Can A Public Owner Ever Seek Clarification Of Ambiguous Pricing?

Recently, a public owner solicited bids for a university construction project. The bid form sought pricing for base bid work and alternate work. One of the bidders included ambiguous pricing for an alternate item, in that the pricing was Read more

Debriefing After Non-Selection Does Not Toll 7-Day Deadline For Bid Protest

The Pa. Procurement Code sets a strict deadline for bid protests - the protest must be filed within seven days after the protestant knew or should have known of the facts giving rise to the protest.  If the protest is untimely, it Read more

Does Separations Act Prohibit Use Of Best Value Contracting For Construction Of Philadelphia Public Buildings?

Now that "best value" contracting is officially the new game in town for City of Philadelphia procurement, with the issuance of the new best value regulations, it's worth asking whether the longstanding Separations Act precludes the City from using best Read more

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

Free Training for Prevailing Wage Requirements on Federal Contracts

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The U.S. Department of Labor will offer a free training session in Philadelphia on prevailing wage requirements for federal contracts. The training will be conducted on July 10-12.

This training is not just for federal government contractors. For example, federal agencies must ensure that recipients of assistance funded by federal stimulus funds require contractors and subcontractors to pay laborers and mechanics at least the Davis-Bacon prevailing wages.  Thus, this training will also be useful for contractors performing work on federally-funded public contracts.

The press release with details on the training and how to sign up can be found here.

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Posted on by Christopher I. McCabe, Esq. in Prevailing Wage 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

Public Bidding 101: Bidder Responsibility

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This is one in a continuing series of posts on the basic tenets of public bidding in Pennsylvania.  The subject of today’s post is bidder responsibility.

“Responsibilty” refers to the qualifications, including competence and experience, of a bidder to perform a public contract.  Whether a bidder is responsible or qualified to receive a contract award is ordinarily left up to the discretion of the government officials in charge of awarding the contract.  The courts are extremely reluctant to overrule government decisions to disqualify a bidder as non-responsible.

The standards for bidder responsibility have been established for many years.  The criteria include financial responsibility, integrity, efficiency, industry, experience, promptness, and ability to successfully perform and complete the contract.  While some may believe that the ability to secure and post a bond is proof of their responsibility, a bond is not a substitute for the failure of a bidder to satisfy qualification criteria.  Furthermore, a bidder cannot be rejected as non-qualified unless the government officials have also first conducted an investigation into all bidders’ respective qualifications.

Bidder responsibility can be determined before bids are received, via a pre-qualificaiton process, or after the bids are received.  All bidders must be judged according to the same criteria.  A pre-qualification process may be used only if one is mandated or allowed by statute or ordinance.  Where there is no prescribed pre-qualification process, a municipal official may not exclude certain persons from bidding under the guise of a pre-qualification program.

In Harris v. City of Philadelphia, 299 Pa. 473, 149 A. 722 (1930), the Supreme Court of Pennsylvania had this to say about responsibilty determinations:

We again lay down the rule that all bidders on a municipal contract must be accorded the same treatment, for not otherwise can the requirements of the statute be complied with.  The city may … accept and schedule all bids, and then, if acting in good faith, refuse to award the contract to one who is the lowest bidder, because he is not the ‘lowest responsible bidder.’  Or she may … determine in advance who are responsible bidders, and refuse to receive bids from those who, after treating all alike, she determines are not in that class.  But she may not impose conditions on one prospective bidder, which are not imposed upon all; nor may she enforce a method by which, through favoritism, one person may be conclusively authorized to bid on a pending contract, while another, equally as responsible and perhaps more so, is wholly excluded from even submitting a bid.

This rule of public bidding is as applicable today as it was in 1930.

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Posted on by Christopher I. McCabe, Esq. in Public Bidding 101, Responsibility 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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Posted on by Liam Y. Braber, Esq. in General Leave a comment

$590 Million Deal on Philadelphia Sludge Plant Exposed

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In 2008, the City of Philadelphia reached a deal to award a multi-million dollar contract to a private firm to operate a City sludge plant, known as the Biosolids Recycling Center.  After reading a recently-issued opinion by U.S. District Court Judge Stewart Dalzell, it would appear that the deal and the manner in which it was obtained have a stink as bad as the sludge.

According to a front-page report in The Philadelphia Inquirer, the winning contractor used a team of not-so illustrious political consultants to secure the deal:

To win the prize, the contract winner, Houston’s Synagro Technologies Inc., had a team of political consultants, including a man later convicted of bribing a Detroit city councilwoman to help win Synagro a $1 billion contract in that city by a single vote.

Synagro also brought in an Atlanta man, Hiriam Hicks, who Dalzell said paid a Philadelphia community activist $55,000 to round up 175 people – some of them from homeless shelters – to cheer on City Council as it approved Synagro’s contract by a 15-2 vote, with the backing of Mayor Nutter.

Judge Dalzell’s opinion, according to the Inquirer, goes on to recount a variety of insider machinations that cemented the deal and resulted in a broken promise of a substantial payout for one of the hired consultants.  The opinion came in a suit brought by the consulting firm of Mr. Hicks who alleges that his firm was stiffed on a promise to pay it $400,000 a year over the life of the deal.  Needless to say, Judge Dalzell’s opinion shines a much-needed light on the City’s process of awarding contracts where sealed, competitive bidding is not required.  It’s not a pretty sight or for the faint of heart.

The Inquirer article can be found here.  Judge Dalzell’s opinion can be found here.

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