SENATE AMENDED

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY M. K. KELLER, GINGRICH, AUMENT, BAKER, BEAR, BENNINGHOFF, BLOOM, BOBACK, BOYD, BROOKS, CAUSER, CHRISTIANA, CLYMER, COX, CREIGHTON, CUTLER, DELOZIER, DENLINGER, ELLIS, EVERETT, FARRY, FLECK, GABLER, GEIST, GILLESPIE, GRELL, GROVE, HALUSKA, HARHART, HARPER, HARRIS, HELM, HENNESSEY, HESS, HICKERNELL, KAUFFMAN, KILLION, KNOWLES, MAJOR, MARSHALL, MARSICO, MASSER, METCALFE, MILLARD, MILLER, MOUL, OBERLANDER, O'NEILL, PAYNE, PEIFER, PERRY, PICKETT, PYLE, QUIGLEY, QUINN, RAPP, REED, REICHLEY, ROAE, ROCK, ROSS, SAYLOR, SCAVELLO, CULVER, SCHRODER, SIMMONS, SONNEY, STERN, STEVENSON, SWANGER, TALLMAN, TOBASH, TRUITT, TURZAI, VEREB, VULAKOVICH, WATSON AND F. KELLER, JANUARY 27, 2011

SENATOR EICHELBERGER, LOCAL GOVERNMENT, IN SENATE, AS AMENDED, SEPTEMBER 27, 2011   

AN ACT

Amending the act of February 1, 1966 (1965 P.L.1656, No.581),

entitled "An act concerning boroughs, and revising, amending

and consolidating the law relating to boroughs," in

contracts, further providing for regulation of contracts, for

evasion of advertising requirements and for certain purchase

contracts.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 1402(a), (a.1) and (d) of the act of

<--

February 1, 1966 (1965 P.L.1656, No.581), known as The Borough

Code, amended or added July 10, 1990 (P.L.383, No.90), December

18, 1996 (P.L.1141, No.171), December 18, 1996 (P.L.1156,

No.176), December 20, 1996 (P.L.1497, No.193) and October 27,

2010 (P.L.862, No.87), are amended and the section is amended by

adding a subsection to read:

Section 1402.  Regulation of Contracts.--(a)  All contracts

or purchases in excess of [ten thousand dollars ($10,000)] the

base amount of twenty-five thousand dollars ($25,000) subject to

annual adjustment under subsection (a.2), except those

hereinafter mentioned, shall not be made except with and from

the lowest responsible bidder after due notice in one newspaper

of general circulation in the borough, at least two times at

intervals of not less than three days where daily newspapers of

general circulation are available for such publication, in case

of weekly newspapers, such notice once a week for two successive

weeks. The first advertisement shall be published not more than

forty-five days and the second advertisement not less than ten

days prior to the date fixed for the opening of bids.

Advertisements for contracts or purchases shall also be posted

in a conspicuous place within the borough. Advertisements for

contracts and purchases shall contain the date, time and

location for opening of bids and shall state the amount of the

performance bond determined under subsection (c). The amount of

the contract shall in all cases, whether of straight sale price,

conditional sale, bailment lease, or otherwise, be the entire

amount which the borough pays to the successful bidder or his

assigns in order to obtain the services or property, or both,

and shall not be construed to mean only the amount which is paid

to acquire title or to receive any other particular benefit or

benefits of the whole bargain. In awarding contracts, council

shall have the right to take into consideration such other

factors as the availability, cost and quality of service.

(a.1)  Written or telephonic price quotations from at least

three qualified and responsible contractors shall be requested

for all contracts that [exceed four thousand dollars ($4,000)] 

are in excess of the base amount of ten thousand dollars

($10,000) subject to annual adjustment under subsection (a.2) 

but are less than the amount requiring advertisement and

competitive bidding or, in lieu of price quotations, a

memorandum shall be kept on file showing that fewer than three

qualified contractors exist in the market area within which it

is practicable to obtain quotations. A written record of

telephonic price quotations shall be made and shall contain at

least the date of the quotation, the name of the contractor and

the contractor's representative, the construction,

reconstruction, repair, maintenance or work which was the

subject of the quotation and the price. Written price

quotations, written records of telephonic price quotations and

memoranda shall be retained for a period of three years.

(a.2)  Adjustments to the base amounts specified under

subsections (a) and (a.1) shall be made as follows:

(1)  The Department of Labor and Industry shall determine the

percentage change in the All Items Consumer Price Index for All

Urban Consumers (CPI-U) for the United States City Average as

published by the United States Department of Labor, Bureau of

Labor Statistics for the twelve-month period ending September 30

of the calendar year in which this subsection becomes effective,

and for each successive twelve-month period thereafter.

(2)  If the department determines that there is no positive

percentage change, then no adjustment to the base amounts shall

occur for the relevant time period provided for in this

subsection.

(3)  (i)  If the department determines that there is a

positive percentage change in the first year that the

determination is made under paragraph (1), the positive

percentage change shall be multiplied by each base amount and

the products shall be added to the base amounts, respectively,

and the sums shall be preliminary adjusted amounts.

(ii)  The preliminary adjusted amounts shall be rounded to

the nearest one thousand dollars ($1,000), to determine the

final adjusted base amounts for purposes of subsections (a) and

(a.1).

(4)  In each successive year in which there is a positive

percentage change in the CPI-U for the United States City

Average, the positive percentage change shall be multiplied by

the most recent preliminary adjusted amounts and the products

shall be added to the most recent preliminary adjusted amounts,

respectively. The sums thereof shall be rounded to the nearest

one thousand dollars ($1,000) to determine the new final

adjusted base amounts for purposes of subsections (a) and (a.1).

(5)  The determinations and adjustments required under this

subsection shall be made in the period between October 1 and

November 15 of the year following the effective date of this

subsection, and annually between October 1 and November 15 of

each year thereafter.

(6)  The final adjusted base amounts and new final adjusted

base amounts obtained under paragraphs (3) and (4) shall become

effective January 1 for the calendar year following the year in

which the determination required under paragraph (1) is made.

(7)  The department shall publish notice in the Pennsylvania

Bulletin prior to January 1 of each calendar year of the annual

percentage change determined under paragraph (1) and the

unadjusted or final adjusted base amounts determined under

paragraphs (3) and (4) at which competitive bidding is required

under subsection (a) and written or telephonic price quotations

are required under subsection (a.1), respectively, for the

calendar year beginning the first day of January after

publication of the notice. The notice shall include a written

and illustrative explanation of the calculations performed by

the department in establishing the unadjusted or final adjusted

base amounts under this subsection for the ensuing calendar

year.

* * *

(d)  The contracts or purchases made by council, which shall

not require advertising, bidding or price quotations as

hereinbefore provided, are as follows:

(1)  Those for maintenance, repairs or replacements for

water, electric light or public works of the borough, provided

they do not constitute new additions, extensions or enlargements

of existing facilities and equipment, but a bond may be required

by council, as in other cases of work done;

(2)  Those made for improvements, repairs and maintenance of

any kind, made or provided by any borough, through its own

employes: Provided, That all materials used for street

improvement, maintenance and/or construction in excess of [four

thousand dollars ($4,000)] the amount specified or adjusted

under subsection (a.1) be subject to the relevant price

quotation or advertising requirements contained herein;

(3)  Those where particular types, models or pieces of new

equipment, articles, apparatus, appliances, vehicles or parts

thereof are desired by council, which are patented and

manufactured or copyrighted products;

(3.1)  Those for used equipment, articles, apparatus,

appliances, vehicles or parts thereof being purchased from a

public utility.

(4)  Those involving any policies of insurance or surety

company bonds; those made for public utility service under

tariffs on file with the Pennsylvania Public Utility Commission;

those made with another political subdivision, or a county, the

Commonwealth of Pennsylvania, the Federal Government, any agency

of the Commonwealth or the Federal Government, or any municipal

authority, including the sale, leasing or loan of any supplies

or materials by the Commonwealth or the Federal Government or

their agencies. The price thereof shall not be in excess of that

fixed by the Commonwealth, the Federal Government, or their

agencies;

(5)  Those involving personal or professional services.

(6)  Those made relating to the purchase of electricity and

associated energy and related services by a borough owning or

operating electric generation or distribution facilities on the

effective date of this section with any of the following:

(i)  A political subdivision.

(ii)  Another state.

(iii)  The Commonwealth or an agency thereof.

(iv)  The Federal Government.

(v)  A private corporation.

(vi)  An electric cooperative corporation under 15 Pa.C.S.

Ch. 73 (relating to electric cooperative corporations).

(vii)  A non-profit membership corporation. As used in this

subclause, the term "non-profit membership corporation" means an

entity, the membership of which:

(A)  consists solely of Pennsylvania boroughs, such as a

consortium, buying group or municipal power agency under section

2471.2; or

(B)  consists of Pennsylvania boroughs and political

subdivisions of another state or states.

(viii)  An electric cooperative of another state.

Nothing in this clause shall prohibit council from engaging

in advertising, bidding or price quotations if the council

determines that the advertising, bidding or price quotations are

in the public interest.

* * *

Section 2.  Sections 1403(a) and 1405 of the act, amended

July 10, 1990 (P.L.383, No.90), are amended to read:

Section 1403.  Evasion of Advertising Requirements.--(a)  No

member or members of council shall evade the provisions of

section 1402 hereof as to advertising for bids, by purchasing or

contracting for services and personal properties piecemeal for

the purpose of obtaining prices under [ten thousand dollars

($10,000)] the amount specified or adjusted under section

1402(a) upon transactions, which transactions should, in the

exercise of reasonable discretion and prudence, be conducted as

one transaction amounting to more than [ten thousand dollars

($10,000)] the amount specified or adjusted under section

1402(a). This provision is intended to make unlawful the evading

of advertising requirements by making a series of purchases or

contracts, each for less than the advertising requirement price,

or by making several simultaneous purchases or contracts, each

below said price, when, in either case, the transactions

involved should have been made as one transaction for one price.

Any members of council who so vote in violation of this

provision and who know that the transaction upon which they so

vote is or ought to be a part of a larger transaction and that

it is being divided in order to evade the requirements as to

advertising for bids, shall be jointly and severally subject to

surcharge for ten percent of the full amount of the contract or

purchase. Whenever it shall appear that a member of council may

have voted in violation of this section but the purchase or

contract on which he so voted was not approved by council, this

section shall be inapplicable.

* * *

Section 1405.  Separate Bids for Plumbing, Heating,

Ventilating and Electrical Work.--In the preparation for the

erection, construction and alteration of any public building,

when the entire cost of such work shall exceed [ten thousand

dollars ($10,000)] the amount specified or adjusted under

section 1402(a), the architect, engineer, or other person

preparing such specifications may, if so requested by the

borough council, prepare separate specifications for the

plumbing, heating, ventilating and electrical work. The person

or persons authorized to enter into contracts for the erection,

construction or alteration of such public buildings may, if such

separate specifications shall have been proposed, receive

separate bids upon each of the said branches of work and shall

thereupon award the contract for the same to the lowest

responsible bidder for each of said branches.

Section 3.  This act shall apply to contracts and purchases

advertised after December 31 of the year in which this section

takes effect.

Section 4.  This act shall take effect immediately.

Section 1.  Section 1402(a), (a.1) and (d) of the act of

<--

February 1, 1966 (1965 P.L.1656, No.581), known as The Borough

Code, amended or added July 10, 1990 (P.L.383, No.90), December

18, 1996 (P.L.1141, No.171), December 18, 1996 (P.L.1156, No.

176), December 20, 1996 (P.L.1497, No.193) and October 27, 2010

(P.L.862, No.87), are amended and the section is amended by

adding a subsection to read:

Section 1402.  Regulation of Contracts.--(a)  All contracts

or purchases in excess of [ten thousand dollars ($10,000)] the

base amount of eighteen thousand five hundred dollars ($18,500) 

subject to adjustment under subsection (a.2), except those

hereinafter mentioned, shall not be made except with and from

the lowest responsible bidder after due notice in one newspaper

of general circulation in the borough, at least two times at

intervals of not less than three days where daily newspapers of

general circulation are available for such publication, in case

of weekly newspapers, such notice once a week for two successive

weeks. The first advertisement shall be published not more than

forty-five days and the second advertisement not less than ten

days prior to the date fixed for the opening of bids.

Advertisements for contracts or purchases shall also be posted

in a conspicuous place within the borough. Advertisements for

contracts and purchases shall contain the date, time and

location for opening of bids and shall state the amount of the

performance bond determined under subsection (c). The amount of

the contract shall in all cases, whether of straight sale price,

conditional sale, bailment lease, or otherwise, be the entire

amount which the borough pays to the successful bidder or his

assigns in order to obtain the services or property, or both,

and shall not be construed to mean only the amount which is paid

to acquire title or to receive any other particular benefit or

benefits of the whole bargain. In awarding contracts, council

shall have the right to take into consideration such other

factors as the availability, cost and quality of service.

(a.1)  Written or telephonic price quotations from at least

three qualified and responsible contractors shall be requested

for all contracts [that exceed four thousand dollars ($4,000)]  

in excess of the base amount of ten thousand dollars ($10,000) 

subject to adjustment under subsection (a.2) but are less than

the amount requiring advertisement and competitive bidding or,

in lieu of price quotations, a memorandum shall be kept on file

showing that fewer than three qualified contractors exist in the

market area within which it is practicable to obtain quotations.

A written record of telephonic price quotations shall be made

and shall contain at least the date of the quotation, the name

of the contractor and the contractor's representative, the

construction, reconstruction, repair, maintenance or work which

was the subject of the quotation and the price. Written price

quotations, written records of telephonic price quotations and

memoranda shall be retained for a period of three years.

(a.2)  Adjustments to the base amounts specified under

subsections (a) and (a.1) shall be made as follows:

(1)  The Department of Labor and Industry shall determine the

percentage change in the All Items Consumer Price Index for All

Urban Consumers (CPI-U) for the United States City Average as

published by the United States Department of Labor, Bureau of

Labor Statistics for the twelve-month period ending September

30, 2012, and for each successive twelve-month period

thereafter.

(2)  If the department determines that there is no positive

percentage change, then no adjustment to the base amounts shall

occur for the relevant time period provided for in this

subsection.

(3)  (i)  If the department determines that there is a

positive percentage change in the first year that the

determination is made under paragraph (1), the positive

percentage change shall be multiplied by each base amount and

the products shall be added to the base amounts, respectively,

and the sums shall be preliminary adjusted amounts.

(ii)  The preliminary adjusted amounts shall be rounded to

the nearest one hundred dollars ($100), to determine the final

adjusted base amounts for purposes of subsections (a) and (a.1).

(4)  In each successive year in which there is a positive

percentage change in the CPI-U for the United States City

Average, the positive percentage change shall be multiplied by

the most recent preliminary adjusted amounts and the products

shall be added to the preliminary adjusted amount of the prior

year to calculate the preliminary adjusted amounts for the

current year. The sums thereof shall be rounded to the nearest

one hundred dollars ($100) to determine the new final adjusted

base amounts for purposes of subsections (a) and (a.1).

(5)  The determinations and adjustments required under this

subsection shall be made in the period between October 1 and

November 15 of the year following the effective date of this

subsection, and annually between October 1 and November 15 of

each year thereafter.

(6)  The final adjusted base amounts and new final adjusted

base amounts obtained under paragraphs (3) and (4) shall become

effective January 1 for the calendar year following the year in

which the determination required under paragraph (1) is made.

(7)  The department shall publish notice in the Pennsylvania

Bulletin prior to January 1 of each calendar year of the annual

percentage change determined under paragraph (1) and the

unadjusted or final adjusted base amounts determined under

paragraphs (3) and (4) at which competitive bidding is required

under subsection (a) and written or telephonic price quotations

are required under subsection (a.1), respectively, for the

calendar year beginning the first day of January after

publication of the notice. The notice shall include a written

and illustrative explanation of the calculations performed by

the department in establishing the unadjusted or final adjusted

base amounts under this subsection for the ensuing calendar

year.

(8)  The annual increase in the preliminary adjusted base

amounts obtained under paragraphs (3) and (4) shall not exceed

three percent.

* * *

(d)  The contracts or purchases made by council, which shall

not require advertising, bidding or price quotations as

hereinbefore provided, are as follows:

(1)  Those for maintenance, repairs or replacements for

water, electric light or public works of the borough, provided

they do not constitute new additions, extensions or enlargements

of existing facilities and equipment, but a bond may be required

by council, as in other cases of work done;

(2)  Those made for improvements, repairs and maintenance of

any kind, made or provided by any borough, through its own

employes: Provided, That all materials used for street

improvement, maintenance and/or construction in excess of [four

thousand dollars ($4,000)] the amount specified or adjusted

under subsection (a.1) be subject to the relevant price

quotation or advertising requirements contained herein;

(3)  Those where particular types, models or pieces of new

equipment, articles, apparatus, appliances, vehicles or parts

thereof are desired by council, which are patented and

manufactured or copyrighted products;

(3.1)  Those for used equipment, articles, apparatus,

appliances, vehicles or parts thereof being purchased from a

public utility.

(4)  Those involving any policies of insurance or surety

company bonds; those made for public utility service under

tariffs on file with the Pennsylvania Public Utility Commission;

those made with another political subdivision, or a county, the

Commonwealth of Pennsylvania, the Federal Government, any agency

of the Commonwealth or the Federal Government, or any municipal

authority, including the sale, leasing or loan of any supplies

or materials by the Commonwealth or the Federal Government or

their agencies. The price thereof shall not be in excess of that

fixed by the Commonwealth, the Federal Government, or their

agencies;

(5)  Those involving personal or professional services.

(6)  Those made relating to the purchase of electricity and

associated energy and related services by a borough owning or

operating electric generation or distribution facilities on the

effective date of this section with any of the following:

(i)  A political subdivision.

(ii)  Another state.

(iii)  The Commonwealth or an agency thereof.

(iv)  The Federal Government.

(v)  A private corporation.

(vi)  An electric cooperative corporation under 15 Pa.C.S.

Ch. 73 (relating to electric cooperative corporations).

(vii)  A non-profit membership corporation. As used in this

subclause, the term "non-profit membership corporation" means an

entity, the membership of which:

(A)  consists solely of Pennsylvania boroughs, such as a

consortium, buying group or municipal power agency under section

2471.2; or

(B)  consists of Pennsylvania boroughs and political

subdivisions of another state or states.

(viii)  An electric cooperative of another state.

Nothing in this clause shall prohibit council from engaging in

advertising, bidding or price quotations if the council

determines that the advertising, bidding or price quotations are

in the public interest.

* * *

Section 2.  Sections 1403(a) and 1405 of the act, amended

July 10, 1990 (P.L.383, No.90), are amended to read:

Section 1403.  Evasion of Advertising Requirements.--(a)  No

member or members of council shall evade the provisions of

section 1402 hereof as to advertising for bids, by purchasing or

contracting for services and personal properties piecemeal for

the purpose of obtaining prices under [ten thousand dollars

($10,000)] the amount specified or adjusted under section

1402(a) upon transactions, which transactions should, in the

exercise of reasonable discretion and prudence, be conducted as

one transaction amounting to more than [ten thousand dollars

($10,000)] the amount specified or adjusted under section

1402(a). This provision is intended to make unlawful the evading

of advertising requirements by making a series of purchases or

contracts, each for less than the advertising requirement price,

or by making several simultaneous purchases or contracts, each

below said price, when, in either case, the transactions

involved should have been made as one transaction for one price.

Any members of council who so vote in violation of this

provision and who know that the transaction upon which they so

vote is or ought to be a part of a larger transaction and that

it is being divided in order to evade the requirements as to

advertising for bids, shall be jointly and severally subject to

surcharge for ten percent of the full amount of the contract or

purchase. Whenever it shall appear that a member of council may

have voted in violation of this section but the purchase or

contract on which he so voted was not approved by council, this

section shall be inapplicable.

* * *

Section 1405.  Separate Bids for Plumbing, Heating,

Ventilating and Electrical Work.--In the preparation for the

erection, construction and alteration of any public building,

when the entire cost of such work shall exceed [ten thousand

dollars ($10,000)] the amount specified or adjusted under

section 1402(a), the architect, engineer, or other person

preparing such specifications may, if so requested by the

borough council, prepare separate specifications for the

plumbing, heating, ventilating and electrical work. The person

or persons authorized to enter into contracts for the erection,

construction or alteration of such public buildings may, if such

separate specifications shall have been proposed, receive

separate bids upon each of the said branches of work and shall

thereupon award the contract for the same to the lowest

responsible bidder for each of said branches.

Section 3.  This act shall apply to contracts and purchases

advertised after December 31 of the year in which this section

takes effect.

Section 4.  This act shall take effect immediately.