(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 the purchase shall be made from or the contract shall be awarded to the lowest responsible bidder.

(2) If any purchase or contract for which competitive bidding is required involves an expenditure of more than ten thousand ($10,000) dollars,[3] which amount shall be adjusted every five (5) fiscal years as rounded to the nearest one thousand ($1,000) dollars 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:

(a) The Procurement Department shall advertise for sealed bids 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. The Department shall require a certified check in an appropriate 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;

(b) Bids shall publicly be opened and tabulated in the presence of a representative of the City Controller at the time specified for their opening. 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 substitute for his certified check a performance bond, and where appropriate, a labor and materials bond containing such terms as the Department and the City Solicitor shall require and in such amount as the Department may determine;

(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. It shall contain a provision that in the performance of the contract the contractor will not discriminate nor permit discrimination against any person because of his race, color, religion or national origin;

(e) The Procurement Department may in its discretion, permit a bidder to file an annual bond 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 bond 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.

(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.

ANNOTATION

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 $2,000.00 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.