§ 17-109. Local Bidding Preferences. 75
   (1)   Legislative findings.
      (a)   Local businesses that seek to enter into contracts with the City labor under a competitive disadvantage with businesses from other areas because of the higher administrative costs of doing business in the City (e.g., higher taxes, higher rents, higher wages and benefits for labor, higher insurance rates, etc.).
      (b)   The public interest would be served by encouraging businesses to locate and remain in Philadelphia through the provision of a preference to local businesses in the award of City contracts.
      (c)   The bid preference will serve the public interest because the growth and development of local businesses will have a significant positive impact on the economic health of the City by, among other things, the creation of local jobs and increased tax revenue.
      (d)   The bid preference will serve the goal of rewarding those businesses which contribute the most to the local economy.
      (e)   The bid preference, in affording local businesses a competitive advantage when bidding on City contracts, does not exclude any potential contractor.
   (2)   Definitions. For purposes of this Section, the following definitions apply:
      (a)   Business Entity shall mean any individual, domestic corporation, foreign corporation, association, syndicate, joint stock company, partnership, joint venture, or unincorporated association, including any parent company, subsidiary, exclusive distributor or company affiliated therewith, engaged in a business or commercial enterprise.
      (b)   Commissioner shall mean the Procurement Commissioner, and Department shall mean the Procurement Department.
      (c)   Local Business Entity shall mean any Business Entity certified pursuant to subsection (3).
   (3)   Certification.
      (a)   A Business Entity that seeks to be certified as a Local Business Entity shall make application to the Commissioner on a form provided by the Department. Such application shall not be considered by the Commissioner unless the Business Entity files with the Commissioner:
         (.1)   A written certificate that the Business Entity is not delinquent in the payment of any City or School District of Philadelphia taxes, charges, fees, rents or claims, or that the Business Entity has entered into an agreement to pay any such delinquency and is abiding by the terms of such agreement; and
         (.2)   A written waiver of the provisions of subsection 19-506(2) to expressly authorize the Revenue Department to share with the Department all information in its possession concerning the Business Entity, including any information that would otherwise be confidential.
      (b)   The Commissioner shall certify a Business Entity as a Local Business Entity if the Commissioner determines:
         (.1)   That the Business Entity, during the preceding 12 months, has filed a business income and receipts tax return with the City establishing that the contractor conducted business within the City within the calendar year preceding the filing of the return. 76
         (.2)   That during the preceding eighteen (18) months the Business Entity:
            (.a)   Has continuously maintained a valid commercial activity license and all other licenses and permits necessary to conduct business with the City; 77
            (.b)   Has continuously occupied, staffed and conducted business in an office within the City; and 78
               (i)   The Business Entity's principal place of business is located in the City; or
               (ii)   The Business Entity continuously during the preceding eighteen (18) months satisfies at least two of the three following requirements:
                  (A)   More than sixty percent (60%) of the Business Entity's full-time employees are reported as Philadelphia Residents on the City of Philadelphia Annual Reconciliation of Employer Wage Tax;
                  (B)   More than half of the Business Entity's full-time employees work in the City at least sixty percent (60%) of the time; or
                  (C)   More than three quarters of the Business Entity's gross receipts are reported on the Entity's business and income receipts tax return as Philadelphia receipts.
      (c)   If a Business Entity's principal place of business is not located in the City, then the Commissioner, prior to certifying the Business Entity as a Local Business Entity, shall:
         (.1)   Require the Business Entity to provide employment and other data necessary to establish that the Business Entity has met the requirements for certification; and
         (.2)   In the absence of documentation demonstrating the existence of an office within the City of Philadelphia, conduct a site inspection of the Business Entity's offices within the City.
   (4)   Term of Certification. A certification by the Commissioner pursuant to subsection (3) shall be valid for a term of three years, or for such other period as the Commissioner shall prescribe by regulation. To maintain its certification during the three-year term, the Local Business Entity must:
      (a)   Provide to the Commissioner, every year by the anniversary of the certification, an updated certificate in the form required by subsection (3)(a)(.1) and a sworn affidavit affirming that the Local Business Entity continues to comply with subsection (3)(b); and
      (b)   Promptly notify the Commissioner if there is a material change to the ownership or control of the Local Business Entity, or if there is a change in address or phone number, or if there is any other change in the operations of the Local Business Entity that would cause the Local Business Entity no longer to comply with the provisions of subsection (3)(b).
   (5)   Award of City Contracts.
      (a)   On any contract for which the City secures competitive bids pursuant to subsection 8-200(1) of the Home Rule Charter, the Commissioner shall award a bid preference as set forth in subsection (d) to any Local Business Entity that submits with its bid: 79
         (.1)   A current certification from the Commissioner as a Local Business Entity;
         (.2)   The Local Business Entity's most recent annual affidavit under subsection (4)(a);
         (.3)   A certification by the Local Business Entity that, throughout the entirety of the contract:
            (.a)   The Local Business Entity or a subcontractor will perform the majority of any work on the subject contract within the geographic limits of the City;
            (.b)   The Local Business Entity or a subcontractor will maintain within the City a majority of the inventory or equipment that will be used on the contract; and
            (.c)   The Local Business Entity will satisfy subsection (3)(a), subsection (3)(b), and at least one of the requirements identified in subsection (3)(c).
         (.4)   If the Local Business Entity relies upon a subcontractor to meet the requirements in subsection (a)(.3)(.a) or (a)(.3)(.b) of this subsection (5):
            (.a)   a current certification from the Commissioner that the subcontractor itself is a Local Business Entity; and
            (.b)   the subcontractor's most recent annual affidavit provided to the Commissioner pursuant to subsection (4)(a).
      (b)   In determining the lowest responsible bidder on any such contract, the Commissioner shall subtract the amount set forth in subsection (d) from the bid of any Local Business Entity awarded such a preference, or shall implement the bid preference otherwise pursuant to regulations promulgated by the Commissioner. 80
      (c)   The terms of the certification required under subsection (a)(.3) of this subsection (5) shall be deemed to be incorporated into any contract for which a bid preference is awarded. If the Commissioner determines that a Business Entity fails to comply with these terms at any time during the term of the contract, that Business Entity shall be deemed to be in breach of such contract, shall be required to pay liquidated damages of ten percent (10%) of the bid, and may be debarred by the Commissioner for up to three years. If the Commissioner determines to issue a debarment order, the Commissioner shall give the Business Entity written notice thereof and an opportunity to present evidence at a hearing in opposition to the intended debarment. After any such hearing, the Commissioner or such hearing panel as he or she may designate shall issue a written determination stating the grounds for its decision.
      (d)   The amount of the bid preference shall be as follows: 81
         (.1)   For contracts certified by the Director of Finance or his designee as funded in whole in part with moneys received pursuant to the American Recovery and Reinvestment Act, Pub. L. 111-5 (Feb. 17, 2009): ten percent (10%);
         (.2)   For all bids of one million dollars ($1,000,000) or less: ten percent (10%);
         (.3)   For all other contracts: five percent (5%).
   (6)   Waiver. The Commissioner may determine not to award a bid preference if the Commissioner certifies that such a preference would result in the loss of federal, state or similar funds or grants. The Commissioner shall transmit a copy of any such determination to the Mayor, the President of City Council, and the Chief Clerk of City Council no later than one (1) week following the contract award.
   (7)   Regulations. The Procurement Department shall promulgate such regulations as it may deem necessary to aid in the administration and enforcement of the provisions of this Section, and shall submit any such regulations to the Mayor, the President of City Council, and the Chief Clerk of City Council when it submits the regulations to the Department of Records under subsection 8-407(a) of the Home Rule Charter.
   (8)   Inspections. The Commissioner shall have the authority to inspect and monitor all premises, business practices, and operations of any Local Business Entity as may be necessary or appropriate to ensure compliance with this Section.
   (9)   Annual Report. Not later than February 1 of each year, the Commissioner shall issue a report in writing to the Mayor, the President of City Council, and the Chief Clerk of City Council identifying, with respect to the time period between January 1 and December 31 of the preceding year:
      (a)   the types of contracts in which a bid preference was awarded;
      (b)   the number of each type; and
      (c)   the name of all Local Business Entities in breach of contract pursuant to subsection (5)(c).
      (d)   Such report shall also establish a percentage goal of the total dollar value of contracts awarded to Local Business Entities, as established by the Procurement Department or such other agency determined by the Mayor. The report shall explain how the goal for the current year was set and what plans and actions will be taken in furtherance of that established goal, address whether the amount of contracts awarded fall short of the goal provided for that year in the previous report and, if so, outline the corrective actions to be undertaken to achieve the goal in the upcoming year.  81.1
      (e)   In Fiscal Year 2022, a goal shall be established by July 1, 2021.  81.2
      (f)   The information required in subsection (d) shall be updated in the annual report and on August 1 of each year.  81.3
   (10)   Ineligibility. 82
      (a)   The Department, through regulations, shall provide for the ineligibility of a contractor for a local business preference for up to three years upon a finding of any intentional misstatements or noncompliance with any certification relating to LBE status.



   Added, Bill No. 030097 (approved May 15, 2003). Section 2 of Bill No. 030097 provides: "This Ordinance shall become effective ninety (90) days after adoption of an amendment to the Philadelphia Home Rule Charter permitting local bidding preferences." Editor's note: The Charter was so amended, effective December 1, 2003. Amended, Bill No. 050202-A (approved January 24, 2006). Section 2 of Bill No. 050202-A provides: "Transition provisions. A Local Business Entity certified as such on the date this Ordinance takes effect must reapply for certification under the provisions of Section 17-109 of The Philadelphia Code as amended by this Ordinance. Any Local Business Entity certifications in effect on the date this Ordinance becomes law shall expire three months after such date."
   Amended, Bill No. 110758 (approved December 21, 2011), effective May 1, 2012.
   Amended, Bill No. 110758 (approved December 21, 2011), effective May 1, 2012.
   Amended, Bill No. 160709-A (approved November 30, 2016), effective January 1, 2017.
   Amended, Bill No. 090671 (approved December 23, 2009).
   Amended, Bill No. 090671 (approved December 23, 2009).
   Added, Bill No. 090671 (approved December 23, 2009); amended, Bill No. 120387 (approved March 4, 2014).
   Added, Bill No. 200353 (approved December 1, 2020).
   Added, Bill No. 200353 (approved December 1, 2020).
   Added, Bill No. 200353 (approved December 1, 2020).
   Added, Bill No. 160709-A (approved November 30, 2016), effective January 1, 2017.