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December 19, 2007
TO THE PRESIDENT AND MEMBER OF
THE CITY OF PHILADELPHIA:
I have signed Bill No. 070910 which would require the City to pay vendor invoices within 60 days or pay monthly interest of 1½% on amounts claimed. City vendors would have a similar prompt pay requirement.
I note the Law Department has determined that significant portions of the legislation are unenforceable, because they exceed City Council's authority and will not be enforced by the City. Specifically, they are the provisions:
- Requiring the City to make prompt payments to contractors, or to pay
interest on contracts not subject to Council approval and
- Requiring the City to require its contractors to make prompt payments to
subcontractors, or to pay interest if the contract is not subject to competitive bidding or Council approval (e.g., one year professional services contracts).
Conversely, the City Solicitor has determined the City will be required to make prompt payments and to pay interest on late payments on any procurement contracts approved by City Council, typically, procurement contracts for more than one year. City also will be required to include in its procurement contracts a provision requiring the contractor to pay its subcontractors promptly and to pay interest on late payments to the extent the City's contract is for the purchase of goods or services and is either subject to competitive bidding (e.g., public works contracts; supply and equipment contracts); or approved by City Council. The requirement to include these provisions in competitively bid contracts is pursuant to the City's long-standing practice of complying with similar Council-imposed requirements, and is not necessarily lawfully required.
With warmest regards I remain,
Sincerely
John F. Street
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