On Tuesday, Philadelphia voters will be asked to vote on this ballot question:
“Shall The Philadelphia Home Rule Charter be amended to allow for the award of certain contracts based on best value to the city?”
Currently, Philadelphia awards most contracts under the “lowest responsible bid” standard, which generally means that the qualified bidder with the lowest price is awarded the contract. However, because the ballot question is vague and confusing, voters aren’t told this, which might lead some voters to conclude that best value is better than no value at all.
If the ballot question is approved, the city will be allowed to award some contracts on a “best value” standard. But this raises more questions than answers. What contracts will be subject to best value? What standards will be used to decide best value? Who will determine best value to the city? No one really knows because the best-value standards have not even been developed yet.
Nonetheless, the proposed amendment to the charter recently garnered support from the nonpartisan Committee of Seventy. The committee is not typically thought of as proficient in local public procurement, so it formed a task force comprised of board members “with contracting experience in the public- and private-sector” to study the issue.
According to the committee’s press release announcing its support for best value, it “found the proposed amendment to be a step in the right direction to modernize the city’s procurement system,” even though the efficiency and integrity of the new process will depend upon yet-to-be-issued regulations. The Inquirer Editorial Board has come out against the charter amendment, pointing out that flexibility and subjective standards can lead to favoritism and will likely breed suspicion about who really stands to benefit from best-value contracting.
I am unconvinced by the Committee of Seventy’s task force report, and remain opposed to the amendment. My position can be distilled to the following:
If all bidders are equally qualified and competent to perform the contract in question, and if the service or product being contracted for is clearly specified, why isn’t price and cost always the best indicator of best value? What else can be obtained through best value if you have two equally competent contractors competing for the same contract under the same specifications and requirements?
In its press release, the Committee of Seventy states: “The best-value amendment would allow the option to award such contracts using other criteria in addition to cost.” This is highly misleading, as nothing currently prohibits the city from considering “other” criteria in awarding a public contract, provided that such criteria are published prior to the receipt of bids and the bidding is conducted on a level playing field.
Further, the notion that best value will allow the city to “weed out” unqualified bidders, or to consider “schedule” or “past performance,” as suggested by the Committee of Seventy, is wildly overblown. Under its present “lowest responsible bid” procurement standard, the city is perfectly free to consider past performance and can easily eliminate unqualified bidders through a prequalification process or by establishing stringent qualification criteria in the bid specifications. In fact, the Philadelphia Code presently mandates that bidders for city public works contracts must be prequalified to bid. Moreover, the courts in Pennsylvania have consistently held that public officials have broad discretion to determine who is qualified to perform a public contract, so it is unlikely, under the current system, that any court would second guess a decision by the city to reject an unqualified bidder.
Finally, the idea that best-value contracting will eliminate change orders is absurd. Change orders occur on public works projects when there are changes to the work, or when unforeseen conditions are encountered. There is no valid reason to believe that change orders will suddenly disappear on a best-value contract.
In my considered view, the lowest price obtained from a qualified and competent bidder is the epitome of a best value public contract. Changing the low-bid system to a best value standard on even just a few contracts opens the door to arbitrariness, favoritism, collusion, and corruption, all of which were rampant when the “lowest responsible bid” procurement standard was implemented in 1952.
Accordingly, on May 16, I plan to vote NO on the best-value ballot question.