A giant construction company’s role in winning a $20.8 million federal contract reserved for small businesses has at least one contractor raising concerns.
A joint venture between Miron Construction Co. Inc., Neenah, one of Wisconsin’s largest contractors, and De Arteaga Inc., a Greenville-based small and minority-owned business, this week was awarded the contract to build maintenance buildings at Fort McCoy in Monroe County.
The U.S. Army reserved the contract for companies with the U.S. Small Business Administration’s 8(a) certification as small and disadvantaged businesses.
But Tony Arteaga, president of Arteaga Construction Inc., Milwaukee, said he questions whether the joint venture is helping De Arteaga prepare to take on larger projects, which is the goal of small business set-asides. Arteaga’s $23.7 million bid placed second to the De Arteaga-Miron joint venture’s.
“It has seriously impacted Arteaga Construction in a big way,” Arteaga said. “It’s OK, I lose bids on a daily basis, but I want to go back to the intent of the program.”
Miron and De Arteaga spent almost a year structuring their venture to satisfy SBA mentor-protégé rules, said Dean Basten, Miron secretary/treasurer and operating member of the De Arteaga-Miron Joint Venture LLC, Neenah. De Arteaga handles concrete work, and president Julio DeArteaga Jr. participates in putting together the bids and managing the projects, he said.
“Julio was in our office when the bid was being put together,” Basten said. “He was right there next to our estimators making calls.”
DeArteaga said he is expanding his office staff based on his experience working with Miron. He said working with Miron to review subcontractors’ prequalification statements and assembling proposals on bid day have allowed him to train his staff to pursue more jobs as a general contractor. This year, for instance, De Arteaga is the general contractor on a $500,000 Wisconsin Department of Transportation bridge project in Oconto County, he said.
The De Arteaga-Miron bid was higher than a $20.1 million offer from Altmann Construction Co. Inc., Wisconsin Rapids.
Altmann’s bid was rejected because the company is not certified under the SBA program, said Vice President Tom Altmann.
“We are a small business, but we are not certified through the SBA as an 8(a), so it was our mistake,” he said.
“I guess we didn’t know that we had to be certified.”
Altmann said losing the bid was disappointing, but the process was fair.
“I guess the government makes the rules and you’ve got to play by them,” he said. “One way or the other, some people find loopholes, I guess.”
The Fort McCoy contract is the second for the De Arteaga-Miron joint venture. The partnership last year won a $28.3 million federal contract to build the Milwaukee Job Corps Center.
Tony Arteaga said the joint venture is raising concerns among minority contractors that pursue federal jobs with SBA set-asides.
“Are they going to continue taking all of this work?” he said. “There’s no way De Arteaga can go from a $10 million to a $100 million contractor.”
DeArteaga said the joint venture with Miron is truly helping his firm grow. For example, his bonding company already has increased the amount of money he can bond because of the work on the Milwaukee Job Corps project.
“Without the help of a large business, a small business would never be able to achieve these things on a large scale,” he said.
Basten said fears that Miron only partnered with De Arteaga to chase contracts with SBA set-asides are unfounded. The two companies are working with the SBA to organize a workshop this fall to teach other firms how to structure similar joint ventures, he said.
“This program is completely according to the mentor-protégé program,” he said, “and there are few contractors that have followed that program.”
Arteaga said joint ventures between large and small companies are good if they are structured to benefit the smaller firm.
“If it benefits the minority firm and they are truly benefiting from it other than just money, that’s just great,” he said.