State’s 5 percent preference for minority builders could help others
Published: November 2, 2009
Tags: bid, Burkhart Construction, Burkhart Construction Corp., Department of Administration, minority, minority-owned company, Nuvo Construction, preference, Ristow, Schneider Excavating, The Wisconsin Department of Administration, Waukesha
By Sean Ryan
Steve Ristow was the low bidder on a state project and lost the job because Wisconsin offers a preference for minority-owned companies.
Ristow said he expects that defeat to pay off for him. The bid preference helps minority-owned companies get contracts so they can grow, said Ristow, president and owner of Schneider Excavating Inc., Lannon. He said he needs competent minority companies to hire so he can satisfy other state rules requiring builders subcontract with minority-owned builders.
“My concern is that if I have a contract with them and they’re low bidder with me, can I use them?” he said. “Can they perform?”
Ristow’s company bid $211,500 on a Wisconsin Department of Administration excavation and grading project in Waukesha but, along with the second-place bidder, lost to Milwaukee-based minority contractor Nuvo Construction Co.’s $219,600 offer.
State law lets agencies award contracts to minority-owned companies if their bid is within 5 percent of the lowest bid.
Butler-based Burkhart Construction Corp. offered the second-lowest bid at $218,880. The project was estimated at $300,000.
Mike Spanheimer, Burkhart vice president, said the company also lost a contract to the 5 percent preference last year. He said it is one of the rules of the game that Burkhart and other contractors live with.
“From my point of view, if we didn’t like the system,” Spanheimer said, “and it was too onerous for us, we wouldn’t bid.”
Ristow said he supports the 5 percent preference despite the fact that it can mean lost contracts. The state asks contractors to make sure 5 percent of the dollar value of a contract goes to minority-owned companies. But it is difficult to find subcontractors to satisfy the requirement, he said, and the challenge is finding minority firms that can finish the work they’re contracted to perform.
Ristow said the 5 percent bidding edge could give some companies the ability to work as subcontractors. He said there is a chance Schneider Excavating may be a subcontractor to Nuvo on the project.
The Waukesha project, which includes site preparation work for a Division of Motor Vehicles building, marks Nuvo’s first foray into excavation and trucking as a prime, said Nuvo Project Manager Scott Farina. The company historically worked on buildings, he said.
“It basically gives you the ability to somewhat pick and choose,” he said of being a prime contractor, “and expand your capabilities.”
The state met its 5 percent contracting goal for the first time in fiscal year 2008 when 5.87 percent of all contracts went to minority-owned companies. But that was due mostly to a $29.5 million state award to minority-owned Shaw-Lundquist Associates Inc., St. Paul, Minn. The company won the project because of the 5 percent bid preference. The contract sparked a debate over whether the 5 percent preference should be eliminated.
“Ultimately, I think it would be a detriment to the state,” Farina said of removing the preference, “and also to some of the contractors that are bidding and trying to obtain work.”