The law of the land

Industry leaders debate merits of competitive bidding

By Ellen Hickok-Wall
Daily Reporter Staff

Opinions vary among construction industry leaders about how well the state's competitive bid laws work.

But there's one thing they all agree on: Traditional design/bid/build project delivery is receiving more scrutiny than ever in light of recent attempts to legislate design/build project delivery for public work.

Richard Wanta, executive director of the Wisconsin Underground Contractors Association, said WUCA's vote is for maintaining the status quo.

"If we maintain the existing law, which says that jobs must be competitively bid, we feel that's a fair and honorable way of doing things," Wanta said. "We want to avoid favoritism in the award of public works construction. Government would say that it never shows favoritism, but we don't want them to be in a position to exercise favoritism."

One of the merits of the competitive bid process is its open, aboveboard nature, according to Wanta. And he's gravely concerned, he said, that design/build could threaten that openness. So is Bob Smith, an attorney with Wickwire Gavin in Madison.

"Absolutely it is threatened," said Smith.

He said legislation written to promote design/build bidding failed in a couple of critical areas.

"Senate Bill 198 was woefully inadequate in including standards that would maintain the integrity and the openness of the public construction bidding process in Wisconsin," Smith said.

The bill would have given public entities a lot of discretion, he said, and "it could open the door for potential abuse of that discretion."

That sentiment was echoed by James L. Kirschnik, chairman of the State Bar of Wisconsin Construction and Public Contract Law Committee.

No position

The committee, he said, made a decision not to lobby for or against design/build.

"We felt the diversity of membership of our committee spans all types of parties, so we did not feel that we as a committee could take a position one way or another."

Speaking from his own perspective, Kirschnik said there's a good argument to be made against design/build.

"Is it some guy who's a golfing buddy of the guy who's sitting there making the decision?"

That kind of situation worries Wanta, too.

"I can give you no less than 20 examples of corruption that has occurred in the Midwest part of the country," Wanta said. "These examples of favoritism and corruption still exist to this day. They don't occur in Milwaukee. They don't occur in Wisconsin. We don't need that here."

But Mike McCabe, director of legal services for the Milwaukee Metropolitan Sewerage District, which co-sponsored the bill, said MMSD is working hard to "keep the process as open to public scrutiny as we can."

"Any process, including bidding, is subject to collusion," McCabe said. "The term 'bid rigging' is well understood, and the fact that you operate under a system that allows only bidding does not exclude the possibility of illegal action. There's always a possibility of illegal action."

Kirschnik also pointed out flaws in a traditional design/bid/build process.

"The legislation makes you accept the lowest responsible bidder," he said. "Some people argue that you may not, then, always get the best.

"I've had experience with cases where the people say, 'Gee, we get stuck with these low bidders because the law requires it, but you've got people who bid low and hope to make up for it on extras - like change orders.' Once the project gets going, they say the original bid won't cover it."

Who's accountable?

"We sense that there is a consensus developing. We think our chances are much better than ever in the past." Michael McCabe Director of Legal Services MMSD

Another disadvantage of design/build, according to Madison attorney William E. McCardell, is a potential loss of accountability.
"The level of the checks and balances system necessarily will be diminished under a design/build system, unless an owner hires other sophisticated entities to essentially oversee the project," McCardell said.

Kirschnik agreed.

"We've eliminated the potential adversarial relationship in a traditional bid," he said, adding that adversity sometimes serves a project owner well.

"In traditional construction, the architect is watching to make sure it's built the way he designed it. With design/build, there's just one person."

Douglas Rose, an attorney with offices in Brookfield, said it's common practice for an architect to "bird dog" a project under traditional bidding circumstances.

"But from a legal perspective, it adds checks and balances," Rose said.

It's more than checks and balances that WUCA wants from MMSD and other public entities that operate with tax dollars.

He used Milwaukee's Sixth Street viaduct as an example of work awarded unfairly.

"The government said, 'We only want three or four major contractors to submit a proposal.' They will invite them because maybe they've done business with them before or whatever reason," Wanta said. "How many times do you see a new bridge being built in the city? We've waited a long time for those opportunities."

Wanta said MMSD is inviting bids, "and they may not select the low bid. We've waited a lifetime to replace or repair the turn-of-the-century sewer system."

Wanta said WUCA isn't looking for a sure bet.

Protecting opportunities

"There's no guarantee that our members will get the work," he said. "They have an opportunity to get the work. We're trying to protect that opportunity. Nothing more, nothing less."

McCabe said the district generates plenty of work.

"Everybody gets a lot of work from the district," he said. "It's spread out, and that's the way the process should work. Different firms have different areas of expertise.

"Because we do such varied work, the result of that is we hire a lot of firms with lots of different expertise and have never had any complaints on our process of picking those people," McCabe said.

MMSD plans to seek independent authority to bid projects design/build, according to McCabe, who said Senate Bill 198 may have been too broad.

The defeated bill asked for an amendment to existing codes to authorize cities, villages, towns, counties, sewerage districts, technical colleges and federated public libraries to let public works contracts under the design/build construction processes.

McCabe said there's not as much application for smaller municipalities for design/build.

"Many smaller communities upstate acknowledge that they don't have design/build and would prefer to stay with the bid process on large projects," McCabe said. "So there's a lot of indecision on how to handle the fact that some communities want it for big projects, and others don't want it at all."

Smith, who said he highly respects Wanta as an industry leader, also expressed confidence that MMSD would exercise its power appropriately if granted authority to use design/build.

"MMSD is a very large and experienced contracting organization," Smith said. "They may have some projects where they're going to be in a position to reap some time and cost savings.

"My view is that it would be in the public interest for MMSD to have that authority."

MMSD did, in fact, award a job under design/build, Wanta said, and WUCA filed a lawsuit arguing that it was against the law.

MMSD claims it used design/build to save time because the district had an emergency on its hands. WUCA, which acknowledges that design/build is necessary in an emergency, argues that this instance did not constitute an emergency.

Neither Wanta nor McCabe would comment on the suit because it's in litigation, but they both said they expect it would be settled soon.

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