HB 487 — 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
 1   Amending Title 62 (Procurement) of the Pennsylvania Consolidated
 2      Statutes, in source selection and contract formation, further
 3      providing for supplies manufactured and services performed by
 4      persons with disabilities.
 5      The General Assembly of the Commonwealth of Pennsylvania
 6   hereby enacts as follows:
 7      Section 1.        Section 520 of Title 62 of the Pennsylvania
 8   Consolidated Statutes is amended to read:
 9   § 520.   Supplies manufactured and services performed by persons
10                  with disabilities.
11      (a)   General rule.--
12            (1)   Contracts for supplies manufactured by and services
13      performed by persons with disabilities shall be entered into
14      in accordance with this section without the requirement for
15      competitive bidding. The following apply:
16                  (i)    Persons with disabilities must make an
17            appreciable contribution in manufacturing [an item] a
18            supply or performing a service.
 1              (ii)    The department shall determine whether the
 2        contribution by persons with disabilities is an
 3        appreciable contribution.
 4        (2)   When the Commonwealth enters into a contract under
 5    this section with a cost exceeding $300,000 per year, the
 6    department, in cooperation with the purchasing agency, shall
 7    conduct an annual review to confirm compliance with the
 8    contract and the requirements of this section. The annual
 9    review shall include, but not be limited to, an assessment of
10    all requirements related to appreciable contribution. If the
11    department, in cooperation with the purchasing agency,
12    determines that persons with disabilities are not making an
13    appreciable contribution in the manufacturing of [an item] a
14    supply or the performance of a service or an agency for
15    persons with disabilities is not in compliance with other
16    requirements of this section, the department shall give an
17    agency for persons with disabilities 45 days in which to
18    remedy the deficiency. If the agency for persons with
19    disabilities fails to remedy the deficiency within 45 days,
20    the agency for persons with disabilities shall be deemed to
21    be in noncompliance with the contract, and the purchasing
22    agency may terminate the contract and seek to procure the
23    [item] supply or service through a competitive bidding
24    process. Nothing in this section shall preclude a purchasing
25    agency from procuring [an item] a supply or service through
26    an emergency contract when an agency for persons with
27    disabilities is deemed to be in noncompliance.
28        (3)   The following apply to subminimum wage:
29              (i)    Beginning on the effective date of this
30        subparagraph, the department is prohibited from entering

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 1        into any new contract that utilizes a Federal 14(c)
 2        certificate for work connected to this section.
 3              (ii)    Beginning two years following the effective
 4        date of this subparagraph, the use of a Federal 14(c)
 5        certificate for work connected to this section is
 6        prohibited.
 7        (4)   The following apply to integration:
 8              (i)    Beginning two years following the effective date
 9        of this subparagraph, an agency for persons with
10        disabilities shall have a work environment that is
11        integrated for employees connected to State contracts
12        described in this section.
13              (ii)    In determining whether a location is
14        integrated, employees who are persons with disabilities
15        must interact with other individuals who are not persons
16        with disabilities at the work location. The interaction:
17                     (A)   Shall not apply to supervisors, job coaches
18              and service providers.
19                     (B)   Shall involve coworkers, customers, vendors
20              and members of the general public.
21              (iii)    For purposes of this section, an agency for
22        persons with disabilities may be an organization that
23        affirmatively hires and promotes persons with
24        disabilities, if the agency for persons with disabilities
25        meets the integration requirement and other eligibility
26        requirements under this section.
27              (iv)    The department shall require an attestation
28        from each agency for persons with disabilities specifying
29        that applicable locations are integrated in accordance
30        with this paragraph.

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 1                  (v)    The department shall monitor compliance with the
 2            integration requirement under this paragraph by a
 3            participating agency for persons with disabilities
 4            through the annual review in accordance with paragraph
 5            (2), which shall also include a location site visit to
 6            the agency for persons with disabilities:
 7                         (A)   no less frequently than every five years; or
 8                         (B)   upon receipt of a credible allegation that
 9                  the participating agency for persons with
10                  disabilities is in material violation of the
11                  integration requirement.
12                  (vi)    The department may delegate the duty to monitor
13            compliance under subparagraph (v) through an interagency
14            agreement to the Office of Vocational Rehabilitation or
15            another State department or agency.
16            (5)   Each agency for persons with disabilities shall
17      prioritize disability inclusion and representation regarding
18      employment strategic planning.
19      (b)   Fair market price.--Upon request to the department and
20   notice to the purchasing agency, the department shall determine
21   the fair market price of any supply manufactured by or service
22   performed by persons with disabilities and offered for sale to
23   any Commonwealth agency by an agency for persons with
24   disabilities. The department shall revise the prices in
25   accordance with changing market conditions.
26      (c)   Distribution.--[At the request of the department, the
27   Department of Public Welfare or a nonprofit agency with the
28   approval of the Department of Public Welfare] The department, or
29   a nonprofit agency at the request of and with the approval of
30   the department, shall facilitate the distribution of orders for

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 1   supplies manufactured by or services performed by persons with
 2   disabilities among agencies for persons with disabilities.
 3      (d)   Procurement of supplies manufactured and services
 4   performed by persons with disabilities.--Except as provided in
 5   subsection (e), all supplies manufactured by and services
 6   furnished by persons with disabilities shall be procured in
 7   accordance with applicable specifications of the department or
 8   other Commonwealth agencies from any agency for persons with
 9   disabilities whenever the supplies and services are available at
10   a price determined by the department to be the fair market
11   price. The head of a purchasing agency shall annually discuss
12   its needs for supplies or services with any agency for persons
13   with disabilities.
14      (e)   Procurement from Commonwealth agency.--If any supply
15   manufactured by or any service performed by persons with
16   disabilities and offered for sale is available for procurement
17   from any Commonwealth agency and this part or any other statute
18   requires the procurement of the supply or service from the
19   Commonwealth agency, then the procurement of the supply or
20   service shall be made in accordance with the other provisions.
21      (f)   [Exception] Exceptions.--
22            (1)   Notwithstanding [subsection (h)] any other
23      provisions of this section, when the Commonwealth enters into
24      a contract under this section for the operation of the
25      Commonwealth's driver's license photo centers, at least 70%
26      of the amount paid by the Commonwealth shall be used to cover
27      payment of wages and salaries to persons with disabilities
28      and to cover actual manufacturing costs, real estate lease
29      costs, property insurance and other costs which are
30      specifically required by contract.

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 1            (2)   The department may provide an exception to ratio or
 2      integration requirements due to unexpected external events
 3      outside of the control of the agency for persons with
 4      disabilities, for the purposes of piloting new employment
 5      initiatives, or other reasons to protect or advance
 6      competitive, integrated employment for persons with
 7      disabilities for the purposes of this section.
 8      (g)   Application.--
 9            (1)   This section shall not supersede any contract
10      currently in force between a Commonwealth agency and another
11      party.
12            (2)   Nothing in this section shall be construed as
13      conferring upon any party any right or interest in any
14      contract entered into with the Commonwealth.
15      (h)   Definitions.--As used in this section, the following
16   words and phrases shall have the meanings given to them in this
17   subsection:
18      "Agency for persons with disabilities."    Any charitable,
19   nonprofit agency incorporated under the laws of this
20   Commonwealth and approved by the department through which
21   persons with disabilities manufacture supplies or perform
22   services in this Commonwealth.
23      ["Appreciable contribution."
24            (1)   In addition to paragraph (2), the department shall
25      determine whether the contribution by individuals with
26      disabilities is appreciable. Persons with disabilities must
27      make an appreciable contribution in manufacturing a supply or
28      performing a service.
29            (2)   At least 75% of the personnel either engaged in the
30      direct labor of manufacturing of a supply or engaged in the

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 1      direct labor in performing a service in this Commonwealth
 2      must be visually impaired, mentally retarded or physically
 3      disabled. In addition, at least 75% of the amount paid by the
 4      Commonwealth agency for the supply or the service shall be
 5      remitted to the agency for persons with disabilities to cover
 6      payment of wages and salaries to persons with disabilities
 7      and to cover other actual manufacturing costs incurred by the
 8      agency for persons with disabilities in manufacturing of a
 9      supply.]
10      "Appreciable contribution."    A contribution that satisfies
11   the direct labor ratio requirements.
12      "Direct labor ratio requirements."     As follows:
13          (1)    At least 51% of the direct labor involved in
14      manufacturing a supply or engaged in performing a service in
15      this Commonwealth involves persons with disabilities.
16          (2)    At least 51% of the amount paid by the Commonwealth
17      agency for the supply or the service is remitted to the
18      agency for persons with disabilities to cover payment of
19      wages and salaries to persons with disabilities and to cover
20      other actual allowable overhead costs incurred by the agency
21      for persons with disabilities in manufacturing the supply or
22      delivering the service.
23      "Federal 14(c) certificate."    A subminimum wage certificate
24   provided in accordance with 29 U.S.C. § 214(c) (relating to
25   employment under special certificates).
26      "Manufactured."   The transformation of raw materials or the
27   assembly of essential component parts or a combination of both
28   in the production of a supply which is different in form,
29   composition or character from the raw materials or the essential
30   component parts. This definition applies only to the assembly of

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 1   a supply.
 2      ["Mentally retarded."    Subaverage general intellectual
 3   functioning which originates during the developmental period and
 4   is associated with the impairment of maturation, learning or
 5   social adjustment.]
 6      "Performed."    Labor provided to do the work to fulfill the
 7   requirements of the contract.
 8      ["Persons with a disability."        A person who is visually
 9   impaired, mentally retarded or physically disabled.
10      "Physically disabled."    A limitation of most activities and
11   functioning by virtue of a severe impairment of the various
12   bodily systems which cannot be eliminated, modified or
13   substantially reduced by the usual rehabilitation services and
14   which precludes competitive employment.]
15      "Persons with disabilities."     Individuals with a physical or
16   mental impairment that presents a substantial impediment to
17   employment.
18      "Services."    While "services" is defined in section 103
19   (relating to definitions), for the purposes of this section, the
20   term specifically includes such packaging or repackaging which,
21   as determined by the department, provides a substantial and real
22   benefit to the Commonwealth agency which needs the supplies to
23   be packaged or repackaged. When packaging or repackaging
24   services are to be provided to a Commonwealth agency by an
25   agency for persons with disabilities, the Commonwealth agency
26   shall make the arrangements for the procurement of the supplies
27   to be packaged or repackaged. Packaging or repackaging shall not
28   be considered "services" if the manufacturer usually packages or
29   repackages the supplies in the quantity required by the agency
30   as a part of its manufacturing and distribution process. This

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1   definition applies only to the packaging or repackaging of a
2   supply.
3      ["Visually impaired."   A condition in which central visual
4   acuity does not exceed 20/200 in the better eye with correcting
5   lenses or in which the widest diameter of the visual field
6   subtends an angle no greater than 20 degrees.]
7      Section 2.   This act shall take effect in 60 days.




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