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Apr 6, 2020

Proposed Lehigh County, PA Regulation Changes May Restrict GOVT Contract Bidding

David Spaulding

Lehigh County, PA commissioners have introduced a regulation change which, if enacted, would limit which construction companies can bid for government contracts.

On March 4, 2020, Lehigh County Commissioners proposed an ordinance which would adversely affect the construction industry and which may be a blueprint for other ordinances.  The title is “AN ORDINANCE OF LEHIGH COUNTY PROVIDING FOR THE ADOPTION OF CERTAIN PROCEDURES RELATED TO THE SOLICITATION AND AWARD OF PUBLIC WORKS CONTRACTS WITHIN LEHIGH COUNTY AND AMENDING SECTION 801.3 OF THE ADMINISTRATIVE CODE” and it is Bill No. 2020 - 07 (“Regulation”). 

The Regulations states that a contractor, for any government work over $100,000, has to submit a “CONTRACTOR RESPONSIBILITY CERTIFICATE,” a Subcontractor List, and a Subcontractor Responsibility Certificate for each subcontractor on the project. 

Only “Class A Apprenticeship” Compliant Companies Could Bid Under these Regulations.

On its face, the requirement that companies certify that they will use subcontractors to competently perform  the work sounds reasonable.  However, Page 3, Section (D)(1), requires of contractors “proof that the subcontractor participates in a Class A Apprenticeship Program.” 

The designation “Class A Apprenticeship Program” is something of a fiction since apprenticeship programs are not defined this way by Pennsylvania or the federal government.  Therefore, we have to look at the Regulation itself to know what that means.  It is defined on Page 5, Section (D)(3)(l) as one which: 1) is registered, 2) has graduated apprentices to journey person status for 3 of the last 5 years.  

Whatever the Underlying Intent, the Regulation Will Likely Have a Negative Practical Effect on the Construction Industry.

 Since the Lehigh County Commissioners did not reference any particular incident or issue in proposing the Regulation so we can only really look at its practical effects to evaluate it:  Let us say Contractor X bids on work worth $100,000 +; under this Regulation, only subcontractors which have a qualifying apprenticeship program can work on the project.

A $100 K project is fairly small and an independent, non-union contractor would normally parcel out the sub-contractor jobs to smaller companies.   Under the proposed Regulation though, no small to mid-sized construction company could qualify as a contractor, much less a sub-contractor.  In essence, the Regulation quietly vests contracting in a handful of companies which are large enough and have robust enough apprenticeship programs to meet the more restrictive requirements.  Alternatively, such companies could be fully aligned with unions which have large enough apprenticeship programs to consistently qualify under the “Class A” description in the Regulation.

The Regulation Does Not Seem to Serve Taxpayer Interests Either.

The Lehigh County Commissioners did not reference any incident in which this system has resulted in sub-standard work for Lehigh County in proposing these changes and there is no reasonable belief that small to mid-sized construction industry companies have failed to perform their government contracts well.  A rule which advantages only a small number of large companies in bidding for contracts must, by its nature, reduce competition.  Setting aside the impact on companies, this seems unwise for taxpayers. 

Competition is efficient and effective.  Reducing the number of companies which can compete for government contracts directly attacks the goals of government contracting policies; mainly, to efficiently use tax dollars to get the highest quality work.  Acknowledging that counties have a duty to make sure that projects are handled in a workmanlike manner, we want tax dollars spent well too.  That goal is thwarted by handing out contracts to a small group of pre-selected contractors and subcontractors.  We want high quality work at a fair price, not an inflation of costs by diminishing participants. 

Government Has Less Restrictive Means for Ensuring Workmanlike Performance of Construction Contracts.

Governments have immense resources and significant recourse to employ against a contractor who poorly performs the work.  Simple, normal inspection protocols are ostensibly sufficient to guarantee the county’s interest.  Pennsylvania Counties directly employ officials to oversee this work and to make sure that we, the taxpayers, get what we paid for so what is the problem this Regulation is designed to solve?

Bottom line?  This seems like an ill-advised solution to an undefined problem.  The Regulation cuts all but a small group of pre-selected construction businesses out of consideration and that neither seems like good policy, nor fair to businesses which pay substantial taxes and have as much right to bid for work as their competitors.

The Proposal Is Subject to Hearing Before it Becomes Law And Some Consideration Seems Appropriate.

For interested parties, it should be noted that there will be a Public Zoom with the Lehigh Board of Commissioners on Tuesday, April 7, 2020.  The text of the proposed Regulation can be found here:

https://files.constantcontact.com/9dc6ab67001/34953110-ceed-4109-b892-b0aadbc828e0.pdf

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