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Robert G. Ruggieri is a Senior Associate with Cohen Seglias Pallas Greenhall & Furman PC and a member of the Firm's Federal Contracting Group. He practices law in the areas of government contracts, procurement, and construction. Bob’s clients, which include prime contractors, subcontractors, and suppliers, routinely seek out his advice in protesting government procurement decisions, size and NAICS code protests, interpreting the Federal Acquisition Regulation (FAR), preparing Requests for Equitable Adjustment, (REAs), prosecuting claims under the Contract Disputes Act (CDA), and responding to government investigations, suspensions, and debarment proceedings.

check.jpgSeparate but commonly owned or related companies are common place in the construction industry. It is also common for contractors to get squeezed by late or nonpaying owners and/or subcontractors demanding payment for work performed. A recent case in New Jersey highlighted the pitfalls contactors and their owners can fall into in these situations, and the harsh ramifications they could face if they don’t follow corporate policies and are less than honest in their representations to owners and their subcontractors.

AACON Contracting, LLC v. Glen Poppe et al

In AACON Contracting, LLC v. Glen Poppe et al. (A-1500-11T2), the Appellate Division in New Jersey upheld a trial court decision that found that Glen Poppe, individually, and the three corporations that he owned and controlled, Walter H. Poppe General Contractors, Poppe Construction (“Poppe Construction”) and Poppe Contracting (“Poppe Contracting”), were jointly liable to their subcontractor, AACON Contracting, LLC (“AACON”) for fraud. AACON contracted with one of the Poppe entities, Poppe Construction, to serve as a masonry and concrete subcontractor for the construction of a new Walgreens pharmacy. Prior to entering into the subcontract with AACON, Poppe Construction represented that it was the general contractor and had a contract with Walgreens. But in actuality, a different entity, Poppe Contracting, was the party that had a contract with Walgreens.

Project Background

During the course of the Project a dispute arose between Poppe Construction and AACON regarding the installation of a concrete floor. The third entity, Walter H. Poppe General Contractors, was the company issuing payments to AACON. These payments stopped when the dispute arose, resulting in the withholding of the contract balance from AACON. However, Poppe Contracting continued to represent to Walgreens in its payment applications that it was paying AACON, and Walgreens continued make payments. At the same time, Poppe Construction was representing to AACON that that it could not pay AACON because it had not received payment from Walgreens, and that AACON would be paid when Poppe Construction was paid by Walgreens. AACON relied upon these representations and continued working.

The Dispute

AACON then filed a construction lien claim against the project for unpaid work. Walgreens paid AACON $34,900 in exchange for AACON’s completion of its work and discharge of the lien. AACON arbitrated its payment dispute with Poppe Construction, and was awarded the majority of its contract balance. AACON then filed a lawsuit against all three corporations and Glen Poppe, individually, for, among other things, fraud. The trial court held Glenn Poppe and all three corporations liable for fraud.

Corporate and Personal Liability for Fraud

The Court’s finding of fraud was based on several key facts: (1) that Poppe Construction represented to AACON that it had a contract with Walgreens when it didn’t; (2) Poppe Contracting and Glenn Poppe represented to AACON that it would be paid when Walgreens issued payment, when in fact Walgreens had already issued payment to Walter H. Poppe General Contractors; (3) Poppe Contracting represented to Walgreens that it had paid AACON for its work, when it fact it hadn’t; and (4) AACON was induced to continue working on the project by Poppe Construction’s misrepresentation that it had not yet been paid by Walgreens.

Finally, and perhaps most significantly, the Court held that Glen Poppe was personally liable for the fraud of the corporations because he clearly controlled all three corporations and was the sole individual responsible for “the shuffling of these corporations” to avoid their payment obligations to AACON.

The Takeaway

The Poppe case reminds us of the importance of maintaining corporate formalities when operating related businesses, and that when they are not, the related entities, and the individuals who control them, can be jointly liable for their debts. Most importantly, general contractors, and their principals and officers, must avoid making false certifications to owners regarding the status of payments to owners, and also false statements to subcontractors regarding the status of payments from owners, lest be subject to claims of fraud and personal liability.

Robert Ruggieri is a Senior Associate at Cohen Seglias Pallas Greenhall & Furman PC and practices in the area of complex construction litigation.

Jennifer Budd, an Associate with Cohen Seglias contributed to this post.

By: Robert J. O’Brien and Robert G. Ruggieri

In a matter of first impression in Pennsylvania, the Commonwealth Court in Ribarchak v. Municipal Authority of the City of Monongahela recently addressed the issue of whether the use of a subcontractor’s bid as part of a general contractor’s bid proposal creates a contract between the subcontractor and the general contractor, particularly when the general contractor’s bid proposal is ultimately accepted by the owner.

In Ribarchak, the Municipal Authority of the City of Monongahela solicited bids from general contractors for the renovation of a sewage treatment plant. Galway Bay Corporation submitted a bid that included Fisher Associates as a subcontractor. The Municipal Authority ultimately accepted Galway’s bid. Several months later, Galway decided to substitute another subcontractor in place of Fisher, and Fisher filed suit, alleging breach of contract.

Fisher contended that Galway’s inclusion of Fisher’s bid in Galway’s bid to the Municipal Authority created a binding contract between Galway and Fisher. The Commonwealth Court, however, disagreed with Fisher’s argument. Looking to case law from other states, the Court adopted the general rule that:

“A subcontractor bidder merely makes an offer that is converted into a contract by a regularly communicated acceptance conveyed to him by the general contractor. No contractual relationship is created between the subcontractor and the general contractor even though the bid is used as part of the general over-all bid by the general contractor and accepted by the awarding authority.”

As a result of this decision, in Pennsylvania, a general contractor’s use of a subcontractor’s bid as part of the general contractor’s bid proposal does not create a binding agreement between the general contractor and the subcontractor.

Notably, the Court did suggest that its conclusion may have been different if there were other evidence that the general contractor had accepted the subcontractor’s bid. Although Ribarchak sends a message to contractors and subcontractors that express acceptance of an offer is necessary to form a legally-binding contract, Pennsylvania courts have yet to address precisely what is required for acceptance.

This area of the law continues to present novel and interesting questions that can lead to problems for general contractors and subcontractors alike. General contractors wondering how to protect their rights or subcontractors concerned about the enforceability of a contractual arrangement should contact their attorney for more information.

Robert O’Brien is an Associate with Cohen Seglias Pallas Greenhall & Furman PC and is a member of the Construction Group.

Robert Ruggieri is a Senior Associate at Cohen Seglias Pallas Greenhall & Furman PC and practices in the area of complex construction litigation.

Green building is more popular than ever, and achieving LEED certification for projects is a mark of distinction. Construction companies and developers need to understand how they can effectively manage the risks and reap the rewards of these projects. Please join us for a panel discussion where industry professionals, including Lane Kelman and Jonathan Cass, will provide an overview of green building and address the financial and liability issues unique to sustainable development.

For further information, or to register, please see the full event invitation here.

 

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By: Jennifer M. Horn and Robert Ruggieri Blaker, Evan A.jpg

Partner Evan A. Blaker recently joined Cohen Seglias Pallas Greenhall & Furman PC. We sat down with him to discuss his background and his thoughts on the state of the construction industry. Keep reading to learn his interesting backgound and perspective on the industry.

Construction Law Signal: What is your background?

Evan A. Blaker: More recently, over the past 10 years or so, I have concentrated my practice in construction-related claims and disputes in Pennsylvania and New Jersey, with a particular emphasis in representing contractor supply houses. This represented somewhat of a change in my practice focus coinciding with my teaming up with a former associate, Anthony Byler. Tony and I had been at the same firm for several years and eventually left and went in separate directions. During that time, Tony developed a construction law practice that grew to the point where he needed help and called me and asked me join him in what would become Byler & Blaker LLC.

Overall, I have been practicing law as a trial litigator for more than 20 years. Going back to the time immediately after graduating from Temple Law School, I worked as a tax attorney at what was known at the time as Coopers & Lybrand. I started my career at Coopers, in large part, in order to obtain my CPA license, which was important to me as unfinished business since I majored in Accounting as an undergraduate at Drexel University. After getting my CPA license, I left Coopers and began working at a small firm in Cherry Hill, headed by a great trial attorney. It was at that small firm where I met Tony. Since that time, I have handled all types of cases and disputes, from wrongful death to oppressed shareholder claims.

CLS: What is your practice philosophy?

Blaker: My credo is to treat all of my clients as if they were members of my family. And the fact is that I have developed strong friendships with virtually all of my clients. Counseling folks that you consider your friends becomes easy as there is a deeply engrained mutual respect and understanding of the things that matter most in any given scenario. And while I am a proponent of litigation being a last resort, when it does become time to do battle, preparation is key because for me and my competitive nature, losing is simply not an option.

CLS: What strengths do you bring to Cohen Seglias?

Blaker: I have been actively engaged in litigation practice for over 20 years. I know the rules of procedure in Pennsylvania and New Jersey, both Federal and State Courts, like the back of my hand and can effectively utilize them to benefit my clients. There is no substitute for experience, which I bring to the firm.

CLS: What are you looking forward to with the move to the Cohen Seglias Commercial Litigation Group?

Blaker: The move to CSPG&F is exciting on several different fronts. First, I am eager to use the wider CSPG&F platform to provide my existing clients with expertise in areas in which I don’t practice, like transactional work and estate planning. I am also eager to provide my expertise to the firm’s clients as I have been quite successful in what I do.

CLS: If they were asked, what do you think your clients would say about you?

Blaker: My sense is that my clients would have very positive things to say. Things like, “he’s very responsive,”; “when we need him, he’s there and turns things around very timely and efficiently.” It’s funny because you never really know what your clients think or how they perceive you. I guess we assume that if we continue to get work and the bills are getting paid, the client is happy. That said, not too long ago I had the CFO of one of my clients tell me that I should charge more. I don’t think I ever had a client tell me that before that moment. This particular CFO said that my work ethic and work product were far superior to that which he received from the big firm attorneys that his company hired from time to time and whose rates were often double mine. He said that if those rates are the measuring stick, I am the best bargain around. Of course, I didn’t raise my rate or provide any lesser service. I can tell you that having a client tell you that you should increase your rate is something I don’t think I will ever forget.

Evan A. Blaker can be reached at 215.564.1700 or eblaker@cohenseglias.com.

By: Mark Leavy and Marc Furman

On November 29, 2011, Mayor Michael A. Nutter signed Executive Order No. 15-11: “Public Works Project Labor Agreements”. The Order strongly recommends – but does not strictly require – the use of project labor agreements (PLAs) on public building projects.

Under the Executive Order, a project is “appropriate” for a PLA if it includes any of “the following characteristics”: a) high construction costs, b) multiple crafts or trades, c) “complex labor requirements” that “conflict with existing collective bargaining agreements”, d) completion without delay, and e) the project furthers “urgent City goals.”

All City Agencies are to issue a “Project Review” to the Mayor’s office regarding these “criteria” on building projects with estimated construction costs of $5 million or more. However, the Executive Order declares that projects with lower costs may also be “appropriate” for PLAs and “encourages” City Agencies to review those projects, too.

The Executive Order “does not require” the use of a PLA on any particular Project. However, it does grant the Mayor’s office the authority to “determine that a [PLA] is appropriate” and enter into negotiations with labor organizations “in consultation with the City Agency”.

Such PLAs must have: a) “guarantees” against strikes or lockouts, b) “binding procedures” for jurisdictional disputes between unions, and c) “diversity goals” for labor organizations and contractors. The Mayor’s Office can also require a third-party “Monitor” on the project to review the opportunities provided for “qualified City Residents, minorities, and women.”

This Executive Order has been the subject of both praise and scorn. Either way, both union and non-union contractors alike that are vying for work on public projects must be aware of this development and understand the implication of entering into a PLA.

If you have any questions or would like more information about the Executive Order and its potential impact, please contact Marc Furman or Mark J. Leavy at 215.564.1700 or at mfurman@cohenseglias.com or mleavy@cohenseglias.com.

Marc Furman is the chair and Mark Leavy is an associate in the Labor & Employment Group of Cohen Seglias Pallas Greenhall & Furman PC.

 

By: Jennifer M. Horn and Robert Ruggieri

A September 1, 2011 decision by the Maryland Court of Special Appeals reminds us of the critical importance of strictly following contractual and procurement procedures before performing change order work for a pubic entity; and of the perils of proceeding with work outside the scope of a contract without formal approval, even where employees and agents of the public entity request gavel.jpgand provide informal, and even written authorization, for the additional work.

Baltimore County, Maryland v. AECOM Services, Inc., f/k/a DMJM H&N, Inc.

This case concerned a dispute between Baltimore County (County) and DMJM H&N, Inc., now known as AECOM Services, Inc. (DMJM) over payment for services performed by DMJM for the County in connection with the expansion of the Baltimore County Detention Center (Project). DMJM entered into a contract with the County to provide architectural and engineering services for the Project. The County sued DMJM seeking damages for an alleged breach of contract and negligence. DMJM countersued, seeking payment for services provided both under the “base contract” and for “additional services” performed outside the scope of the base contract. After trial, the jury found that DMJM did not breach its contract, and had not been negligent. More importantly, the jury awarded DMJM damages in the amount of $1,653,600, the majority of which included payment for the additional services. Appeals followed, with the most important issue being whether DMJM was entitled to payment for the additional services where DMJM had not obtained a formal contract amendment approved by the County Council for the additional services.

Language in the contract required not only written authorization by the County, but also approval by the County Council before the contract amount could be increased. DMJM claimed that during the course of the Project it had performed significant additional services valued at $1,471,498, that were authorized and requested by County officials, but had not been formally approved by a contract amendment.

The Court’s “Harsh” Ruling

The Appeals Court, relying on a strict interpretation of the contact, the Baltimore County Charter, the Baltimore County Code, and prior Maryland case law, reversed the jury’s award to DMJM for the additional services, and held that DMJM was not entitled to payment for any of the additional services because they were not formally approved by the County and County Council in a written amendment. First, the Court stated that the contract language unambiguously required written authorization from the County to obligate the County to pay for the additional services. Second, the Court found that the Baltimore County Code and Baltimore County Charter required that a contract amendment had to be approved by the County Council to be enforceable; because the County Council never approved an amendment for the additional services, the County could not be liable for payment. Finally, the Court relied on prior Maryland case law that set forth the principle that “a government entity may never have an obligation imposed upon it except in the formal manner expressly provided by law.” The rationale behind this principle, the Court provided, is that public funds must be protected by stringent procurement procedures, not only against outside parties, but even against its own employees and agents.

The Court was not persuaded by DMJM’s argument that County Council approval was only required for the underlying contracts, but not for changes to existing contracts. Nor did the Court accept DMJM’s argument that the County had waived its right to rely the strict procedures of the contract and Baltimore’s code and charter by acting and proceeding as if all the requirements had been met and informally approved and authorized the additional services.

The Court acknowledged that its ruling was harsh, but insisted that it was not unjust, and that there are sound policy reasons for its harshness. The Court reasoned that DMJM knew, or should have known, by the terms of the contract, that County Council approval was required for all amendments, and that the law imputes upon the party contracting with the municipality knowledge of the municipality’s limitations. The Court’s decision makes it abundantly clear that even if the additional services were done at the express request and direction of the County’s employees and agents, DMJM would still not be entitled to payment because the exact contract requirements were not fulfilled. The Court reasoned that it is more reasonable that an individual contractor or design professional occasionally suffer from the mistakes of public officials and agents who improperly authorize additional work than to risk detriment or injury to the public. The Court also reiterated that no state more rigidly enforces these principles than Maryland, and that those who deal with employees and agents of a Maryland municipality must, at their peril, take notice of the limits of the powers of both the municipality and those who assume to act as its agents and officers.

Not all states are as unforgiving as Maryland when it comes to allowing payment to contractors and design professionals who have performed work not approved in 100% accordance with contract requirements. States such as Pennsylvania, in certain circumstances, will consider other factors, such as whether the municipality was prejudiced and/or whether the municipality, though its conduct of requesting and informally approving additional work, waived its right to rely on strict contractual procedures to avoid payment obligations. Nonetheless, this case provides an important lesson to all contractors and design professionals, in any state, of the importance of strictly following procedures for changed or extra work and the perils of not doing so, especially when contracting with public entities.

Jennifer M. Horn is Senior Counsel at Cohen Seglias and a member of the Construction Group. She concentrates her practice in the areas of construction litigation and real estate.

Robert Ruggieri is an associate at Cohen Seglias and a member of the Construction Group. He concentrates his practices in the area of complex construction litigation.

By: Robert Ruggieri

Last week we blogged about an important decision recently handed down by the Third Circuit Court of Appeals on the enforceability of pay-if-paid provisions in Pennsylvania. In Sloan & Company v. Liberty Mutual Insurance Company, a surety, Liberty Mutual, was found not liable to pay Sloan, a subcontractor, on a payment bond claim because of a valid pay-if-paid provision in the subcontract between Sloan and Shoemaker, the general contractor who had secured the payment bond. The Court held that Shoemaker did not have to pay Sloan in full because it did not get paid in full from the project owner. Because Shoemaker was not liable under the contract, the Court held that its surety could not be liable on the bond claim.

The Sloan case certainly clarifies many issues regarding pay-if-paid provisions and liquidating agreements in Pennsylvania. However, language in the Court’s opinion calls into question the opinion’s lasting impact, and suggests that particular aspects the Court’s ruling may be limited by developments in Pennsylvania’s Mechanics’ Lien Law (Lien Law) that went into effect after the subcontract in question was formed.

Pennsylvania’s Public Policy in Favor of Subcontractors’ Right to Secure Payment

In the Sloan case, the subcontract between Shoemaker and Sloan required that Sloan waive its right to file a mechanics’ lien. Sloan argued that if the surety was able to rely on the pay-if-paid provision in the subcontract as a defense to payment on Sloan’s bond claim, this would result in a situation that is contrary to Pennsylvania’s public policy that favors subcontractors’ right to secure payment.

This public policy is spelled out in a 2007 amendment to the Lien Law. Specifically, Section 1401(b) of the Lien Law makes lien waivers invalid, and unenforceable, unless they are given in exchange for payment for work performed by the subcontractor, or, unless the contractor has posted a bond guaranteeing payment for labor and materials provided by subcontractors.

The purpose of this provision is to provide subcontractors with an alternate avenue for recovery of payment in exchange for their waiver of lien rights. A subcontractor gives up the protection afforded by the lien in consideration for the protection of a surety bond. In Sloan, that protection was taken away by the pay-if-paid provision. Importantly, however, this provision of the Lien Law was not in effect at the time Sloan entered into the subcontract.

Surety’s Ability to Rely on Pay-if-Paid Provision May Be Contrary to Public Policy

In a footnote, the Court stated that its ruling in favor of the surety was not contrary to public policy because the Lien Law amendment came into affect after Sloan entered into the subcontract, and Sloan, without relying on this policy, freely accepted the tradeoff between a mechanic’s lien and a surety bond.

However, this footnote begs the questions:

  • Would the Court have ruled the same way if Sloan entered into the subcontract after the 2007 Lien Law amendment? and;
  • Going forward, will courts allow a surety to rely on a pay-if-paid provision in a contract entered into after the 2007 Lien Law amendment where the subcontractor was required to waive its lien rights?

The Court did not address these questions in its opinion. However, arguments can certainly be made that after the 2007 Lien Law amendments, it is against Pennsylvania public policy to allow a surety to rely on a pay-if-paid provision as a defense to a subcontractor’s payment bond claim, where the subcontractor was required to waive its right to file a lien; and, had the Sloan Court been interpreting a contract entered into after the amendments that its ruling would have been different.

Whats Next?

The Sloan decision does nothing to prevent a subcontractor, who waived its lien rights after the 2007 Lien Law amendment, from arguing that a surety’s reliance on a pay-if-paid provision is against Pennsylvania’s public policy. Subcontractors can, and will, argue that the purpose of the Lien Law amendment is to ensure that a subcontractor who is required to waive its lien right will have the protection of a payment bond; and that allowing a surety to rely upon a pay-if-paid provision to deny payment on a bond claim thwarts the very purpose of the surety bond and defeats the purpose of the Lien Law amendment.

On the other hand, sureties will rely on the Sloan decision, as well as other established principles of surety law holding that a surety’s liability is only triggered when the principal’s (general contractor’s) debt matures. Because the pay-if-paid provision prevents the general contractor’s debt from maturing, the surety cannot be held liable. Finally, sureties will argue that surety bonds are provided for the primary benefit and protection of the obligee, usually the owner, not the subcontractors, and therefore, a subcontractor’s reliance on the bonds is misplaced.

So, while the Sloan decision is certainly an important one in the line of cases dealing with pay-if-paid provisions, its impact may be limited and subject to change. In the realm of pay-if-paid provisions, many questions remain. It is likely that in the near future a court will have to answer the tough questions the Sloan Court was able to avoid.

Robert Ruggieri is an associate at Cohen Seglias Pallas Greenhall & Furman PC and practices in the area of complex construction litigation.

“Technology has transformed dozens of ways we interact with the world. How we communicate, learn, work, entertain, and provide for ourselves have all been radically altered by computers, sensors, and software. One area where technology is woefully underused, but sorely needed, is in roadway safety.”
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Patrick Sorek, Partner with Cohen Seglias recently authored an article for Highway Builder Magazine, titled “We Need Technology to Boost Our Traffic Management” which discussed the need for improvements in transportation technology. The article discusses new ideas for highway technology such as traffic control sensors and cameras to increase roadway safety.

To read the full article, please visit Highway Builder, and for more information, please contact Patrick Sorek.

Patrick Sorek is a partner in the Commercial Litigation Group of Cohen Seglias Pallas Greenhall & Furman PC. Mr. Sorek focuses his practice in commercial litigation, and has considerable experience in civil rights and employment cases.

As many contractors know, Pennsylvania’s attempt to formulate and use innovative procurement methods has incurred a series of setbacks from the Commonwealth’s appellate courts. The latest setback came when the Pennsylvania Supreme Court found that PennDot’s Design-Build Best Value (DBBV) procurement method violated the Pennsylvania Procurement Code.

Unless there is a potential for harm to the travelling public, Pennsylvania agencies, such as PennDot, are prohibited from procuring construction contracts through DBBV. Traditional methods of procurement require that contracts be awarded to the lowest responsible and responsive bidder. DBBV, however, allowed agencies to pre-qualify a short-list of design-build teams, and then select a design-build team’s proposal utilizing a best-value assessment methodology, that includes subjective and objective factors, to determine which proposal supplies the best value for the cost of the bid.

In the case of Brayman Construction Corp., et al. v. Commonwealth of Pennsylvania Department of Transportation, the Supreme Court of Pennsylvania enjoined Pennsylvania agencies from using DBBV because the practice does not comply with the Procurement Code’s requirement that construction contracts be awarded through the processes of sealed competitive bidding or sealed competitive proposals.

What Is PennDot’s Design-Build Best Value Bid Procedure?

DBBV is outlined in PennDot’s “Publication 448, Innovative Bidding Toolkit” (Publication 448) Publication 448 describes various innovative bidding methods for selecting contractors for highway projects. It explains that innovative bidding seeks, among other things, to account for social costs, such as disturbance to the traveling public, in addition to taxpayer dollar costs.

According to Publication 448, DBBV provides the agency “with the most potential for multiple design solutions and innovation in the use of materials.” Its goal is to “reduce overall time from design start to completion of the project, which provides for a shorter project completion time at a lower cost.”

DBBV is a two step process. The first step is aimed at creating a “short list” of three to five design-build teams which will eventually submit proposals for the contract. Prospective design-build teams submit statements of interest detailing their qualifications, the resumes of key personnel, and organizational charts. The statements of interest do not include a monetary bid. From the statements of interest, PennDot picks a short list of three to five teams that it considers best suited for the project.

In the second step, each short-listed team submits a technical approach and a price, which becomes the basis for a negotiated stipend agreement. To accomplish this, PennDot enters into a separate stipend agreement with the teams on the short list to develop a proposed design for the project. Thereafter, the design partner for each team develops a proposed technical approach and submits it, along with a price bid, to PennDot. PennDot then selects a design-build team based on which proposal offers the best value, not on a lowest competitive price basis.

Why Did the Supreme Court Severely Limit DBBV?

The general rule for procurement under Pennsylvania’s Procurement Code is that “[u]nless otherwise authorized by law, all Commonwealth agency contracts shall be awarded by competitive sealed bidding under section 512[.]”. One notable exception allows a procuring agency to contract for design professional services through a two-step proposal process.

In the case of Brayman v. PennDot, Brayman challenged PennDot’s attempt to procure design-build services urgently needed for replacement of the Six Mile Creek Bridge in Erie county. PennDot had proposed to select a design-builder via the DBBV process. As part of DBBV’s first step, Brayman, and its design partner, submitted a statement of interest. However, PennDot did not select Brayman for its short-list, and therefore, Brayman was precluded from submitting a proposal for the project.

Brayman initiated a lawsuit in an effort to prevent PennDot from awarding the bridge contract through the DBBV process. Brayman claimed that DBBV violated the Commonwealth Procurement Code. PennDot argued that the Procurement Code did permit public procurement on a design/build basis, and did not prohibit best-value selection. Alternatively, PennDot argued that design/build services were professional services, which were exempted from the competitive bidding requirements of the Procurement Code. The Commonwealth Court rejected PennDot’s arguments, holding that design-build contracts, because they include construction and not merely professional engineering and architectural services, were subject to the Procurement Code’s requirement of competitive sealed bidding.

The Commonwealth Court’s order enjoined PennDot from awarding design/build contracts “using the best-value method or any other ‘innovative method’ that does not award the bid based on sealed competitive bids.” On appeal, the Pennsylvania Supreme Court agreed that the design-build contract was a construction contract and therefore its procurement must comply with the objective requirements of competitive sealed bidding.

However, both the Commonwealth and Supreme Courts refused to enjoin PennDot’s award of the contract for the Six-Mile Creek Bridge project because the new bridge was so urgently needed to prevent a potential catastrophe.

What Does the Curtailment of DBBV Mean for Contractors?

The bottom line is that Commonwealth procurement agencies must use the competitive sealed bid process of the Procurement Code for all construction-contracts, including design-build contracts, unless the contract or project falls within an express statutory exception to competitive bidding or where there is an imminent danger to the public. While the Commonwealth appears determined to utilize non-traditional methods of procurement which it believes allows for a more rapid and efficient project delivery, for now, bidding on public road projects will be business as usual until PennDot is able to develop innovative methods that comply with existing procurement laws.

This article is the first of a series on Pennsylvania bid procurement practices and protests. Please look for part two of this series coming in August.

The Philadelphia Zoo recently broke ground on the brand new Hamilton Family Children’s Zoo and Education Center. The Zoo website describes the center as a “joyful, engaging experience for children and families while promoting a lifetime of conservation action through hands-on learningzoo.jpg activities.”

The Zoo plans to construct the new center according to LEED guidelines, making it the first zoo structure to include a green roof, cisterns to recycle waste water and geothermal heating.

The center, which is scheduled to open April 13, 2013 is estimated to cost $30 million and will cover 2.5 acres of land. To date, $18 million has been raised.

According to uwishunu.com, the center will occupy both indoor and outdoor space, and will include the following indoor and outdoor exhibits:

Indoor features include:

  • Exhibits featuring fish, budgies, butterflies and frogs;
  • A hatchery that allows children to observe newborn chicks; and
  • Action stations focused on environmental issues such as water usage, energy consumption and recycling.

Outdoor features include:

  • An 8-stall stables building to house horses, donkeys and other livestock;
  • Overhead trails and bridge systems for monkeys and lemurs;
  • Animal contact yards with rare breeds of goats, sheep and chicken; children can help with animal grooming, feeding and more;
  • Parallel climbing ramps and towers for goats and children alike; and
  • A toddler play area equipped with balance beams and spheres.