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?

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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

City of Phila.

City Of Philadelphia Contractor Charged With Mail Fraud

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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.

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Posted on by Christopher I. McCabe, Esq. in City of Phila., Phila. Inspector General Leave a comment

Philadelphia Inspector General Investigation Leads To Arrest Of City Contractor

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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.

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Posted on by Christopher I. McCabe, Esq. in City of Phila., Phila. Inspector General Leave a comment

Subcontractor Officially Debarred From City Of Phila. Contracts

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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.

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

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

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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.

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

Philadelphia Prison Contractor Fined $1.85M for Evading Minority Contracting Rules

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The City of Philadelphia has once again taken enforcement action against a City contractor for a violation of the City’s minority contracting rules.  The City’s inspector general conducted an investigation of Prison Health Services, the City’s contractor for prison health care services, and charged the contractor with using a woman-owned firm as a mere pass-through entity in order to satisfy the City’s minority contracting rules.  Prison Health Services agreed in a settlement to a fine of $1.85 million.

The City’s inspector general, Amy Kurland, was quoted in the Philadelphia Inquirer as follows:

“In reality, that company did nothing except give its name to Prison Health Services so Prison Health Services could get the contract,” she said.

Mayor Nutter had even harsher words:

Mayor Nutter called the PHS settlement “a significant moment that sends a very, very strong message to everyone who does business with the city.”  “If you engage in inappropriate or illegal activities,” Nutter said, “we will find you and root you out.”

The settlement with the contractor was the third such enforcement action taken since May 2011, when the City debarred a contractor for violation of minority contracting rules on work at the Philadelphia International Airport.  My post regarding the City’s prior enforcement actions can be found here.  The Philadelphia Inquirer article on the City’s enforcement action can be found here.

If you are a City contractor and you think you can evade the City’s contracting requirements, think again!  You will get caught eventually, and you will likely pay a hefty price.  Don’t make that mistake.  Get advice before you proceed down a path of no return.

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