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(1) Except in the purchase of unique articles or articles which for any other reason cannot be obtained in the open market, competitive bids shall be secured before any purchase, by contract or otherwise, is made or before any contract is awarded for construction, alterations, repairs or maintenance or for rendering any services to the City other than professional services and, except as provided in subsection (5) below, the purchase shall be made from or the contract shall be awarded to the lowest responsible bidder and in conformity with any procedure established by the Procurement Department by regulation, designed to appropriately maximize accessibility by vendors, maximize transparency to the public, and minimize costs to the City; provided, however, that City Council may, by ordinance, prescribe bid preferences for businesses located in or doing business in Philadelphia, and provided further that Council may, by ordinance, regulate the process by which purchases and contracts not subject to the lowest responsible bidder requirement of this paragraph are awarded, and may require that contracts with agencies (as that term is defined in subsection 6-400(c) of this Charter) or with other entities include provisions obligating such agencies or entities to comply with any process established by Council under the authority of this subsection, except that such regulations may not require Council authorization of a contract unless Council authorization is required by some other provision of this Charter. 156
(2) Except as authorized by Section 8-200(2.1) and 8-200(4), if any purchase or contract required to be awarded to the lowest responsible bidder involves an expenditure of more than seventy-five thousand dollars ($75,000), which amount shall be adjusted every fiscal year as rounded to the nearest one thousand dollars ($1,000) to reflect the percentage change in the most recently published Consumer Price Index for All Urban Consumers (CPI-U) All Items Index, Philadelphia, Pennsylvania, United States Department of Labor, Bureau of Labor Statistics, the following procedure shall be applicable: 157
(a) The Procurement Department shall advertise for sealed bids (which may include, at the discretion of the Department, electronic submission of bids, so long as appropriate safeguards are in place to protect against premature disclosure) at least once a week for two weeks in one of the three newspapers having the largest paid circulation in the City and in such other newspapers as it deems necessary. Council may by ordinance adopted by a vote of two-thirds of all of its members specify different or additional methods by which the Department shall provide notice of contracts available for bids, in accordance with applicable law. Any such ordinance may include a requirement that notice be posted on the City's official website. The Department shall require bid security in an appropriate form and amount which shall be stated in the specifications to accompany all bids unless a bidder has filed an annual bid bond in excess of such amount. 158
(b) After the time specified for bid closing, bids shall publicly be opened and tabulated in the presence of a representative of the City Controller. At its discretion, and in lieu of sealed bids, the Department may provide for competitive electronic auction bidding under which (i) bids are submitted electronically at the time and in the manner designated in the invitation to bid; (ii) during the auction, only such information regarding the prices bid as the Department determines is likely to result in the lowest price to the City is disclosed to other bidders; (iii) bidders have the opportunity to reduce their prices during the auction; and (iv) at the conclusion of the auction, the name of each bidder and the lowest price it submitted are made available for public inspection. Whether or not the Department utilizes competitive electronic auction bidding, the Department may reject all bids if it shall deem it in the interest of the City so to do. Otherwise the contract shall be awarded to the lowest responsible bidder.
(c) Within ten days after the award of a contract, the successful bidder shall furnish such performance security and, where appropriate, payment security, as the Department may require, containing such terms as the Department and the City Solicitor shall require.
(d) The contract shall be in writing and shall be executed in behalf of the City by the Procurement Department but only after it has been approved as to form by the City Solicitor and as to availability of funds under the budget and appropriations by the City Controller and the Director of Finance. The Department may permit the contract to be executed electronically, in a manner approved by the Law Department. The contract shall contain a provision that in the performance of the contract the contractor will not discriminate nor permit discrimination against any person because of race, color, religion, ancestry, national origin, sex, gender identity, sexual orientation, age or disability. 159
(e) The Procurement Department may in its discretion, permit a bidder to file an annual bond, or other security acceptable to the Department, to cover bids that may be made by, or the performance of contracts that may be awarded to, such bidder during an annual period. Such security shall be in such an amount as the Department may determine and may be increased from time to time, as the Department may require, in order to keep it commensurate with the bids made or contracts awarded during the annual period.
(a) The purchase or contract requires an expenditure of less than $100,000, which amount shall be adjusted every fiscal year, as rounded to the nearest one thousand dollars ($1,000), to reflect the percentage change in the most recently published Consumer Price Index for All Urban Consumers (CPI-U) All Items Index, Philadelphia, Pennsylvania, United States Department of Labor, Bureau of Labor Statistics.
(b) The contract is not for the erection, remodeling or alteration of, or addition to, any building or structure.
(c) All applicants for the contract have submitted such bid security or annual bond as the Procurement Department determines is sufficient.
(3) Contracts may be made for the leasing of real estate and for personal property to be supplied or services to be rendered over a period of more than one year only when permitted by ordinance. Otherwise no contract shall be binding upon the City unless there is an appropriation available for its payment. When the term of a contract exceeds four years, there shall be inserted a clause reserving to the City the right to terminate it at the option of the City at any time after the expiration of four years without liability to the other party for damages or loss of profits which would have been realized had the contract not been terminated. The limitations of this paragraph shall not apply to any contract entered into between the City and any authority.
(4) In lieu of compliance with Section 8-200(1) and 8-200(2), the Procurement Department may participate in a cooperative arrangement with the procurement office of any public agency for the joint procurement of any services, supplies, equipment or construction, or may utilize contracts of a public agency, upon certification by the Procurement Commissioner and the Director of Finance that the use of such an arrangement or contract is very likely to result in a lower total cost to the City than the use of procurement procedures otherwise authorized or mandated for such a procurement by this section and the basis for such determination; and that the public agency conducts the procurement pursuant to its own standard procedures in such a manner as to invite competition, guard against favoritism and corruption, and secure the lowest practicable price. The resulting City contract shall comply with all otherwise applicable ordinances, except and to the extent the Commissioner, after consultation with the Law Department, certifies that compliance is impracticable; and that entry into the contract, as opposed to a contract under subsection (2) of this section, is unlikely to have a material impact on the City's ability to meet Annual Participation Goals established pursuant to Section 6-109(b). For purposes of this subsection, "public agency" shall mean any federal, State, or municipal government agency or any authority, school district or public college or university, or any consortium of such entities. Certifications required by this subsection shall be within the sole discretion of the designated officers and shall not be subject to further review. Nothing in this subsection (4) is intended to apply to the making of any professional services contract. 161
(5) In lieu of awarding a contract to the lowest responsible bidder, the Procurement Department may award a contract to the responsible bidder whose proposal provides the City with the best value, but only when the Procurement Commissioner has determined in writing that award to the lowest responsible bidder may not yield the best value to the City because the goods, construction, alterations, repairs, maintenance or other services that are the subject of the award have qualitative characteristics that make them better suited to an open, competitive solicitation of proposals. Such characteristics may include the integration of technical or professional service elements, quality differences among proprietary products and services, incorporation of City contracting objectives, including but not limited to, participation in City contracts by disadvantaged business enterprises pursuant to Article 6-109 of this Charter (related to participation goals), or other attributes that make price alone a poor indicator of best value. In such instances, the award of the contract shall be subject to any applicable process established by City Council pursuant to subsection (1), above, applicable generally to contracts not subject to the lowest responsible bidder requirement; and the awarding decision shall be made according to criteria established by the Procurement Department by regulation. For contracts involving an expenditure in excess of the amount set forth in subsection (2), above, as adjusted, the applicable criteria shall be set forth in any solicitation for proposals. 162
Sources: See Act of June 25, 1919, P.L. 581, Article XX; the Administrative Code of 1929, Act of April 9, 1929, P.L. 177, Sections 2408 - 2410, as amended; Purchasing Laws for State, County and City Governments (1941) pp. 26 et seq.
Purposes: 1. Competitive bidding is required as a rule to assure the City's obtaining its purchases and letting its contracts at the lowest prices. However, since the bidder submitting the lowest bid may by experience, reputation or resources not be capable of the performance required, the lowest bidder must also be a "responsible" bidder within the meaning of that term as established by many judicial decisions.
2. Unique articles and other articles which cannot be obtained in the open market are not subject to the requirement of competitive bidding. Obviously they are not articles as to which a best competitive price may be obtained. Nor are contracts for professional services subject to the competitive bidding requirement for there is a personal, intangible quality involved in the rendition of such services which would be lost sight of if such contracts had to be awarded to the lowest bidder.
3. Although purchases and contracts are as a rule subject to the requirement of competitive bidding, only contracts in an amount above $2,000 are subject to the procedure detailed in subsection (2). Contracts below this amount bulk so large in number that to make them subject to subsection (2) would be economically prohibitive.
4. Subsection (2) seeks to obtain by the requirement for newspaper advertising the widest practicable solicitation of bids; to protect the interests of the City through requirements for certified checks accompanying bids, bid, performance, labor and materials bonds written contracts and the right of the City to reject all bids; to protect the interests of bidders and of the City through sealed bids and the opening and tabulation of such bids publicly and in the presence of a representative of the City Controller; and by requiring a non- discriminatory practices provision in all contracts, to effectuate the policy of the Charter, that City funds shall not be used to promote practices of discrimination because of race, color, religion or national origin.
5. Long term contracts may at times be advantageous to the City. However, appropriations are made only for periods of one year. Accordingly contracts to run beyond a year must be authorized by Council and thereafter Council is bound to make appropriations for payment (see Section 2-309); in all other cases, a contract is not binding on the City unless there are funds appropriated in advance for its payment.
6. With the stated exception, in contracts extending beyond four years, a right in the City to terminate without liability after four years must be reserved so that the next administration will at some point during its four year term be able to terminate, should there be a sound reason for such action.
Amended by approval of the voters at the election held on November 4, 2003 and certified on December 1, 2003. See Bill No. 030098 (approved May 15, 2003); Resolution No. 030106 (adopted May 1, 2003). Amended by approval of the voters at the election held on November 8, 2005 and certified on November 28, 2005. See Bill No. 040771-A (approved June 9, 2005); Resolution No. 050428 (adopted May 26, 2005). Amended by approval of the voters at the election held on May 16, 2017, and certified on June 6, 2017. See Bill No. 160971 (approved December 20, 2016); Resolution No. 160981 (adopted December 8, 2016). Amended by approval of the voters at the election held on November 5, 2019, and certified on November 20, 2019. See Bill No. 190290 (approved June 26, 2019); Resolution No. 190299 (adopted June 13, 2019).
Amended by approval of the voters November 1991. See Bill No. 1080 (approved April 17, 1991); Resolution No. 946 (1991). Amended by approval of the voters at the election held on November 4, 2003 and certified on December 1, 2003. See Bill No. 030115 (approved May 29, 2003); Resolution No. 030119 (adopted May 8, 2003). Pursuant to subsection 8-200(2), the Procurement Commissioner on July 22, 2008, effective August 1, 2008, certified a new bidding threshold of thirty thousand dollars ($30,000); and on July 19, 2013, effective August 1, 2013, certified a new bidding threshold of thirty-two thousand dollars ($32,000); and on July 26, 2018, effective August 1, 2018, certified a new bidding threshold of thirty-four thousand dollars ($34,000). Amended by approval of the voters at the election held on November 2, 2010 and certified on November 22, 2010. See Bill No. 100334 (approved June 30, 2010); Resolution No. 100342 (adopted June 10, 2010). Amended by approval of the voters at the election held on May 16, 2017, and certified on June 6, 2017. See Bill No. 160971 (approved December 20, 2016); Resolution No. 160981 (adopted December 8, 2016). Amended by approval of the voters at the election held on November 5, 2019, and certified on November 20, 2019. See Bill No. 190290 (approved June 26, 2019); Resolution No. 190299 (adopted June 13, 2019).
Added by approval of the voters at the election held on November 4, 2003 and certified on December 1, 2003. See Bill No. 030342 (approved September 17, 2003); Resolution No. 030359 (adopted September 11, 2003). Amended by approval of the voters at the election held on November 2, 2010 and certified on November 22, 2010. See Bill No. 100334 (approved June 30, 2010); Resolution No. 100342 (adopted June 10, 2010).