Pennsylvania Consolidated & Unconsolidated Statutes
Chapter 14 - Contracts
Section 1402 - Regulation of contracts

(a) Requirements.--All contracts or purchases in excess of the base amount of $18,500, subject to adjustment under subsection (a.2), except those mentioned in this section and except as provided by the act of October 27, 1979 (P.L.241, No.78), entitled "An act authorizing political subdivisions, municipality authorities and transportation authorities to enter into contracts for the purchase of goods and the sale of real and personal property where no bids are received," shall not be made except with and from the lowest qualified and responsible bidder after due notice in one newspaper of general circulation, at least two times at intervals of not less than three days where daily newspapers of general circulation are available for publication and, in case of weekly newspapers, notice once a week for two successive weeks. The first advertisement shall be published not more than 45 days and the second advertisement not less than ten days prior to the date fixed for the opening of bids. Advertisements for contracts or purchases must also be posted in a conspicuous place within the borough. Advertisements for contracts and purchases must contain the date, time and location for opening of bids and must state the amount of the performance bond determined under subsection (c). The amount of the contract must in all cases, whether of straight sale price, conditional sale, lease, lease purchase or otherwise, be the entire amount which the borough pays to the successful bidder or the bidder's assigns in order to obtain the services or property, or both, and may not be construed to mean only the amount that is paid to acquire title or to receive another particular benefit of the whole bargain.
(a.1) Price quotations.--Written or telephonic price quotations from at least three qualified and responsible contractors must be requested for contracts in excess of the base amount of $10,000, subject to adjustment under subsection (a.2), and less than the amount requiring advertisement and competitive bidding, or, in lieu of price quotations, a memorandum must 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 must be made and must 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 that was the subject of the quotation and the price. Written price quotations, written records of telephonic price quotations and memoranda must be retained for a period of three years. Written price quotations as used throughout this section include electronic mail.
(a.2) Adjustments to base amounts.--Adjustments to the base amounts specified under subsections (a) and (a.1) must be made as follows:
(1) The Department of Labor and Industry shall determine the percentage change in the Consumer Price Index for All Urban Consumers: All Items (CPI-U) for the United States City Average as published by the United States Department of Labor, Bureau of Labor Statistics, for the 12-month period ending September 30, 2012, and for each successive 12-month period.
(2) If the Department of Labor and Industry determines that there is no positive percentage change, no adjustment to the base amounts may occur for the relevant time period provided for in this subsection.
(3) (i) If the Department of Labor and Industry determines that there is a positive percentage change in the first year that the determination is made under paragraph (1), the positive percentage change must be multiplied by each base amount, and the products must be added to the base amounts, respectively, and the sums must be preliminary adjusted amounts.
(ii) The preliminary adjusted amounts must be rounded to the nearest $100 to determine the final adjusted base amounts for purposes of subsections (a) and (a.1).
(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 must be multiplied by the most recent preliminary adjusted amounts, and the products must be added to the preliminary adjusted amount of the prior year to calculate the preliminary adjusted amounts for the current year. The sums must be rounded to the nearest $100 to determine the new final adjusted base amounts for purposes of subsections (a) and (a.1).
(5) The determinations and adjustments required under this subsection must be made in the period between October 1 and November 15 of each year.
(6) The final adjusted base amounts and new final adjusted base amounts obtained under paragraphs (3) and (4) become effective January 1 for the calendar year following the year in which the determination required under paragraph (1) is made.
(7) The Department of Labor and Industry 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 is required under subsection (a) and written or telephonic price quotations are required under subsection (a.1), respectively, for the calendar year beginning January 1 after publication of the notice. The notice must include a written and illustrative explanation of the calculations performed by the department in establishing the unadjusted or final adjusted base amounts under this subsection for the ensuing calendar year.
(8) The annual increase in the preliminary adjusted base amounts obtained under paragraphs (3) and (4) may not exceed 3%.
(b) Awarding contracts and authority of council.--
(1) The award of contracts must be made by public announcement at the meeting at which bids are received, or at a subsequent meeting, the time and place of which shall be publicly announced when bids are received. If for any reason one or both of the meetings are not held, the same business may be transacted at a subsequent meeting if at least five days' notice shall be published in the newspaper of general circulation. At council's request, the bids advertised for must be accompanied by cash, money order, a certified or cashier's good faith check or other irrevocable letter of credit drawn upon a bank authorized to do business in this Commonwealth or by a bond with corporate surety in the amount as council determines, and, when requested, no bid may be considered unless so accompanied.
(2) Notwithstanding paragraph (1), council may direct that a committee of council, a member of council or a member of the borough staff receive, open and review bids during normal business hours and forward the information to council for subsequent award at a public meeting. Bidders must be notified and other interested parties, upon request, must be notified of the date, time and location of the opening of bids and may be present when the bids are opened.
(c) Security.--The successful bidder when advertising is required may, at the discretion of council, be required to furnish a bond or irrevocable letter of credit or other security with suitable reasonable requirements guaranteeing the work to be done with sufficient surety in an amount as determined by council that must be not less than 10% nor more than 100% of the amount of the liability under the contract within 20 days after the contract has been awarded, unless council shall prescribe a shorter period of not less than ten days, and, upon failure to furnish the security within the time, the previous award is void. Deliveries, accomplishment and guarantees may be required in all cases of expenditures.
(d) Contracts or purchases.--The contracts or purchases made by council, which shall not require advertising, bidding or price quotations as provided in this part, are as follows:
(1) Those for routine maintenance, repairs or replacements for water, electricity or public works of the borough, if they do not constitute new additions, extensions or enlargements of existing facilities and equipment, but security may be required by council, as in other cases of work done.
(1.1) Those for emergency maintenance, repairs or replacements for water, electricity or public works of the borough, if they do not constitute new additions, extensions or enlargements of existing facilities and equipment, but security may be required by council, as in other cases of work done. The actual emergency and the nature of the procurement shall be stated in a resolution by council and adopted at the next public meeting.
(1.2) Those for the mitigation of a real or potential emergency involving a clear and present danger to the health, safety and welfare of the residents of the borough. For those contracts or purchases made in cases of emergencies, the actual emergency and the nature of the procurement shall be stated in a resolution by council and adopted at the next public meeting.
(2) Those made for improvements, repairs and maintenance of any kind, made or provided by a borough, through its own employees, if the materials used for street improvement, maintenance or construction in excess of the amount specified or adjusted under subsection (a.1) are subject to the relevant price quotation or advertising requirements contained in this section.
(3) Those under which particular types, models or pieces of new equipment, articles, apparatus, appliances, computer software, vehicles or parts of vehicles are desired by council, which are patented and manufactured or copyrighted products.
(3.1) Those for used personal property, such as equipment, articles, apparatus, appliances, vehicles or parts of vehicles being purchased from a public utility, municipal corporation, county, school district, municipal authority, council of government, volunteer fire company, volunteer ambulance service, volunteer rescue squad or Federal or State Government.
(4) (i) Those involving a policy of insurance or a surety company bond.
(ii) Those made for utility service for borough purposes, including, but not limited to, those made for natural gas or telecommunications services and electricity.
(iii) (Deleted by amendment).
(iv) Those made with another political subdivision, or a county, or council of governments, consortium, cooperative or other similar entity created under 53 Pa.C.S. Ch. 23 Subch. A (relating to intergovernmental cooperation) or the Commonwealth, the Federal Government, an agency of the Commonwealth or the Federal Government, or a municipal authority, including the sale, lease or loan of any supplies or materials by the Commonwealth or the Federal Government or their agencies. The price may not be in excess of that fixed by the Commonwealth, the Federal Government or their agencies.
(5) Those involving personal or professional services.
(6) Those made relating to the purchase of electricity and associated energy and related services by a borough owning or operating electric generation or distribution facilities with any of the following:
(i) A political subdivision.
(ii) Another state.
(iii) The Commonwealth or a Commonwealth agency.
(iv) The Federal Government.
(v) A private corporation.
(vi) An electric cooperative corporation under 15 Pa.C.S. Ch. 73 (relating to electric cooperative corporations).
(vii) A nonprofit membership corporation. As used in this subparagraph, the term "nonprofit membership corporation" means an entity, the membership of which:
(A) consists solely of Commonwealth boroughs, such as a consortium, buying group or municipal power agency under section 24A04 (relating to municipal power agencies); or
(B) consists of Commonwealth boroughs and political subdivisions of another state.
(viii) An electric cooperative of another state.
Nothing in this paragraph prohibits council from engaging in advertising, bidding or price quotations if the council determines that the advertising, bidding or price quotations are in the public interest.
(7) Those made for materials and supplies or equipment rental under emergency conditions under 35 Pa.C.S. Pt. V (relating to emergency management services).
(e) Applicable law.--Council shall award contracts subject to the requirements of and may exercise any powers granted by the following acts to the extent applicable:
(1) The act of August 15, 1961 (P.L.987, No.442), known as the Pennsylvania Prevailing Wage Act.
(2) The act of December 20, 1967 (P.L.869, No.385), known as the Public Works Contractors' Bond Law of 1967.
(3) The act of January 17, 1968 (P.L.11, No.5), known as The Minimum Wage Act of 1968.
(4) The act of January 23, 1974 (P.L.9, No.4), referred to as the Public Contract Bid Withdrawal Law.
(5) The act of March 3, 1978 (P.L.6, No.3), known as the Steel Products Procurement Act.
(6) The act of February 17, 1994 (P.L.73, No.7), known as the Contractor and Subcontractor Payment Act.
(7) 62 Pa.C.S. Pt. II (relating to general procurement provisions).
(f) Prohibition.--No person, consultant, firm or corporation contracting with the borough for purposes of rendering personal or professional services to the borough may share with a borough officer or employee, and no borough officer or employee may accept, a portion of the compensation or fees paid by the borough for the contracted services provided to the borough except under the following terms or conditions:
(1) Full disclosure of the relevant information regarding the sharing of the compensation or fees must be made to the council of the borough.
(2) The council of the borough must approve the sharing of a fee or compensation for personal or professional services prior to the performance of the services.
(3) No fee or compensation for personal or professional services may be shared except for work actually performed.
(4) No shared fee or compensation for personal or professional services may be paid at a rate in excess of that commensurate for similar personal or professional services.
(Oct. 24, 2018, P.L.673, No.99, eff. 60 days; Oct. 24, 2018, P.L.885, No.140, eff. 60 days)
2018 Amendments. Act 99 amended subsec. (d)(1), (4)(ii) and (6), added subsec. (d)(1.1), (1.2) and (7) and deleted subsec. (d)(4)(iii) and Act 140 amended subsec. (d)(3.1).
Cross References. Section 1402 is referred to in sections 1403, 1405 of this title.