SENATE AMENDED

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY M. K. KELLER, AUMENT, BAKER, BEAR, BENNINGHOFF, BLOOM, BOBACK, BOYD, BROOKS, CAUSER, CHRISTIANA, CLYMER, COX, CREIGHTON, CUTLER, DELOZIER, DENLINGER, ELLIS, EVERETT, FARRY, FLECK, GABLER, GEIST, GILLESPIE, GINGRICH, 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 May 27, 1953 (P.L.244, No.34), entitled "An

act relating to and regulating the contracts of incorporated

towns and providing penalties," further providing for

regulation of contracts; providing for annual adjustment;

further providing for evasion of advertising requirements,

for contracts between $750 and $10,000 and for separate bids

for plumbing, heating, ventilating and electrical work.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 2(a) and (d)(2) of the act of May 27,

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1953 (P.L.244, No.34), entitled "An act relating to and

regulating the contracts of incorporated towns and providing

penalties," amended July 10, 1990 (P.L.392, No.93) and December

18, 1996 (P.L.1140, No.17), are amended to read:

Section 2.  Regulation of Contracts.--(a)  All contracts or

purchases of incorporated towns in excess of [ten thousand

dollars] the base amount of twenty-five thousand dollars subject

to annual adjustment under section 2.1, 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 published or circulated in the county in which the

town is situated at least three times at intervals of not less

than three days where daily newspapers of general circulation

are available for such publication, and in case of weekly

newspapers shall be published once a week for two successive

weeks. The first advertisement shall be published not less than

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

Section 1.  Section 2(a) and (d)(2) of the act of May 27,

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1953 (P.L.244, No.34), entitled "An act relating to and

regulating the contracts of incorporated towns and providing

penalties," amended July 10, 1990 (P.L.392, No.93) and December

18, 1996 (P.L.1140, No.170), are amended to read:

Section 2.  Regulation of Contracts.--(a)  All contracts or

purchases of incorporated towns in excess of [ten thousand

dollars] the base amount of eighteen thousand five hundred 

dollars subject to adjustment under section 2.1, 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 published or circulated in the county in

which the town is situated at least three times at intervals of

not less than three days where daily newspapers of general

circulation are available for such publication, and in case of

weekly newspapers shall be published once a week for two

successive weeks. The first advertisement shall be published not

less than ten days prior to the date fixed for the opening of

bids. 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 town 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.

* * *

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

not require advertising, bidding or price quotations as

hereinbefore provided, are as follows:

* * *

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

any kind made or provided by any incorporated town through its

own employes: Provided, That all materials used for street

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

a base amount of ten thousand dollars be subject to the relevant

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price quotation or advertising requirements contained herein and

to annual adjustment under section 2.1.

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* * *

Section 2.  The act is amended by adding a section to read:

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Section 2.1.  Annual Adjustment.--

 Adjustments to the base amounts specified under sections

2(a) and (d)(2), 3(a), 3.1(b) and 5 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 section 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 section.

(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, to determine the final

adjusted base amounts for purposes of sections 2(a) and (d)(2),

3(a), 3.1(b) and 5.

(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 to determine the new final adjusted base

amounts for purposes of sections 2(a) and (d)(2), 3(a), 3.1(b)

and 5.

(5)  The determinations and adjustments required under this

section shall be made in the period between October 1 and

November 15 of the year following the effective date of this

section, 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) for purposes of sections 2(a) and (d)(2),

3(a), 3.1(b) and 5 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 section for

the ensuing calendar year.

Section 3.  Section 3 of the act, amended July 10, 1990

(P.L.392, No.93), is amended to read:

Section 3.  Evasion of Advertising Requirements.--(a)  No

member or members of council shall evade the provisions of

Section two hereof by purchasing or contracting for services and

personal properties piecemeal for the purpose of obtaining

prices under [ten thousand dollars] the base amount of twenty-

five thousand dollars subject to annual adjustment under section

2.1 upon transactions which transaction should, in the exercise

of reasonable discretion and prudence, be conducted as one

transaction amounting to more than [ten thousand dollars] the

base amount of twenty-five thousand dollars subject to annual

adjustment under section 2.1. 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 of 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 per centum of

the full amount of the contract or purchase.

(b)  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.

(c)  Any council member who votes to unlawfully evade the

provisions of section 2 and who knows that the transaction upon

which he so votes 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 commits a misdemeanor of

the third degree for each contract entered into as a direct

result of that vote. This penalty shall be in addition to any

surcharge which may be assessed pursuant to subsection (a).

Section 4.  Section 3.1 of the act, amended July 10, 1990

(P.L.392, No.93) and repealed in part December 18, 1996

(P.L.1140, No.170), is amended to read:

Section 3.1.  Contracts between Seven Hundred Fifty Dollars

and [Ten thousand] Twenty-five Thousand Dollars; Written Bids.--

(b)  Written or telephonic price quotations from at least

three qualified and responsible contractors shall be requested

for all contracts that [exceed four thousand dollars] are in

excess of the base amount of ten thousand dollars subject to

annual adjustment under section 2.1 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.

Section 5.  Section 5 of the act, amended July 10, 1990

(P.L.392, No.93), is amended to read:

Section 5.  Separate Bids for Plumbing, Heating, Ventilating

and Electrical Work.--In the preparation for the erection,

construction and alteration of any public building of an

incorporated town, when the entire cost of such work shall

[exceed ten thousand dollars] be in excess of the base amount of 

twenty-five thousand dollars subject to annual adjustment under

section 2.1, the architect, engineer or other person preparing

such specifications shall 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

shall receive separate bids upon each of the said branches of

work and award the contract for the same to the lowest

responsible bidder for each of said branches.

Section 6.  This act shall apply to contracts and purchases

advertised on or after January 1 of the year following the

effective date of this section.

Section 7.  This act shall take effect immediately.

Section 2.  The act is amended by adding a section to read:

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Section 2.1.  Adjustment.--Adjustments to the base amounts

specified under section 2 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 section.

(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, to determine the final adjusted

base amounts for purposes of section 2.

(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 to determine the new final adjusted base

amounts for purposes of section 2.

(5)  The determinations and adjustments required under this

section shall be made in the period between October 1 and

November 15 of the year following the effective date of this

section, 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 and written

or telephonic price quotations are required under section 2,

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 section 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 per centum.

Section 3.  Section 3 of the act, amended July 10, 1990

(P.L.392, No.93), is amended to read:

Section 3.  Evasion of Advertising Requirements.--(a)  No

member or members of council shall evade the provisions of

[Section two hereof] section 2 by purchasing or contracting for

services and personal properties piecemeal for the purpose of

obtaining prices under [ten thousand dollars] the base amount of

eighteen thousand five hundred dollars subject to adjustment

under section 2.1 upon transactions which transaction should, in

the exercise of reasonable discretion and prudence, be conducted

as one transaction amounting to a base amount of more than [ten

thousand dollars] eighteen thousand five hundred dollars subject

to adjustment under section 2.1. 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 of 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 per centum of

the full amount of the contract or purchase.

(b)  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.

(c)  Any council member who votes to unlawfully evade the

provisions of section 2 and who knows that the transaction upon

which he so votes 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 commits a misdemeanor of

the third degree for each contract entered into as a direct

result of that vote. This penalty shall be in addition to any

surcharge which may be assessed pursuant to subsection (a).

Section 4.  Section 3.1 of the act, amended July 10, 1990

(P.L.392, No.93) and repealed in part December 18, 1996 (P.L.

1140, No.170), is amended to read:

Section 3.1.  [Contracts between Seven Hundred Fifty Dollars

and Ten thousand Dollars; Written Bids.--] Written or Telephonic

Price Quotations.--

(b)  Written or telephonic price quotations from at least

three qualified and responsible contractors shall be requested

for all contracts [that exceed four thousand dollars] in excess

of the base amount of ten thousand dollars subject to adjustment

under section 2.1 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.

Section 5.  Section 5 of the act, amended July 10, 1990 (P.L.

392, No.93), is amended to read:

Section 5.  Separate Bids for Plumbing, Heating, Ventilating

and Electrical Work.--In the preparation for the erection,

construction and alteration of any public building of an

incorporated town, when the entire cost of such work shall

exceed [ten thousand dollars] a base amount of eighteen thousand

five hundred dollars subject to adjustment under section 2.1,

the architect, engineer or other person preparing such

specifications shall 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 shall

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

award the contract for the same to the lowest responsible bidder

for each of said branches.

Section 6.  This act shall apply to contracts and purchases

advertised on or after January 1 of the year following the

effective date of this section.

Section 7.  This act shall take effect immediately.