issued For Violation Of Separations Act

A recent decision by the Commonwealth Court of Pennsylvania illustrates the extreme perils of waiting too long to challenge a violation of the public bidding laws. In December 2015, the West Jefferson Hill School District solicited bids for a new Read more

Regulations Issued For City of Philadelphia Best Value Contracting

On July 27, the regulations governing the City of Philadelphia's purchase of goods and non-professional services under the "best value" standard became official. Under the regulations, the Procurement Commissioner can permit a contract to be awarded under the "best value" Read more

DBE/MBE/WBE

ENR Editorial on U.S. Department of Transportation DBE Program

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On July 16, 2012, Engineering News-Record published an editorial on the U.S. Department of Transportation’s DBE program.  The US DOT DBE program principally affects contractors working for entities receiving federal transportation funding, such as PennDOT, SEPTA, and the City of Philadelphia Streets Department, among other public entities.  The editorial raises some salient points about the US DOT DBE program and is worth checking out.  The full editorial can be found here.

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Posted on by Christopher I. McCabe, Esq. in DBE/MBE/WBE Leave a comment

Bridge Contractor Found Guilty in 15-Year DBE Scheme

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Once again, the U.S. Department of Transportation’s DBE program is in the news, with a warning for contractors who might think they can evade the DBE rules applicable to federally funded public contracts.  In April 2012, the owner of Schuylkill Products, Inc., a Pennsylvania bridge contractor, was found guilty on 26 of 30 charges in an indictment including conspiracy to defraud the U.S. DOT in a DBE fraud scheme.

Joseph W. Nagle, the contractor-owner, was convicted of participating in a 15-year-long scheme, where he and other executives at his firm diverted over 300 PennDOT and SEPTA construction contracts to the firm and a subsidiary firm that were reserved for DBE’s.  The contractor owner and his co-conspirators executed the scheme by using Marikina Construction Corporation, a small Connecticut highway construction firm, as a “front” company to obtain these lucrative government contracts.

This prosecution is Exhibit A on why contractors should be especially wary of trying to circumvent the strict DBE rules on U.S. DOT-funded public contracts.  If you happen to be caught, the penalties – both criminal and civil – can be severe, including jail time.

According to the press release issued by the United States Attorney’s Office for the Middle District of Pennsylvania, this recent prosecution is just one salvo in the federal government’s continuing battle to shut down DBE fraud schemes:

 “Preventing and detecting DBE fraud are priorities for the Secretary of Transportation and the USDOT Office of Inspector General,” said Doug Shoemaker, OIG Regional Special Agent in Charge. “This significant conviction, in what is the largest reported DBE fraud case in USDOT history, will serve as a clear signal that severe penalties await those who would attempt to subvert USDOT laws and regulations. Prime contractors and subcontractors are cautioned not to engage in fraudulent DBE activity and are encouraged to report any suspected DBE fraud to the USDOT-OIG. Our agents will continue to work with the Secretary of Transportation, the Administrators of the Federal Highway and Transit Administrations, and our law enforcement and prosecutorial colleagues to expose and shut down DBE fraud schemes throughout Pennsylvania and the United States.”

The full press release explaining the prosecution and its background can be found here.  This case has some similarities to the recent prosecution of an Ohio contractor which I commented about here.

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Posted on by Christopher I. McCabe, Esq. in DBE/MBE/WBE, PennDOT Leave a comment

Denial of WBE Certification Non-Reviewable

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Late last year, the Commonwealth Court ruled in Wilco Mechanical Services, Inc. v. Department of General Services that a DGS decision denying a company’s application for certification under DGS regulations as a Women’s Business Enterprise (WBE) was not reviewable.  Certification as a WBE would have allowed the company to participate on state contracts as a subcontractor, with the prime contractor receiving credit for using the company.

The Court found that WBE certification process did not operate pursuant to either a regulation or a statute but as part of a general statement of policy.  Moreover, the company seeking certification did not have a personal right or a property right in such a certification.  Therefore, the rejection of the WBE certification application was not an adjudication and was not appealable.

As a result of this ruling, certification decisions regarding MBEs and WBEs are now vested within the sound discretion of the public officials reviewing such applications, and the courts are unavailable for relief in the event of a rejection of an application for MBE or WBE status.

The Commonwealth Court decision can be found here.  The website for the DGS Bureau of Minority and Women Business Opportunities can be found here.  Instructions on how to become an MBE or WBE under the DGS program can be found here.

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Posted on by Christopher I. McCabe, Esq. in DBE/MBE/WBE, DGS Leave a comment

$500K Settlement for Ohio Contractor in DBE Case on Cleveland Airport Project

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Federal prosecutors in Ohio recently announced that an Ohio contractor has agreed to pay the U.S. Justice Department $500,000 to settle complaints that the contractor improperly claimed credit for minority contractors on a $130 million runway expansion at Cleveland Hopkins International Airport.

Federal prosecutors accused the contractor of submitting false claims that made it appear that the contractor was in compliance with the U.S. Department of Transportation disadvantaged business enterprise program, which was required for the contractor to obtain and keep its contract. The contract was funded by the U.S. DOT.

A Cleveland Plain Dealer article on the complaints and the settlement can be found here.

This settlement is proof, once again, that contractors who evade the DBE rules on federally-funded transportation contracts are at serious risk for significant civil sanctions and potentially criminal penalties, including enforcement action under the federal False Claims Act.  Rather than seeking to meet DBE goals by using questionable “pass-through” entities, contractors should remember that the U.S. DOT DBE rules require only good faith efforts to meet the specified contracting goals. The DBE goals cannot be enforced as quotas, and a contractor’s failure to meet the goals should not disqualify it from receiving a contract, so long as the contractor can show that it has expended reasonable and good faith efforts to meet the goals. A denial of the contract for failure to meet the goals, in the face of good faith efforts, could subject the public entity to an equal protection claim.

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Posted on by Christopher I. McCabe, Esq. in DBE/MBE/WBE, General Leave a comment

What is the PA Unified Certification Program?

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The Pennsylvania Unified Certification Program (PA UCP) was created as a result of a change in the Disadvantaged Business Enterprise (DBE) regulations issued by the U.S. Department of Transportation, and is designed to provide “one-stop shopping” for firms seeking certification as a DBE in accordance with 49 CFR Part 26 and as an Airport Concession DBE (ACDBE) in accordance with 49 CFR Part 23.  These regulations are issued by the US DOT and governn its DBE program which mandates disadvantaged contractor goals in federally-funded contracts. Information on the US DOT program can be found here.

The PA UCP is comprised of all Pennsylvania recipients of funds from the Federal Aviation Administration (FAA), the Federal Highway Administration (FHWA), and the Federal Transit Administration (FTA).

The PA UCP makes all certification decisions on behalf of all agencies and organizations in Pennsylvania with respect to participation in the DBE and ACDBE Programs. In other words, firms certified as a DBE or ACDBE with the PA UCP are eligible to participate on any FAA-, FHWA-, or FTA-funded contract as a DBE or ACDBE.

The PA UCP website can be found here. Click here to learn how to become certified as a DBE or ACDBE.

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Posted on by Christopher I. McCabe, Esq. in DBE/MBE/WBE Leave a comment

Philadelphia Revokes Certification Of MBE Supply Firm; Second Action In 12 Months

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In January, the City of Philadelphia’s Office of Economic Opportunity revoked the 25-year-old certification of a minority-owned supply firm and announced that it would seek to bar another contractor from receiving City contracts for three years.  The OEO’s action was reported in The Philadelphia Inquirer. The OEO’s revocation was the second time in 12 months that the OEO took enforcement action stemming from abuses in the City’s minority-contracting efforts.

The OEO alleges that the MBE supply firm acted essentially as a “pass-through” entity – contending that a prime contractor agreed to use the MBE supply firm for materials, but instead bought materials from a second firm and paid a 3% fee to the MBE supply firm.  The Inquirer further reported that City investigators found that the prime contractor and the non-DBE firm had generated false invoices to cover their tracks.  The City alleges that the non-DBE firm had used the MBE supply firm as a sham minority contractor on at least fourteen other city contracts.

Last year, in May 2011, the OEO had announced the voluntary 20-month debarment of a significant locally-based general contractor for failure to comply with the City’s contracting requirements. The Philadelphia Inquirer article on this suspension can be found here. The suspension in May 2011 was the first time the City had suspended a contractor, but it certainly won’t be the last.

The City’s enforcement actions mean that City contractors can no longer evade the OEO requirements on City contracts.  The OEO will closely monitor contractors for compliance, and serious sanctions may be imposed on contractors for non-compliance.

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Posted on by Christopher I. McCabe, Esq. in City of Phila., DBE/MBE/WBE Leave a comment

OEO Changes Policy on City Contracts for Non-Stocking M/W/DSBE Suppliers

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After long treating M/W/DSBE supply firms the same as M/W/DSBE subcontractors, and giving City contractors 100% credit for the use of M/W/DSBE supply firms, the City of Philadelphia Office of Economic Opportunity has now changed its tune.  Apparently, the OEO will no longer give full credit for use of an M/W/DSBE supply firm, unless the firm is a “stocking” supplier, meaning that it actually has in stock the supplies which it plans to furnish to the prime contractor on the City contract.

The new policy was reported in The Philadelphia Tribune in February.  Angela Dowd-Burton, Executive Director of the OEO, was quoted in the Tribune article as follows:

“They [the M/W/DSBE] don’t have the inventory, and the probability is they’re just picking up the phone and collecting a fee…So, we’ve decided that whatever commission you get from making that call, that’s the only participation we’re going to report on.”

“Contractors will ultimately have to find participation from minority- and women-owned businesses that actually hire people and use contractors that do work, as opposed to someone that is providing more of a clerical function.”

The new OEO policy will undoubtedly affect many M/W/DSBE supply firms, as it is rare that any supplier will have in stock all of the needed supplies for a construction project.  Where custom or special order equipment is involved, as is the case on many public works projects, it is unlikely that any supplier will have the equipment in stock.

The OEO is reportedly encouraging the use of subcontractors for the ordering of construction supplies.  It is hard to see how this makes any difference, however, as it is unlikely that a subcontractor will have in stock the supplies that the supply firm does not.

As for City contractors, they must now pay greater attention to the firms that they propose to meet the City’s M/W/DSBE contracting goals. If those firms are suppliers, and not working subcontractors, the City contractor may need to think twice before using the supply firm to avoid risking disqualification for failure to meet the City’s contracting goals, or seek clarification from the OEO before submitting a bid.

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Posted on by Christopher I. McCabe, Esq. in City of Phila., DBE/MBE/WBE Leave a comment

City Issues FY2012 1st Quarter Report for M/W/DSBE Contracting

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In January 2012, the City’s Office of Economic Opportunity issued its First Quarter Report for Fiscal Year 2012 for contracting activity by minority, woman, and disabled-owned business enterprises (M/W/DSBEs) on City and City-related contracts.  The report can be found here.

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Posted on by Christopher I. McCabe, Esq. in City of Phila., DBE/MBE/WBE Leave a comment
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