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

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

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

City of Phila. Retains Firms for $6.5 Billion Airport Expansion Project

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The City of Philadelphia has selected a joint venture of three companies to manage the planning and construction of a $6.5 billion and 12- to 15-year expansion project at the Philadelphia International Airport.  The lead firm is CH2M HILL, a Denver-based engineering and construction firm with offices in Philadelphia.  The management contract is valued at $25 million for the first four years.  The Philadelphia Inquirer article on the selection can be found here.

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

No Contract Formed Where Contractor Uses Subcontractor Quote on Public Bid

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If a prime contractor bids to a public entity, uses a quote from a subcontractor, and identifies the subcontractor in its bid, is a contract formed between the prime and the sub if the public entity awards a contract to the prime?  In Pennsylvania the answer is NO, according to a recent Commonwealth Court decision.

In Ribarchak v. Municipal Authority of the City of Monongahela, a prime contractor submitted a bid to a public authority, and identified a specific subcontractor in its bid.  The public authority accepted the prime’s bid and awarded it a contract.  The prime later substituted the named subcontractor with another subcontractor.  The named subcontractor then sued for breach of contract, claiming that a valid contract had been formed with the prime when the prime included the sub in its bid and when the authority accepted the prime’s bid.  The trial court rejected this claim, and the Commonwealth Court affirmed.

The Commonwealth Court followed the reasoning of many other jurisdictions that have rejected the notion that a contractor’s use of a subcontractor’s quote constitutes acceptance of the quote.  The Commonwealth Court held that there must be affirmative evidence that the prime expressly accepted the subcontractor’s quote before a contract can be formed.  The Commonwealth Court decision can be found here.

While this case concerned the public contracting context, it would seem that the rule is equally applicable in the private contracting context.  A hat tip to my friend and former colleague Wally Zimolong who brought this decision to my attention in his blog Supplemental Conditions.

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