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Subs wary of possible shift in project delivery

By Dan Shaw

Carmen Fosick says her electrical company often is among the multiple contractors that now contract directly with the state on its construction projects.

Under the state’s system of awarding work, companies from the electrical, mechanical, plumbing, HVAC and fire protection industries often are each given separate contracts to perform work related to their specialties on state jobs.

Fosick, president of Kaukauna-based Elmstar Electric Corp., said she likes that multiple-prime system, as it’s called, because it lets contractors work directly with the state and provides for greater transparency in bidding.

“You know who you are bidding to,” she said.

But the system’s future is in doubt.

According to a memo the Associated General Contractors of Wisconsin sent to Gov. Scott Walker on Friday, AGC officials have heard the budget might call for project-delivery reform, or changes to the way state contracts are awarded and managed. The memo, attributed to Jim Boullion, AGC’s director of government affairs, urged the governor not to take steps in that direction without discussing the matter further with stakeholders throughout the construction industry.

It was not clear at press time Wednesday whether the budget, which was to be released Wednesday night, contains such a proposal. Walker’s staff did not immediately return calls seeking comment.

One possibility being discussed for the budget, Boullion said Tuesday, would have the state award projects using the single-prime contract method, under which projects would be overseen by a single general contractor that companies such as Fosick’s likely would have to work under.

Jeff Beiriger, executive director of Specialty Contractors of Wisconsin, said it should come as no surprise that subcontractors would prefer to directly work with the state on construction projects rather than through a general contractor.

“The main reason is that you have your contract terms and you are negotiating directly with the person who is the source of the revenues,” he said. “You are able to negotiate ultimately with the person who is responsible for the project.”

John Mielke, president of the Associated Builders and Contractors of Wisconsin, said he has heard for years that officials within the Division of State Facilities, which oversees state construction projects, have wanted a more efficient project-delivery system.

“If you have a lot of projects and they are all multiple prime, then there is the issue of being able to identify who’s responsible if a project is behind schedule or if there are complications,” he said. “In multiple prime, there is a greater chance you are going to have finger-pointing.”

At the same time, Mielke said, he understands the concerns many have expressed about the single-prime system. For one, he said, the system often is perceived as making it easier for general contractors to bid shop, or show subcontractors the lowest bids they have received from other subcontractors in the hope of attracting even lower bids.

Mielke said a more efficient government should be a goal of project delivery reform but said there are other priorities that are more important in the awarding of state construction work. When it comes to projects paid for with taxpayer money, “transparency becomes paramount” no matter what the delivery is, he said.

Transparency, Fosick said, is the reason why she likes the state’s current system. It affords companies certain protections that might be lost under the single-prime method, she said.

“You know,” Fosick said, “there isn’t going to be any shenanigans with the bids.”

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