During the recent Pennsylvania State Senate Appropriations Committee Budget Hearings for Fiscal Year 2017-2018, the Department of General Services Secretary Curt Topper testified to discuss the proposed appropriations for his department. When Committee Chair Sen. Pat Browne opened the floor for questions, Topper gave a response to one particular question that may surprise you. He spoke in favor of modernizing the Separations Act.
Before we get to his testimony, let’s first explain what the Separations Act is. Enacted over a century ago, the Separations Act derives its name from its mandate to have separate prime contractors for one public construction project in the areas of general construction, electrical, plumbing, heating & air conditioning. This is referred to as a Multiple Prime Delivery System. In essence, the Separations Act forces the public owner to serve as the General Contractor for a project and each of the primes contract directly to the public owner.
This is an inefficient contract delivery method fraught with problems such as delays and claims, which are two culprits for projects being over-budget. This multiple prime delivery system only exists in three states and this system is not used in the federal, private, residential, and commercial markets. The construction industry has drastically evolved over the past century, but Pennsylvania is unable to take advantage of progressive delivery methods like Design/Build and Construction Management-At-Risk because of the Separations Act.
During the budget hearing whenTopper spoke in favor of modernizing the Separations Act, it was shocking to the commercial construction industry in that this issue is supported by organized labor and one would expect when a Democrat is governor that the administration would support labor. But what exactly did the DGS official say, here’s how it played out:
Sen. Mike Folmer asked the DGS Secretary to provide a 30,000-foot view on the changes to the Pennsylvania Procurement Code that Topper thinks we need to address. Secretary Topper’s response:
“The changes that I would like to see are all based on an understanding that we face some significant constraints that the private sector does not face when it comes to managing our money efficiently. So, for example the Commonwealth, when we go to market in order to contract to do construction, we are bound by the Separations Act of 1913. We are one of three remaining states in the U.S. that has a Separations Act. The Separations Act requires that we do business less efficiently than we could otherwise do business. It effectively prohibits us in the main from doing Design/Build; it effectively prohibits us in the main from doing Integrated Project Delivery; and it effectively sets up a situation where it is much more difficult to design a project, to bid a project, and to manage a project. So, I'd love to see us address that problem.”
After making this last statement, Topper paused and you could someone say: “I too,” presumably Folmer.
Then Topper continued, discussing other issues that DGS face concerning the Procurement Code besides the Separations Act. Then he tied all the Code discussion together with this statement: “The kind of changes suggested are really on the order of housecleaning right. I'd love to see us take a look at the [Procurement] Code from start to finish and remove some of the requirements that imply costs and constraints that aren't necessarily adding value.”
Bravo to DGS Secretary Topper for saying what everyone knows: the time has come to repeal this antiquated and pointless statute. The Commonwealth can no longer afford to ignore the obstacles that the Separations Act creates.
— Jon O’Brien is executive director for the Keystone Contractors Association. Based in Lemoyne, PA, the KCA is a commercial construction trade association with members based throughout the Commonwealth. For more on the KCA visit www.KeystoneContractors.com.
— NOTE: To view the referenced DGS testimony in its entirety, visit the following webpage (page down to DGS — the Separations Act comments begin during minute five of the video): http://www.pasenategop.com/budget-hearings-summary/.