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Tech college backtracks on bid breaks

Published: March 3, 2009
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Sean Ryan
sean.ryan@dailyreporter.com

The possibility of lawsuits trumped Southwest Wisconsin Technical College’s plan to forgo bid bond requirements to help local companies compete for campus projects.

The Fennimore-based college told contractors last week that bid bonds will be required for the 13 campus project contracts worth $26.2 million. The technical college board of directors originally requested bids without the bonds in an attempt to help small, local builders compete for more of the contracts.

Contractors buy bid bonds when bidding on a project as a guarantee to the project owner that contractors’ bid amounts will be honored.

SWTC President Karen Knox said she asked the college attorney to review the idea of not requesting bid bonds after the Surety Association of Wisconsin argued state law requires them.

“(The attorney) felt that this would be safest because if there was some contractor that thought it should be done this way, there could be litigation,” she said, adding no one threatened to sue.

Knox said the college did not ask its attorney for an opinion before requesting bids because the project architect, Milwaukee-based Zimmerman Architectural Studios Inc., recommended the approach.
“We didn’t think it was necessary,” she said.

Doug Barnes, Zimmerman vice president and principal, said he heard of other municipalities forgoing bid bonds and thought the bonding statues let governments waive the requirement for projects. He said the Surety Association of Wisconsin also contacted his office to argue the state require bid bonds.

The statutes only waive bid bond requirements when there is another form of security in place, said Lawrence Michael, producer for The Brehmer Agency Inc., a Butler-based surety and bonding company. He said the bid bonds help public agencies avoid lawsuits from bidders because the bonds root out companies that submit low bids but cannot do the work.

“By law, public owners are required to take the lowest responsive, responsible bid,” Michael said. “And now they have to go through the tangled web of now documenting why they are not taking the low bidder.”

Knox said local contractors told SWTC that eliminating bid bonds would let them compete for more of the college’s contracts. Bids are due March 19 for all of the contracts.

“I think it’s unfortunate that this created such a stir and that it’s made it difficult to make this building available to local contractors,” she said.

But two local general contractors said eliminating the bonding requirement would not make a difference.

Karla Rands, secretary/treasurer of Midwest Builders Inc., Fennimore, said her bonding company requires builders buy bid bonds when buying performance and payment bonds. Since the performance and payment bonds are required, Midwest would have bought a bid bond anyway, she said.

Greg Zimmerman, project manager for Linden-based MZ Construction Inc., said MZ has enough bonding capacity for the two SWTC contracts on which it plans to bid. He said small, local builders probably will not win general contracting work because the college is letting builders submit a single bid covering all of the work in the various contracts.

It’s more likely, Zimmerman said, one large general will win everything with one bid.

“They’re trying to give it to some of the local contractors,” he said, “but that’s not always realistic.”
Michael said instead of trying to help builders by eliminating bonding requirements, the college should help them increase their bonding capacity.

“I can understand the desire of any public entity to entertain bids from local bidders or contractors,” he said.

“There’s a way to do that appropriately.”

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