Contractors lose again in local preference fight
Published: June 30, 2010
Tags: American Sewer Services, bidder, contract, Joe Davis, lawsuit, local preference, Milwaukee County Circuit Court, MJ Construction, Pocan, sewer contractors, United Sewer and Water
Two sewer contractors lost appeals Wednesday to overturn a project award based on Milwaukee’s local preference law.
American Sewer Services Inc., Rubicon, and United Sewer & Water Inc., Menomonee Falls, filed appeals last week protesting the Milwaukee Public Works Department’s decision to award MJ Construction Inc. a bid for sanitary and storm sewer work even though American Sewer was the low bidder. The city applied the local preference law in awarding the bid to Milwaukee-based MJ.
The city law requires Milwaukee-based builders win contracts if their bids are within 5 percent — with a limit of $25,000 — of the low bid.
The city’s Public Works Contract Appeals Committee, which comprises Sharon Robinson, director of the Milwaukee Department of Administration; Alderman Joe Davis; and Alderman Willie Wade unanimously rejected the arguments from American Sewer and United Sewer, said Deputy City Attorney Katherine Block.
The companies did not provide enough evidence to support their claims that MJ stands to make an unreasonable profit from the contract, said Ghassan Korban, coordination manager for the Milwaukee DPW.
According to a June 22 letter of protest from Scott Maly, vice president of United Sewer, to Jeffrey Mantes, commissioner of public works, MJ Construction’s bid was $18,799.90 higher than the bid submitted by American Sewer.
Dennis Biondich, president of American Sewer, said his company and United Sewer now plan to appeal the decision to the state Department of Natural Resources because the project is using money from the state’s Clean Water Fund.
“The city’s definition of reasonable profit might be different than the DNR’s,” he said. “So we’re hoping that’s another avenue of recourse.”
Biondich said he was disappointed by the outcome of Wednesday’s appeals hearing but not surprised. The results won’t discourage him or Maly from fighting contracts awarded through local preference, Biondich said.
“Scott and I both believe this issue of local-bid preference is wrong,” Biondich said. “It’s never been done that way in 150 years, and it shouldn’t be done that way now.”
American Sewer has lost more than $2 million in work because of local-bidder preference, he said, and the company is struggling somewhat as a result.
“I’ve got guys that live in the city of Milwaukee that are sitting at home because we’re losing these contracts,” Biondich said.
Wednesday’s hearing was the second time this week American Sewer and United Sewer lost a battle against local preference law.
The companies sued the city in October after losing contracts to MJ because of the local-bidder preference.
At a court hearing Monday to conclude that case, Milwaukee County Circuit Court Judge William Pocan ruled the city of Milwaukee does not have to analyze the construction market to determine if contractors are making an unreasonable profit under the local-bidder preference law.
In an earlier decision on the same case, Pocan ruled the city can apply the preference to sewer and water projects that receive low-interest loans from the state’s Clean Water Fund.
Alderman Davis said Pocan’s ruling was an important factor in Wednesday’s denial of American Sewer and United Sewer’s appeals as it covered similar arguments of profit reasonability.
Despite the repeated appeals of bids awarded through local preference, Davis said, he supports the law.
“Milwaukee is very much trying to be progressive on supporting local Milwaukee businesses,” he said.