OFFICIAL OPINION No. 32

OFFICIAL OPINION No. 32 The Admini str ativ e Code-D epar tment of Property and Supplies-Off-Schert- 1tle purchases-Security-Duplicate sealed bids 1. The discretion given by the Administrative Code to the Department of Property and Supplies in purchasing unscheduled and unanticipated items must be exercised wit hin reasonable limits. 2. The first twenty-two paragraphs of Section 2409 of The Administrative Code (71 P.S. §639) refer only to the purchase of scheduled articles and not to the purchase of items that were not anticipated when the sched- ules were prepared. 3. The Secretar y of P roperty and Supplies may, within his reasonable discretion, eliminate security and/ or performance bond requirements on purchases that were not anticipated at the time of the making of the schedules. 4. The Secretary of Property and Supplies may within his reasonable dis- cretion eliminate the requirement that sealed bids on unanticipated pu rcha~es be submitted in duplicate, and may accept a single sealed bid. Honorable Frank C. Hilton Secretay Department of Property and Supplies Harrisburg, Pennsylvania Harrisburg, Pa. April 18. 1973 78 OPINIONS OF THE ATTORNEY GENERAL Dear Secretary Hilton: This will acknowledge receipt of your let~e~ of. March .30, 1973 wherein you have requested a formal opm10n mter.r;>retmg Section 2409 of The Administrative Code ( 71 P.S. §639) msofar as it applies to the requirements for security and/ or perfor- mance bonds for purchases of stationery, paper, fuel, furnishings and supplies that were not anticipated at the time of the making of the department's schedules for those items. It is our opinion, and you are so advised, that the Department of Property and Supplies may purchase unscheduled and unanticipated items without requiring security or performance bonds. However, the discretion given by The Administrative Code to the Department of Property and Supplies in purchasing such items must be ex- ercised within reasonable limits. You have suggested that there be a $10,000 limitation on the amount of any item purchased which item is unanticipated at the time of preparing the sched- ules. This limitation meets the standards of reasonableness and there may be other restrictions you may wish to impose such as requirements that bidders submit financial statements to the Department of Property and Supplies prior to bid. TherPfore, you are advised to promulgate rules and regulations in the Penn- sylvania Bulletin setting forth the procedures for the purchase of non-scheduled unanticipated items which procedures de~cribe reasonable limits on the exercise of your Department's discre- tion in this area. We have carefully reviewed Section 2409 of The Administra- tive Code and we have also reviewed the previous informal Attorney General's Opinion, dated November 14, 1939, to which you have referred in your letter. The question of the require- ment of security has been dealt with in an excellent manner in that opinion and we adopt the following language which we have quoted therefrom: "Since you refer us to Section 2409 of The Administra- tive Code, as amended, which section deals with the method of awarding contracts for the furnishing of stationery, paper, fuel, furnishings and supplies, we assume your inquiry is confined to those off-schedule articles which you purchase under said section of the Code. "Section 2409 of The Administrative Code, Act of April 9, 1929, P.L. 177, was amended by the Act of June 21, 1937, P.L. 1885. "The first twenty-two paragraphs of Section 2409 of The Administrative Code prescribe in detail the method of purchasing scheduled articles. It requires your de- partment to formulate schedules with details and spec- ifications, where necessary, and to advertise said pro- posals 'for at least three days, the first and last publi- OPINIONS OF THE ATTORNEY GENERAL cation to be at least ten days apart, in not less than six or more than twelve newspapers of extensive general circulation in different parts of the Commonwealth, not more than three of which shall be published in any one county.' It further prescribes that no proposal for any contract shall be considered unless such proposal is accompanied by certified or bank check, to the order of the State Treasurer, in one-fourth of the amount of the estimated contract, or by a bond in such form and amount as may be prescribed by your department. In lieu of the certified or bank check, it authorizes your department, in its discretion, to permit a bidder to file a bond for an annual period to cover proposals that may be made from time to time by such bidder during such period; or, such bidder may file a combination bid and performance bond covering an annual period. "A careful study of the first twenty-two paragraphs of Section 2409 of The Administrative Code, as amended, has convinced us that they refer only to the purchase of scheduled articles, as they speak repeatedly of 'the articles named in the schedules,' or 'the quantities given in the schedules.' "Recognizing the fact that it is not always possible to anticipate the need of every particular article or the probability of scheduling the same, Section 2409 of The Administrative Code as amended, contains the follow- ing provision: 'In the event that requisitions are made upon the department for any article of furniture, furnishings, stationery, supplies, fuel or any other matter or thing, the want of which was not anticipated at the time of the making of the schedules, the department may, in its dis- cretion, invite proposals from at least two re- sponsible bidders, unless the article can be pro- cured from only one source, and, then one pro- posal shall be invited, such proposal or pro- posals, toe:ether with such requistion or requi- sitions, shall be submitted to the Board of Com- missioners of Public Grounds and Buildings for apnroval or disapproval: Provided, how- ever, That the department mav, in its discre- tion, purchase in the open market, without in- vitine: any nroposal, any such article costing less than fifty dollars, but all such purchases shall be renorted to the Board of Commission- ers of Public Grounds and Buildings at its next meeting.' "It will be noted at once there is a marked difference between the method set up in The Administrative Code 79 80 OPINIONS OF THE ATTORNEY GENERAL for the awarding of contracts for scheduled articles and those articles which are not scheduled. The scheduled contracts require that they be advertised, whereas all off-schedule articles may be purchased by your depart- ment after inviting 'proposals from at least two re- sponsible bidders.' If one proposal for an off-schedule article is received, as where the article can be procured from only one source, then such proposal, together with the requisition, shall be submitted to the Board of Commissioners of Public Grounds and Buildings for its approval or disapproval. Where the article cost less than $50 your department is authorized, in its discre- tion, to purchase said article in the open market with- out inviting any proposal, but such purchase must be reported to the Board of Commissioners of Public Grounds and Buildings at its next meeting. Nowhere in the provision above quoted covering the purchase of off-schedule articles does it appear that the bidder must furnish a certified check or give a bid bond. The reason for requiring a certified check or a bid bond to accompany the bid for a contract to furnish scheduled articles does not exist in the case of the purchase of a single article or a number of articles off-schedule. The performance of a schedule contract covers a period of time, usually six months, whereas, an off-schedule pur- chase is usually made and completed in one transaction. We are of the opinion, however, that your department, in its discretion, may require a bid check or bid bond to accompany a bid on the furnishing of off-schedule ar- ticles where it deems the same necessary for the pro- tection of the Commonwealth, as well as requiring per- formance bond.'' As a result of the foregoing discussion, we are of the opinion and you are accordingly advised that the Secretary of Property and Supplies may, within reasonable discretion, eliminate se· curity and/or performance bond requirements on purchases that were not anticipated at the time of the making of the schedules. Yo~ have also . as~ed whether the Secretary of Property and Supplies may ehmmate the requirement that sealed bids on unanticipa~ed p~r~hases be submitted in duplicate. In view of the fore?01ng opimon. you have the discretion to accept a single sea~ed bid. It should be noted in this regard that the regulations which you have -~)(~en advised to promulgate by this opinion would, of course, mclude procedures for sealed bids as well as other matters suggested above. Very truly yours, W.W. A NDERSON Deputy Attorney General ISRAEL p ACKEL Attorney General OPINIONS OF THE ATTORN:C-/ GENERAL 81