Proposed Roofing Projects Act Burdensome To Local Government Unit Roofing ProjectsJuly 2013 – Alerts Education Alert
Pennsylvania Senate Bill No. 813 (Session of 2013) proposes a new Chapter 47 to the Commonwealth Procurement Code that would eliminate a local government unit’s option to utilize cooperative purchasing for the procurement of roofing services and impose additional requirements on local government units when procuring roofing services.
This is a re-introduction of Senate Bill No. 1192 (Session of 2011). Chapter 47 is referred to as the Roofing Projects Act (RPA).[i] The term “local government unit” (LGU) is defined in the RPA as “[a] county, city, borough, incorporated town, township, school district, vocational school district, county institution district, home rule municipality, local authority or any joint or cooperative body of local government units or any instrumentality, authority or corporation thereof that has authority to enter into a contract.”[ii] Accordingly, the RPA has broad applicability. The RPA states that that it preempts any contrary law, ordinance or regulation.[iii] If enacted, the RPA would take effect on January 1, 2014 and would apply to roofing project contracts initially advertised after the effective date of the RPA.
At the heart of the RPA is the definition of "roofing project,” the term is defined as “a project to replace or repair a roof of a facility owned by a local government unit. The term shall not include a project for the repair of 25 percent or less of the roof or a repair project that has a total cost of $10,000 or less.”[iv] Per this definition, the RPA applies to roof repairs and replacements only. Accordingly, the construction of a roof on a new building or on an addition to an existing building would arguably not be covered by the RPA, however, it is less clear whether the RPA is intended to apply if repair or replacement of a roof is part of a larger building renovation project. One could argue that the RPA applies only to stand-alone roofing projects since it refers to “a project to replace or repair a roof . . . ,” but it is not entirely clear. If it applies to larger building renovation projects that include roof repairs or replacements, then does it mean that the larger project must have a separate roofing prime contract in addition to the statutorily mandated general, electrical, mechanical and plumbing contracts? This would be a significant change in the law. Even if a separate roofing prime contract were not mandated for larger building renovation projects involving roof repairs or replacements, it would be prudent for an LGU to use a separate roofing prime rather than to potentially expose the entire general construction prime contract to the RPA.
Although the bill attempts to carve out [from the definition of “roofing project”] small roof repairs consisting of a repair of 25 percent or less of the roof or a repair project that has a total cost of $10,000 or less, these carve outs are likely inadequate.[v] The $10,000 threshold is wholly inadequate as most roof repairs would cost in excess of $10,000.[vi] To apply the additional burdens and requirements of the RPA to such small projects will result in increased costs to LGUs, not to mention an increased administrative and financial burden on the Attorney General should there be a bidder challenge per Section 4707(b) (discussed below). Further, the carve outs do not recognize the need for emergency repairs.
One of the primary foci of the RPA is an attempt by the legislature to address what it perceives to be the use of proprietary specifications in roofing projects and undue influence over LGUs by professional consultants, manufacturers, contractors and vendors in the roofing business. The legislature does this by, among other things, requiring that the specifications be prepared by an architect or engineer, attempting to define brand name equivalents, prohibiting use of certain specification features to reject a substitution, imposing additional advertising requirements and requiring financial disclosures.
Section 4703(b) of the RPA mandates that the plans and specifications for a roofing project be prepared by a design professional and bear the stamp or seal of the design professional who prepared the plans or specifications.[vii] "Design professional" is defined as either a professional engineer as defined in the act of May 23, 1945 (P.L. 913, No. 367), known as the “Engineer, Land Surveyor and Geologist Registration Law,” or an architect as defined in accordance with the act of December 14, 1982 (P.L.1227, No.281), known as the “Architects Licensure Law,” who is retained by the local government unit to draft specifications for a roofing project or to advise the contracting officer on awarding a roofing contract.”[viii] It appears the intent of this section is to require an LGU to hire a licensed architect or engineer to prepare the plans and specifications. It is unclear whether an LGU that has a licensed engineer or architect on staff (i.e. an employee of the LGU) satisfies this definition of being “retained by the local government unit” or whether the LGU is required to hire an outside design professional and incur an additional expense.
The RPA continues to permit the use of brand names in specifying materials in order to signify the kind or quality of materials sought.[ix] However, it attempts to establish a standard for determining brand name equivalents.[x] Importantly, it appears that an LGU can still require a bidder to notify the LGU either pre-bid or with its bid whether the contractor intends to use a brand name equivalent and to prohibit post-award substitutions. However, any such procedures will need to comply with Section 4703(d), which prohibits the use of certain specification features to disqualify proposed substitutions – such as (i) requirements applicable to substitute materials that differ substantially from the requirements to be met by the materials named in the specifications; (ii) provisions conferring authority to accept or reject substitute materials upon persons other than the contract officer acting upon the recommendation of the design professional who prepared the specifications; (iii) testing requirements that may be met by only one manufacturer's materials, however, specifications may require materials to meet standards issued by independent testing organizations; (iv) testing requirements that are exclusionary due to time or expense for compliance; and (v) provisions setting a standard for, or placing a restriction on, the use of substitute materials that are not related to the purpose, function or activity for which the contract is awarded.[xi] Accordingly, should the RPA be enacted, LGUs and their Design Professionals will need to review their current substitution procedures for compliance with Section 4703(d).
Sections 4705(a) and (b) of the RPA require professional consultants, manufacturers, contractors and vendors to disclose any ownership, investment or compensation relationship with any architect, engineer, consultant, materials manufacturer, distributor or vendor by completing and signing the certification set forth in subsection 4705(e). The certification is required to be submitted to the LGU by the professional consultant prior to the time the professional services are engaged, and by the manufacturers, contractors and vendors with the bid.[xii] Section 4705(e) contains the required form of certification. While this requirement may seem innocuous, it is additional paperwork that the bidders must collect from any applicable manufacturers, contractors and vendors and submit with their bids and that LGUs must in turn collect from their professional consultants and bidders. While the legislature likely intends these as a measure to protect LGUs, it is nevertheless additional paperwork and increased administrative burden on LGUs, which already collect a plethora of paperwork on construction projects (e.g. prevailing wage certifications, E-Verify statements, bonds, certificates of insurance, etc.). It would also, arguably, impose a duty on the professional consultants, manufacturers, contractors and vendors to update the certificates during the course of the project if the information in the original certificate were no longer accurate.
Section 4706 of the RPA imposes additional advertising requirements for mandatory pre-bid meetings and bid openings. If the LGU makes attendance at its pre-bid meeting mandatory, then the LGU is required to “publish notice of the time and date of the prebid meeting twice in one newspaper of general circulation published or circulating in the county where the roofing project is located at intervals of not less than three days. The first notice may not be published less than 14 days prior to the date of the meeting. If attendance at a prebid meeting is not advertised as required, then the [LGU] may not refuse to accept a bid from a bidder on the sole basis that the bidder failed to attend the prebid meeting.”[xiii] Accordingly, should the RPA be enacted, LGUs desiring to disqualify any bidder that does not attend the mandatory pre-bid must comply with these additional advertising requirements.
Similarly, the RPA requires that, in addition to advertising as required by any other provision of law, the LGU must “publish notice of the time and date of the opening of bids for a roofing project twice in one newspaper of general circulation published or circulating in the county where the roofing project is located at intervals of not less than three days. The first notice may not be published less than 14 days prior to the date fixed for the opening of bids. If the date and time fixed for the opening of bids was not advertised in accordance with this section, anycontracts awarded by the [LGU] after the opening of bids are void, and the [LGU] must readvertise a new date and time fixed for the opening of bids as required by this section.”[xiv] Notably, the repercussion of not advertising properly is severe, as the awarded contracts are void. Presumably this provision is intended to apply if the advertising impropriety were discovered prior to or shortly after the award of the contract, however, it does not expressly state this.[xv] Voiding of the contract after materials have been ordered and work is under way would result in significant unintended consequences and liabilities for the parties involved.
One of the most notable provisions of the RPA is that it permits a prospective bidder or bidder to challenge the specifications as not complying with Section 4703. Section 4707(b) provides:
“At any time up to ten calendar days after a roofing contract is awarded, a prospective bidder or any bidder not awarded the contract may file a complaint with the Attorney General or his or her designee alleging that the specifications used in the solicitation for, or award of, a roofing project contract violate section 4703 (relating to roofing project specifications). The person challenging the specifications has the burden of demonstrating that the specifications violate this chapter. If the Attorney General or the Attorney General’s designee concludes that the specifications do not comply with this chapter, the Attorney General or the Attorney General’s designee shall declare any contract awarded void and shall direct the contracting officer to revise the specifications and reinitiate the solicitation procedure. The contracting officer shall provide documentation to the Attorney General certifying that the specifications have been modified to comply with this chapter. The decision of the Attorney General or the Attorney General’s designee regarding the compliance of the specifications is final and may not be appealed.”[xvi]
Accordingly, LGUs would be wise to build time into their roofing project schedules to allow for this 10-day post-award complaint filing period. Although this section does not state what role the LGU is to play in an Attorney General investigation, it is likely an LGU would incur lost administrative time and possibly professional fees if involved in the investigation. Certainly, re-issuance of the specifications and re-bidding of the project would result in lost time and money for an LGU.
In addition to a bidder’s or prospective bidder’s remedy under Section 4707(b), the RPA contains three other enforcement remedies, two of which are available to LGUs. Section 4707(a) contains a broad remedy that states that “[a] contract awarded in violation of this chapter is voidableby the contracting officer.”[xvii] As noted above, while the voiding of a contract awarded in violation of the RPA is fitting if the violation were discovered prior to or shortly after an award is made, the voiding of a contract after a notice to proceed has been issued, materials ordered or work commenced is more problematic. Further, it is unlikely an LGU would risk voiding a contract as it may then find itself in the position of having to defend its decision and incur legal fees doing so if the bidder to whom the contract was awarded challenges the decision. Thus, it is unlikely this remedy would be utilized by LGUs unless the violation is clear.
The second enforcement remedy available to LGUs is in Section 4707(d), which allows LGUs to “bring acivil action in the court of common pleas against any person who knowingly provides false information or knowingly fails to disclose an ownership, investment or compensation relationship in violation of section 4705 (relating to disclosure of financial interest). In the event the court finds a violation of section 4705, the local government unit may recover any costs that,when compared to the competing bids, are excessive or unnecessary coststo the local government unit and are reasonably attributable to the nondisclosure of the financial relationship.”[xviii] While it’s noteworthy that that this remedy is provided, without the ability to recover enforcement costs (e.g. investigation fees, expert witness fees, attorney fees, etc.), this remedy may not be a viable option for many LGUs as the expense of litigation would likely be prohibitive.
The last enforcement remedy to be discussed is Section 4707(c), which contains a potential civil penalty. It provides that “[t]he Attorney General may petition a court with jurisdiction to impose a civil penalty on any person who knowingly violates this chapter in an amount not to exceed $25,000 per violation, plus any investigative costs incurred and documented by the Attorney General.”[xix] This section applies to any person and to the whole Chapter 47. Accordingly, a LGU could be fined $25,000 plus investigative costs if it is determined, for example, that it knowingly advertised improperly in violation of Section 4706, knowingly wrote a specification in violation of Section 4703, or knowingly accepted a pecuniary benefit in violation of Section 4704(b).
Last, but not least, Section 4708 of the RPA prohibits the use of cooperative purchasing for a roofing project. It states “[n]otwithstanding any other law, a local government unit may not procure a roofing project or the materials for a roofing project from or though a cooperative-purchasing agency or cooperative-purchasing agreement. A local government unit shall personally bid its roofing projects according to this act and the public-bidding laws applicable to that purchasing entity.”[xx] Accordingly, a LGU would be prohibited from using cooperative purchasing for a “roofing project” as defined in the RPA. It is notable that this language also prohibits the use of cooperative purchasing for the purchase of roofing materials alone. Accordingly, LGUs would not be able to take advantage of volume discounts on roofing materials that could be obtained through use of cooperative purchasing. A LGU could still use cooperative purchasing to procure a new roof on a new building or a new roof on an addition to a building, as these projects would appear to be outside the definition of “roofing project.”
It is unfortunate that at a time when budgets for LGUs are so tight a bill would be introduced that would prohibit the use of cooperative purchasing for roofing projects and roofing materials, thereby forcing each LGU to incur its own design professional fees and advertising fees and duplicate the administrative bid process over and over again, rather than pooling their resources and reducing costs by doing so. This proposed legislation is especially disheartening given that intergovernmental cooperation among local governments in Pennsylvania has been encouraged for more than 60 years.[xxi]
[i] Section 4701
[ii] Section 4702
[iii] Section 4709
[iv] Section 4702 (emphasis added)
[v]Section 4702. Section 4704(a) contains familiar language that a local government unit, contracting officer or design professional may not divide a roofing project into smaller projects to avoid the application of this chapter.
[vi] One would assume the $10,000 reference is to the $10,000 bid threshold that applied to most LGUs prior to 2012. However, the legislature increased the bid threshold to $18,500 for most LGUs in 2012 and such threshold is adjusted on an annual basis. Thus, one would assume, at a minimum, that this outdated reference would be corrected prior to enactment of the RPA, as failure to do so could conceivably require LGUs to bid roofing projects that are below the applicable bid threshold.
[vii] Section 4703(b) [viii] Section 4702 (emphasis added) [ix] Section 4703(c) [x] See Section 4703(c) and definition of “brand name equivalent” in Section 4702. [xi] Section 4703(d)
[xii] Sections 4705(a) and (b)
[xiii] Section 4706(a) (emphasis added)
[xiv] Section 4706(b) (emphasis added)
[xv] Section 4707(b) contains a 10-day post-award period for a bidder to challenge the specifications as violating Section 4703. However, there is no corresponding 10-day post-award period limiting a challenge on an advertising impropriety under Section 4706(b), which leaves the drafter’s intent unclear.
[xvi] Section 4707(b) (emphasis added)
[xvii] Section 4707(a) (emphasis added)
[xviii] Section 4707(d) (emphasis added)
[xix] Section 4707(c) emphasis added)
[xx] Section 4708 (emphasis added)
[xxi] See e.g. Section 5-521 of the Pennsylvania Public School Code of 1949, 24 P.S. Section 5-521 (authorizing joint agreements with other political subdivisions)