An Act amending Title 62 (Procurement) of the Pennsylvania Consolidated Statutes, in source selection and contract formation, further providing for supplies manufactured and services performed by persons with disabilities.

PRINTER'S NO. 471
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 487
Session of
2025
INTRODUCED BY KHAN, D. MILLER, GREEN, VENKAT, FIEDLER, O'MARA,
SANCHEZ, PROBST, HOHENSTEIN, GIRAL, CEPEDA-FREYTIZ, HILL-
EVANS, NEILSON, DELLOSO, FLEMING AND OTTEN, FEBRUARY 4, 2025
REFERRED TO COMMITTEE ON STATE GOVERNMENT, FEBRUARY 4, 2025
AN ACT
Amending Title 62 (Procurement) of the Pennsylvania Consolidated
Statutes, in source selection and contract formation, further
providing for supplies manufactured and services performed by
persons with disabilities.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 520 of Title 62 of the Pennsylvania
Consolidated Statutes is amended to read:
§ 520. Supplies manufactured and services performed by persons
with disabilities.
(a) General rule.--
(1) Contracts for supplies manufactured by and services
performed by persons with disabilities shall be entered into
in accordance with this section without the requirement for
competitive bidding. The following apply:
(i) Persons with disabilities must make an
appreciable contribution in manufacturing [an item] a
supply or performing a service.
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(ii) The department shall determine whether the
contribution by persons with disabilities is an
appreciable contribution.
(2) When the Commonwealth enters into a contract under
this section with a cost exceeding $300,000 per year, the
department, in cooperation with the purchasing agency, shall
conduct an annual review to confirm compliance with the
contract and the requirements of this section. The annual
review shall include, but not be limited to, an assessment of
all requirements related to appreciable contribution. If the
department, in cooperation with the purchasing agency,
determines that persons with disabilities are not making an
appreciable contribution in the manufacturing of [an item] a
supply or the performance of a service or an agency for
persons with disabilities is not in compliance with other
requirements of this section, the department shall give an
agency for persons with disabilities 45 days in which to
remedy the deficiency. If the agency for persons with
disabilities fails to remedy the deficiency within 45 days,
the agency for persons with disabilities shall be deemed to
be in noncompliance with the contract, and the purchasing
agency may terminate the contract and seek to procure the
[item] supply or service through a competitive bidding
process. Nothing in this section shall preclude a purchasing
agency from procuring [an item] a supply or service through
an emergency contract when an agency for persons with
disabilities is deemed to be in noncompliance.
(3) The following apply to s ubminimum wage:
(i) Beginning on the effective date of this
subparagraph, the department is prohibited from entering
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into any new contract that utilizes a Federal 14(c)
certificate for work connected to this section.
(ii) Beginning t wo years following the effective
date of this subparagraph, the use of a Federal 14(c)
certificate for work connected to this section is
prohibited.
(4) The following apply to integration:
(i) Beginning two years following the effective date
of this subparagraph, an agency for persons with
disabilities shall have a work environment that is
integrated for employees connected to State contracts
described in this section.
(ii) In determining whether a location is
integrated, employees who are persons with disabilities
must interact with other individuals who are not persons
with disabilities at the work location. The interaction:
(A) Shall not apply to supervisors, job coaches
and service providers.
(B) Shall involve coworkers, customers, vendors
and members of the general public.
(iii) For purposes of this section, an agency for
persons with disabilities may be an organization that
affirmatively hires and promotes persons with
disabilities, if the agency for persons with disabilities
meets the integration requirement and other eligibility
requirements under this section.
(iv) The department shall require an attestation
from each agency for persons with disabilities specifying
that applicable locations are integrated in accordance
with this paragraph.
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(v) The department shall monitor compliance with the
integration requirement under this paragraph by a
participating agency for persons with disabilities
through the annual review in accordance with paragraph
(2), which shall also include a location site visit to
the agency for persons with disabilities:
(A) no less frequently than every five years; or
(B) upon receipt of a credible allegation that
the participating agency for persons with
disabilities is in material violation of the
integration requirement.
(vi) The department may delegate the duty to monitor
compliance under subparagraph (v) through an interagency
agreement to the Office of Vocational Rehabilitation or
another State department or agency.
(5) Each agency for persons with disabilities shall
prioritize disability inclusion and representation regarding
employment strategic planning.
(b) Fair market price.--Upon request to the department and
notice to the purchasing agency, the department shall determine
the fair market price of any supply manufactured by or service
performed by persons with disabilities and offered for sale to
any Commonwealth agency by an agency for persons with
disabilities. The department shall revise the prices in
accordance with changing market conditions.
(c) Distribution.--[At the request of the department, the
Department of Public Welfare or a nonprofit agency with the
approval of the Department of Public Welfare] The department, or
a nonprofit agency at the request of and with the approval of
the department, shall facilitate the distribution of orders for
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supplies manufactured by or services performed by persons with
disabilities among agencies for persons with disabilities.
(d) Procurement of supplies manufactured and services
performed by persons with disabilities.--Except as provided in
subsection (e), all supplies manufactured by and services
furnished by persons with disabilities shall be procured in
accordance with applicable specifications of the department or
other Commonwealth agencies from any agency for persons with
disabilities whenever the supplies and services are available at
a price determined by the department to be the fair market
price. The head of a purchasing agency shall annually discuss
its needs for supplies or services with any agency for persons
with disabilities.
(e) Procurement from Commonwealth agency.--If any supply
manufactured by or any service performed by persons with
disabilities and offered for sale is available for procurement
from any Commonwealth agency and this part or any other statute
requires the procurement of the supply or service from the
Commonwealth agency, then the procurement of the supply or
service shall be made in accordance with the other provisions.
(f) [Exception] Exceptions.--
(1) Notwithstanding [subsection (h)] any other
provisions of this section, when the Commonwealth enters into
a contract under this section for the operation of the
Commonwealth's driver's license photo centers, at least 70%
of the amount paid by the Commonwealth shall be used to cover
payment of wages and salaries to persons with disabilities
and to cover actual manufacturing costs, real estate lease
costs, property insurance and other costs which are
specifically required by contract.
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(2) The department may provide an exception to ratio or
integration requirements due to unexpected external events
outside of the control of the agency for persons with
disabilities, for the purposes of piloting new employment
initiatives, or other reasons to protect or advance
competitive, integrated employment for persons with
disabilities for the purposes of this section.
(g) Application.--
(1) This section shall not supersede any contract
currently in force between a Commonwealth agency and another
party.
(2) Nothing in this section shall be construed as
conferring upon any party any right or interest in any
contract entered into with the Commonwealth.
(h) Definitions.--As used in this section, the following
words and phrases shall have the meanings given to them in this
subsection:
"Agency for persons with disabilities." Any charitable,
nonprofit agency incorporated under the laws of this
Commonwealth and approved by the department through which
persons with disabilities manufacture supplies or perform
services in this Commonwealth.
["Appreciable contribution."
(1) In addition to paragraph (2), the department shall
determine whether the contribution by individuals with
disabilities is appreciable. Persons with disabilities must
make an appreciable contribution in manufacturing a supply or
performing a service.
(2) At least 75% of the personnel either engaged in the
direct labor of manufacturing of a supply or engaged in the
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direct labor in performing a service in this Commonwealth
must be visually impaired, mentally retarded or physically
disabled. In addition, at least 75% of the amount paid by the
Commonwealth agency for the supply or the service shall be
remitted to the agency for persons with disabilities to cover
payment of wages and salaries to persons with disabilities
and to cover other actual manufacturing costs incurred by the
agency for persons with disabilities in manufacturing of a
supply.]
"Appreciable contribution." A contribution that satisfies
the direct labor ratio requirements.
"Direct labor ratio requirements." As follows:
(1) At least 51% of the direct labor involved in
manufacturing a supply or engaged in performing a service in
this Commonwealth involves persons with disabilities.
(2) At least 51% of the amount paid by the Commonwealth
agency for the supply or the service is remitted to the
agency for persons with disabilities to cover payment of
wages and salaries to persons with disabilities and to cover
other actual allowable overhead costs incurred by the agency
for persons with disabilities in manufacturing the supply or
delivering the service.
"Federal 14(c) certificate." A subminimum wage certificate
provided in accordance with 29 U.S.C. § 214(c) (relating to
employment under special certificates).
"Manufactured." The transformation of raw materials or the
assembly of essential component parts or a combination of both
in the production of a supply which is different in form,
composition or character from the raw materials or the essential
component parts. This definition applies only to the assembly of
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a supply.
["Mentally retarded." Subaverage general intellectual
functioning which originates during the developmental period and
is associated with the impairment of maturation, learning or
social adjustment.]
"Performed." Labor provided to do the work to fulfill the
requirements of the contract.
["Persons with a disability." A person who is visually
impaired, mentally retarded or physically disabled.
"Physically disabled." A limitation of most activities and
functioning by virtue of a severe impairment of the various
bodily systems which cannot be eliminated, modified or
substantially reduced by the usual rehabilitation services and
which precludes competitive employment.]
"Persons with disabilities." Individuals with a physical or
mental impairment that presents a substantial impediment to
employment.
"Services." While "services" is defined in section 103
(relating to definitions), for the purposes of this section, the
term specifically includes such packaging or repackaging which,
as determined by the department, provides a substantial and real
benefit to the Commonwealth agency which needs the supplies to
be packaged or repackaged. When packaging or repackaging
services are to be provided to a Commonwealth agency by an
agency for persons with disabilities, the Commonwealth agency
shall make the arrangements for the procurement of the supplies
to be packaged or repackaged. Packaging or repackaging shall not
be considered "services" if the manufacturer usually packages or
repackages the supplies in the quantity required by the agency
as a part of its manufacturing and distribution process. This
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definition applies only to the packaging or repackaging of a
supply.
["Visually impaired." A condition in which central visual
acuity does not exceed 20/200 in the better eye with correcting
lenses or in which the widest diameter of the visual field
subtends an angle no greater than 20 degrees.]
Section 2. This act shall take effect in 60 days.
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