GBCA Leads Court Effort to Save School District $75M

Wed November 17, 2004 - Northeast Edition

Most average taxpayers would not know the difference between the single prime contracting method and the multiple prime contracting method. But taxpayers in Philadelphia may want to learn, because with the continuing capital program for school construction, it’s a difference to the tune of $75 million.

In Pennsylvania, under the Separations Act of 1913, all public works construction projects are divided into a minimum of three separate prime contractors: HVAC, mechanical and general. However, between 1919 and 1951, and again from 1957 to 1959, the school code governing public school construction permitted single prime contracting, where an owner only contracts with one general contractor.

The code was changed in 1959 to require multiple prime. As school construction became more complex over time, this multiple prime delivery method proved less effective and more costly, negatively affecting all involved, including the students. Therefore, in 2000, the General Assembly in Harrisburg passed legislation that permitted schools to obtain waivers from the Department of Education from the mandate of multiple prime contracting.

Between 2001 and 2003, the Pennsylvania Department of Education granted such waivers to 61 schools. The application from the School District of Philadelphia estimated in its application that, for the projects listed in its application, it could save $28 million — literally the cost of a new school — by using single prime contracting.

In January 2003, a lawsuit was filed against the waiver system, and, unfortunately for the school districts, a single judge from the Commonwealth Court ruled that a waiver the Department of Education had granted must be rescinded because, according to that one judge, the schools also were subject to the aforementioned Separations Act. A settlement was reached and the school was completed, but the remaining waivers were put on hold.

Anticipating the major school construction program in Philadelphia, Philadelphia Builders Chapter of the Associated General Contractors of America (GBCA) contractors could not sit idly by knowing that they could make a difference in the quality of the work and the cost of delivery. Believing that the court had reached an erroneous conclusion, GBCA commenced a lawsuit against the Department of Education to reinstate the waiver program to permit single prime contracting for school construction.

Bob Prentice, of Duane Morris, one of GBCA’s attorneys, explained that, “The school code is the exclusive statute for public school construction, so the Separations Act, which applies to other public buildings, is simply inapplicable to contracting for school construction.”

GBCA’s position has gathered much support, including the School District of Philadelphia, The Philadelphia Chapter of the American Institute of Architects (AIA), The Pennsylvania Association of School Boards, the Pennsylvania Association of School Board Officials, two large unions, and, in an unprecedented case, the Department of Education itself.

“Although it is hardly typical that a party that is sued ends up filing papers in support of the position of the party who sued them, that’s exactly what happened here. The Commonwealth supported GBCA’s position in Commonwealth Court,” commented Rick Lowe, another of GBCA’s attorneys at Duane Morris, referring to the Sept. 8 hearing in Harrisburg.

In addition, the representative of the School District of Philadelphia agreed, in court, with the extensive research and documentation that shows the savings potential if the schools are permitted to use single prime during the current capital program — savings of $28 million on the $500 million Phase I, and $75 million over the course of the $1.5 million program.

GBCA has attracted support from many sectors for this effort.

“That such a coalition of different interests can join together with GBCA in this effort proves that single prime contracting is an idea whose time has come,” stated Walter Palmer III, president and CEO of GBCA.

For now, GBCA and its coalition have done all they can to support the School District, and must wait for the Commonwealth Court to render its decision.

“Single prime contracting saves money, creates a single point of responsibility, and reduces lawsuits,” stated John Ball, GBCA board member and president of Shoemaker Construction Co. in West Conshohocken, PA.

“Hopefully GBCA’s efforts will lead to savings of millions of dollars, all of which can be used to benefit school children without any increase in taxes or cutback in services.”