Act 44 of 2009 amended the Municipal Pension Plan Funding Standard and Recovery Act. As part of the amendment, Act 44 sets forth new ethical procedures and requirements for procurement of professional services for pension plan management. The requirements are to provide a more openness to the bidding process and require that contracts be awarded to the “most qualified” bidder. Following are the steps that should be followed for procurement of pension plan management professional services.

Establishment of Procedures
Act 44 requires municipalities to establish procedures for awarding professional service contracts paid out of the pension plan. Further, Act 44 requires those procedures be provided to all potential applicants. Prior to establishing procedures, municipalities should analyze its pension plan to help determine those professional services that need to be contracted and specific requirements for each of those services. Based on the Act 44 requirements, municipalities should do the following in establishing professional service contract procedures:

a. Establish Evaluation Criteria

Act 44 requires municipalities to award the contract to the “most qualified” bidder. The establishment of criteria for each contracted service is essential to ensure and verify that the awarding of the contract was to the “most qualified” bidder. Furthermore, Act 44 requires the preparation of a written summary of the factors that resulted in the award of the contract. The use of established criteria will help in preparation of the written summary. Act 44 provides no guidelines for municipalities to develop criteria; however, the following are some general criteria that should be included:

• qualifications, experience and expertise related to Pennsylvania municipal pensions
• approach to managing risk and research capabilities
• knowledge of Act 205 & Act 600
• fees
• ability to attend meetings
• references
• ultimate confidence bidder is able to meet the municipality’s goals and address the municipality’s concerns

b. Disclosure Requirements

Act 44 requires extensive disclosure requirements for all applicants and places temporary bans on applicants that have made certain political contributions within the past two years. I In addition to the applicant, Act 44 requires disclosures by all employees and agents who will provide services under the contract.2 Municipalities must prepare and include in its procedures a disclosure form to be submitted with each application.3 The form should include following:

• Disclosure of political contributions
• financial, commercial or business relationships with municipal officers
• whether the individual is a current or former official or employee of the municipality
• whether the individual has been registered Federal or State lobbyist
• a description of individual’s responsibilities under the contract
• resume

For your consideration attached is a form that requests the disclosures required under Act 44.

c. Conflict of Interest

The selection procedure must further incorporate a conflict-of-interest policy that would restrict, for a minimum of one year, the following: (1) participation by a former employee of a contractor or a potential contractor in the review of a proposal or negotiation of a contract with that contractor; and (2) participation of a former employee of the municipal pension system in the submission of a proposal or the performance of a contract.

d. Communication

Once the notice is advertised, communication between bidders and municipal officials and employees is prohibited, except requests for technical clarification.

e. Advertisement

Act 44 requires professional service contracts notices to be “advertised to potential participants in a timely and efficient manner.” The term “advertise” appears to place a requirement on municipalities to make the notice publically or generally known. To satisfy this requirement, publication of the notice in a newspaper is not necessarily required. However, if publication is used, once should be sufficient. Act 44 does not place a limit on how far in advance the notice is to be advertised; however, municipalities should consider the extensive disclosure requirements when establishing the notice requirements in its procedures. To ensure potential applicants are aware of the notice, a list of prospective applicants generally known to meet the minimum criteria should be maintained and regularly updated, with a copy of the notice provided by regular mail or e-mail. Under Act 44, advertised notices shall include the following:

• services that are the subject of the proposed contract
• a set of specifications relating to the services
• the procedures adopted by the municipality for applicants to compete for the contract
• a list of required disclosures

Review and Award

Applications must be reviewed pursuant to the standards established by the municipality. After completing the review, the municipality shall award the contract to the “most qualified” bidder. Within ten (l0) days of awarding the contract, a copy of the winning bidder’s application, the written summary of the factors that resulted in the award of the contract, and the required disclosure forms shall be provided to all unsuccessful bidders and posted on the municipality’s website. Municipalities may not enter into a professional service contract prior to seven (7) days of transmitting said information to unsuccessful bidders.

Miscellaneous

• After the awarding of the contract, all applications and disclosure forms are considered public documents, except such for proprietary information, and any other information otherwise protected by law. Applicants should be required to identify any claim of confidentiality at the time the information is submitted.
• Increase in the cost of the contract by the greater of 10 percent of the contract or $10,000, shall require a written justification for the increase be made public and posted on the municipal pension system’s website at least seven days prior to the effective date of the contract amendment.

Vincent M. Pompo
Voice (610) 430-8000
Fax (610) 692-6210
vpompo@chescolaw.com

Robert T. McClintock
Voice (610) 430-8000
Fax (610) 692-6210
bmcclintock@chescolaw.com