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State fights odds for online bidding

Paul Snyder
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A state agency remains committed to launching an electronic bidding system in eight months despite uncertain legislative support, an untried system and industry representatives who say there are more important issues.

“There are systems in place for horizontal building, but not vertical building,” said David Helbach, administrator for the Wisconsin Department of Administration’s Division of State Facilities and secretary of the state Building Commission. “We do so much multiple-prime work that it will be a challenge to devise an appropriate system.

“And I still don’t know the appetite of the Legislature on the idea.”

Nevertheless, Helbach said the February 2010 launch goal remains intact.

Contractors appreciate the goal, but some say there are other issues Helbach must first deal with.

Greg Oelerich, division manager for CG Schmidt Inc.’s Madison office, said the discussion of project delivery methods should finish before the state commits to ineffective methods online.

For the last year, Helbach met and talked with contractors and various builder groups about the possibility of changing Wisconsin’s preferred multiple-prime contract practice to another method, such as construction-manager or design-build. He said his recommendation likely will be made this month, but it could be months before the Building Commission acts on it.

But Oelerich said the state’s process of awarding projects to the lowest bidder — especially in a downturned economy when some contractors give artificially low bids to win projects — is a damaging process that could end up costing taxpayers more.

“People talk about bids coming in lower than estimates, but that’s analogous to measuring an airplane’s time of arrival to when you get pushed back from the gate,” he said. “It doesn’t matter. It’s that you get there on time.”

The real numbers for comparison should be the original estimate and the final construction cost, and Oelerich said that is an argument that favors a switch to a construction-manager delivery method, in which the contractor works with an architect and engineer and negotiates a final price with the state.

If that route is taken, he said, electronic bidding becomes a lower priority.

“If you were hiring a lawyer or dentist or brain surgeon, would you just make your decision based on what someone said online?” Oelerich said. “No. You’d want to sit down with the person and see that they know what they’re talking about.”

But Helbach said there are arguments for different delivery methods based on project size and scope, and his recommendation would neither drive nor diminish the need for an online bidding site.

Dennis Lynch, vice president of health care services for Neenah-based Miron Construction Co. Inc. and general manager of the company’s Madison office, said electronic bidding is the logical next step for the state to take.

“The nice part of an electronic system is that if you don’t fill in the form properly, the computer doesn’t allow you to move on to the next step,” he said. “It could mean less errors on state bidding contracts.”

Although the possibility of eliminating errors with an electronic system is there, Helbach said, so is the possibility for system error.

“You want to be on the leading edge, not the bleeding edge,” he said. “We will have a lengthy transition period to make sure the system and software works so we’re not making it unfair to bidders.”

A request for proposals for software development could be issued in November, Helbach said, and administrative rule changes to let the state accept electronic bids should be proposed in the upcoming months. A fee for electronic bidding is likely, he said, but he does not know how much it will cost.

Although it could mean a crush of work at the end of 2009 and the start of 2010 to get the system online, Helbach said it can be done.

“I’m not afraid to admit errors and failures,” he said. “If the system isn’t ready to go in February, then we don’t do it in February. But for right now, that’s the goal and it’s something I want to continue working for.”

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