Does PA Steel Act Prohibit Public Owner From Specifying Foreign-Made Cast Iron Boiler?

The PA Steel Products Procurement Act requires that all steel products (including cast iron products) supplied on a Pennsylvania public works project must be made from U.S.-made steel. Recently, a school district's contract specified a cast iron boiler manufactured in Europe as the Read more

Disappointed Bidder Lacks Standing To Challenge P3 Contract Award By Non-Commonwealth Entity

In a recent case of first impression, the Commonwealth Court of Pennsylvania has affirmed a lower court ruling that a disappointed bidder lacked standing to challenge a contract awarded by a non-Commonwealth entity under the Public-Private Transportation Partnership Act (P3 Act). In Read more

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

General

DGS Announces 765 Small Business Self-Certifications

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According to a recent announcement of the Pennsylvania Department of General Services, 765 small businesses have self-certified to participate in Pennsylvania’s new Small Business Procurement Initiative program, all in less than three months after Governor Tom Corbett announced the new program.

The DGS press release can be found here.  My earlier post on the new Pennsylvania initiative can be found here.

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

Right-to-Know Law Requires Disclosure of Bids Submitted to Contractor Performing Government Function

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In a recent decision interpreting the Pa. Right-to-Know Law, the Pennsylvania Supreme Court ruled that the Law required the disclosure of public bids received by a private contractor standing in the shoes of a public entity.

In SWB Yankees, LLC v. Wintermantel, 45 A.3d 1029 (2012), the Supreme Court held that documents in the possession of a private entity serving as the management agent for a municipal authority in the operation of a minor league baseball stadium were subject to disclosure under the newly enacted Right-to-Know Law.

In 2008, the Multi-Purpose Stadium Authority of Lackawanna County entered into a management agreement with a private entity, which vested the private entity with the overall management and control of the day-to-day operations of a municipal-owned baseball club, the Scranton/Wilkes-Barre Yankees, and a municipal-owned minor league stadium.

When the SWB Yankees awarded a new contract for concessionaire operations at the stadium, a newspaper reporter for sought copies of the concessionaire bids from the Stadium Authority.  The Authority’s solicitor denied the Right-to-Know request, stating that the Authority did not possess such information. While the Right-to-Know Law applies to certain records in the possession of third parties, like the SWB Yankees, the solicitor claimed that the SWB Yankees was not performing a governmental function on behalf of the Authority and refused to disclose the bids.

The section of the Right-to-Know Law that cover public records in the hands of private parties states as follows:

A public record that is not in the possession of an agency but is in the possession of a party with whom the agency has contracted to perform a governmental function on behalf of the agency, and which directly relates to the governmental function and is not exempt under this act, shall be considered a public record of the agency for purposes of this act.

The Supreme Court rejected the solicitor’s interpretation of the Right-to-Know Law, and held that the Authority was required to disclose any written concessionaire bids for the stadium.

This decision could have far-reaching consequences for public contractors across the Commonwealth.  If you are a contractor performing a core and traditional government function – as opposed to simply doing work for the government – then the records of bidding and your performance will likely be subject to disclosure under the Right-to-Know Law.  On the other hand, if you are a contractor performing services or work for a public entity, there is still the chance that the records of your work will be subject to disclosure.

A full copy of the Supreme Court’s decision can be found here.

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Bid Thresholds for Pa. Borough Contracts Increased

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In November 2011, Act No. 92 was signed into law, increasing the monetary thresholds for public contracts awarded by Pennsylvania boroughs.

Sealed competitive bidding is now required with appropriate advertisement for all contracts in excess of $18,500 (an increase from $10,000).  Written or telephonic quotes from at least three bidders is now required for all contracts in excess of $10,000 (an increase from $4,000), but not more than $18,500.  The Act provides for adjustments to these threshold amounts due to inflation per the “Consumer Price Index for All Urban Consumers” (CPI-U).

The Act became effective January 1, 2012.  The full Act can be found here.

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Bid Thresholds for Pa. Municipal Flood Control Contracts Increased

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In November 2011, Act No. 88 was signed into law, increasing the monetary thresholds for the bidding of flood control contracts by Pennsylvania municipalities.

Sealed competitive bidding is now required with appropriate advertisement  for all contracts in excess of $18,500 (an increase from $10,000).  Written or telephonic quotes from at least three bidders is now required for all contracts in excess of $10,000 (an increase from $4,000), but not more than $18,500.  The Act provides for adjustments to these amounts due to inflation per the “Consumer Price Index for All Urban Consumers” (CPI-U).

The Act became effective January 1, 2012.  The full Act can be found here.

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New State Initiative Will Set Aside Contracts for Small Businesses

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On July 19, 2012, Gov. Corbett officially announced the creation of a new state contracting program which is intended to set aside state contracts for small businesses and small veteran-owned businesses.  The Department of General Services has formed the Small Business Procurement Initiative and has expanded the Small Diverse Business Program – formerly the Small Disadvantaged Business Program– to include small veteran-owned businesses.  The Small Business Procurement Initiative reserves certain state procurements for competition among only self-certified small businesses – those that employ 100 or fewer employees and meet maximum revenue requirements – and enables these small businesses to participate in state contracting opportunities as prime contractors.

The official press release can be found here.  A link to the Small Business Procurement Initiative can be found here.  FAQ on the initiative can be found here.

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

Campaign Finance Laws Still Affect Public Contractors

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Don’t let the era of SuperPACs and free corporate election spending fool you – even proper contributions to candidates can still bar contractors from receiving future government contracts.

The recent U.S. Supreme Court case, Citizens United v. FEC (2010), struck down prohibitions against independent expenditures made by corporate entities toward influencing an election.  In the wake of the Citizens United decision, Pennsylvania’s Department of State officially refused to enforce state restrictions on corporate expenditures.    The age of free corporate election spending dawned.

But not all spending is equal. Prior to Citizens United, Pennsylvania law prohibited both election expenditures and contributions by corporations.  Accordingly, even as it freed corporations to make election expenditures, the State Department clung to its prohibition on campaign contributions.

The main difference between an expenditure and a contribution is not who gives, but who receives.  Generally, a permitted expenditure includes any independent spending not coordinated with or given to a candidate, a candidate’s committee, or a PAC.  Thus, corporations may freely spend on TV or internet ads, billboards, websites, or mailings to support or oppose a candidate (with minor restrictions). However, it may not give that same money to a candidate, a candidate’s committee, or a PAC – even if the money would be spent in the very same way.  The former is an  independent expenditure: OK.  The latter is a contribution: not OK.

So, for now, who can make contributions to candidates in Pennsylvania?  Only individuals, sole proprietorships, and partnerships.  But it is these contributions that can place future public contracts at risk – primarily at the local level.

The Philadelphia Code limits yearly contributions to city office candidates, including Mayor.  Contributors exceeding these limits, currently $2,900 for individuals, will forfeit all non-competitively bid City contracts for the candidate’s term of office.  The ordinances cover contributions by business PACs, partnerships, principals, and even immediate family.  “Attribution rules” link businesses with the individual contributors – meaning that, in theory, if a CEO exceeds the limits, the CEO’s company will forfeit all City contracts.  A list of FAQ on the City’s limitations can be found here.

The City of Pittsburgh recently followed suit – with a narrow City Council vote this Spring to approve limits of $2,000 per election by individuals or partnerships, and $5,000 by political committees.  It supplants prior legislation deemed ineffective.  However, the bill is not yet signed by Pittsburgh Mayor Luke Ravenstahl.

Across the bridge, New Jersey maintains a statewide public contract forfeiture law – similar in concept to Philadelphia’s law.  At the state level, Pennsylvania requires holders of “non-bid” public contracts to formally report all yearly contributions by principal individuals, including officers, directors, partners, and their immediate family.

Liam Y. Braber, Esq.

Liam Y. Braber, Esq.

  Guest blogger Liam Y. Braber, Esq., practices law in PA and NJ with the firm Jacoby Donner, P.C.  

  This blog post is for informational purposes only, and shall not be considered legal advice.

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Should Disappointed Bidder Be Allowed to Recover its Bid Preparation Costs?

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In Pennsylvania, a general rule of public bidding is that a disappointed bidder cannot recover lost profits or other costs for the reason that the bidding laws are for the benefit of the taxpayers and not the bidders themselves.

But what of the disappointed bidder, whose bid is wrongfully rejected but where injunctive relief is denied to the taxpayer who has sought such relief?  If it is later determined that the taxpayer was indeed correct, but it is too late for the wrongful decision to be undone and for the contract to be awarded to the bidder instead, or at least enjoined, should the disappointed bidder be allowed to recover, if not its lost profits, at least its bid preparation costs?

In the case of Meccon, Inc. v. Univ. of Akron, the Ohio Supreme Court held in 2010 that, when a rejected bidder establishes that a public entity violated competitive-bidding laws in awarding a public contract, the bidder may recover reasonable bid preparation costs as damages if (a) the bidder promptly sought, but was denied, an injunction to suspend work on the project, pending resolution of the bid dispute, and (b) it is later determined that the bidder was wrongfully rejected and injunctive relief is no longer available.

The Ohio Supreme Court’s reasoning in support of its decision is powerful:

If, for instance, a rejected bidder alleges that a public authority failed to comply with competitive-bidding laws and promptly seeks injunctive relief to delay the public-improvement project pending resolution of the dispute, denial of the requested injunctive relief means that determination of the allegation of wrongful conduct by the public authority will not take place until much later in the litigation. Under our precedent, once the public-improvement work commences or is completed, the rejected bidder will not be able to perform the public contract even if the bidder demonstrates that its bid was wrongfully rejected.  In such circumstances, the wrongfully rejected bidder is left with no remedy for the public authority’s unlawful conduct, and injunctive relief will no longer serve to deter the public authority’s unlawful conduct.

Of course, this rule has never been applied by the Pennsylvania courts. The general rule here is that only injunctive relief is available and only if sought by a taxpayer.  The disappointed bidder itself has no standing as a bidder to seek any relief against a public entity for the reason that the bidding laws are for the benefit of the taxpayers and general public.

In view of the Ohio decision, there may come a time that such a limited claim is asserted on behalf of a disappointed bidder.  To allow such a claim, the rule on standing would need to be modified in Pennsylvania.

There are numerous instances where injunctive relief is denied to a taxpayer, but where there is a strong claim that the public entity acted in a wrongful manner (thereby harming the interests of the public, the taxpayers, and the participating bidders). And certainly, for many large public works projects, the costs of preparing a bid, for what the bidder believed would be a fair and open process, can be quite significant.  If such costs cannot recouped and the public entity faces no threat of injunctive relief, how are the interests of taxpayer served, especially where the bidder is a taxpayer itself?

If the bid process is found to be unfair and wrongful, but if injunctive relief is no longer available, there is no real deterrent to the public entity if it chooses to repeat its same conduct on future bids.  In such a case, should the potential remedy be limited solely to injunctive relief for a taxpayer, even where such relief is unavailable as a practical matter, because the project has already commenced, and where the bidder, in reliance upon what was expected to be a fair and open process, has expended significant costs?  In such a case, it could be argued that a limited exception to the standing rule should be carved out to permit the disappointed bidder to at least recover its bid preparation costs.

The Meccon decision can be found here.

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$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

PENNVEST Announces $115 Million In Water And Wastewater Projects

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On April 25, 2012, the Pennsylvania Infrastructure Investment Authority (PENNVEST) announced the investment of $115 million in 28 non-point source, drinking water, and wastewater projects in 17 counties.  In the PENNVEST press release, Governor Tom Gorbett is quoted:

“These projects will significantly contribute to improved waterways, including the Chesapeake Bay, and will also create hundreds of new jobs that are so vital to our local communities.”

“These projects serve the dual purposes of responsible environmental stewardship and steadfast economic recovery, both of which are critical to the future of Pennsylvania.”

Of the $115 million total, $82 million is for low-interest loans and $33 million is offered as grants.

The funding comes from a combination of state funds approved by voters, federal grants to PENNVEST from the Environmental Protection Agency, and recycled loan repayments from previous PENNVEST funding awards.  This new funding will undoubtedly mean more work for public works contractors performing wastewater and utility work in Pennsylvania.

For the official PENNVEST press release, click here.

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Welcome to PA Public Contracts!

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Welcome to PA Public Contracts, a legal blog focused on the issues of public bidding and contracting at the state and  local level in Pennsylvania.

This blog will offer news, analysis, opinions, and commentary on public bidding and contracting in Pennsylvania, analysis and commentary on significant court decisions, legislative changes to public procurement law, ideas and tips on public contracting issues, and observations on public bidding questions and disputes.  It is intended eventually to be a clearinghouse of sorts for the topic of public bidding and contracting in Pennsylvania.

I am a construction and public contract attorney at Jacoby Donner, P.C., a boutique construction law firm based in Philadelphia.  Prior to joining Jacoby Donner in June 2005, I was an attorney with the City of Philadelphia Law Department where I focused my practice on representing the City of Philadelphia in a variety of public contract and procurement matters, such as contractor suits, payment claims, MBEC issues, bid protests, and injunction actions in Common Pleas Court.

I hope that all of those who visit this blog will find it of value to their business and public contracting efforts.  Feel free to contact me for further information or assistance.

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