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Philadelphia Proposed Best Value Procurement Bill

Posted in Construction Law

An opinion piece in today’s Philadelphia Inquirer concerning proposed legislation that would change the way the City of Philadelphia awards public construction projects is causing quite a stir. The article concerns legislation that would allow the City to award public construction contracts based on a “best value” approach rather than the current requirement that the contract be awarded to the lowest responsible and responsive bidder.  The author worries that by removing the current objective criteria and replacing it with subjective ones, contracts can be steered to politically favored contractors.  The author cites the recent no-bid contract awarded to a law firm run by the friend of Mayor Jim Kenney as an example of the chaos would ensue if this bill was passed.

Considering that the Bill’s sponsor, Bobby Hennon, is under FBI investigation,  and some of the Mayor’s biggest supporters are as well, the author has ever right to be concerned.  However, article comes up short in explaining what the Bill says and what best value procurement, if adopted, would mean for public construction work in Philadelphia.

First, the Bill that Councilman Hennon is proposing is actually a Bill that would make the best value procurement question a ballot question next November.  In other words, the Bill, if passed, would but to a City wide vote the question of whether the City should change it procurement practices to permit the best value approach to be used in addition to the low bid approach that is current used.

Second, the best value approach that the citizens would be asked to vote on in November, would not permit the current administration – or any future administration – to steer contracts to favored contractors by fiat or decry. Rather, before the best value approach can be used, the Procurement Commissioner must determine in writing that the low bid approach may not yield the best value to the City.  This would be done proposals for the project are solicited.

This approach is similar to the approach that the Commonwealth uses and has been permitted to use since 2014 (the federal government also uses a best value approach).  Under 62 Pa.C.S.A Section 513, when a contracting officer determines in writing that the use of the low bid approach is not practicable or advantageous to the Commonwealth, a best value approach may be used.

While low bid does provide objective criteria that can prevent corrupting and favoritism, it also can cost the taxpayers more money because the contract has to be awarded to the low bidder who sometimes provides inferior work that has to be corrected.  Or, the contractor intentionally underbids the project only to make up the difference via change orders.  The key to best value working is to require that the criteria for evaluating each proposal be adequately set forth in the request for proposal.  That way if a proposal is simply steered to a favored contractor without regard to the evaluating factors, the award is subject to challenge.  I would suggest that the City go one step further an adopt requirements similar to the federal rules that mandate that the contracting officer support in writing the award to a specific contractor.