Backers of Milwaukee’s ordinance that favors local companies in construction bidding are defending the rule, even though its first use is likely to cost taxpayers more than $25,000.
“I do think it’s a fair trade-off,” said Milwaukee Mayor Tom Barrett. “I want to see businesses in the city that are growing and supporting city residents. Businesses located outside the city don’t pay taxes here, and if we can help the ones that do, I think we should.”
The ordinance, which took effect last month, mandates that if a local company’s bid is within 5 percent of the lowest bid, the city must award the contract to the local business. The preference does not apply if the difference between the two bid amounts is more than $25,000.
The rule came into play for the first time Thursday, when the city’s Department of Public Works tentatively awarded two sanitary and sewer relay projects to Milwaukee-based MJ Construction Inc. despite receiving lower bids from Rubicon-based American Sewer Services Inc. and New Berlin-based Underground Pipeline Inc.
MJ’s bid on the sanitary lining project along North 34th Street was $3,351.50 higher than UPI’s, and its bid on the various sewer and water work was $22,273.60 higher than American Sewer’s.
Dennis Biondich, owner of American Sewer, called the loss devastating. He said he has contacted an attorney and is prepared to fight the decision.
“Every job we have going right now is going to be finished within two to three weeks,” he said. “This was the job that was supposed to get us into the winter. If we don’t get it, I’m laying off my workers.”
Richard Wanta, executive director of the Wisconsin Underground Contractors Association, blasted the city’s use of local preference on the contracts, and delivered letters of protest Friday to Milwaukee City Hall for all City Council members.
“This comes on the same day that the mayor goes on television saying he’s going to have to make all sorts of budget cuts,” Wanta said. “Well, that’s $26,000 that could have been used for a new squad car, or to keep firefighters on staff or maintain library hours.”
American Sewer and UPI cannot protest the decision until the city officially announces MJ as the winner of both projects, but Biondich said he expects to challenge the decision early this week.
Alderman Ashanti Hamilton, who proposed the ordinance, declined to comment Friday.
But Alderwoman Milele Coggs joined Barrett in defending the local preference.
“I’ve seen several million dollars go to projects that end up with contractors who are not from here and who hire people that are not from here,” she said. “This is a fiscally responsible thing to do, and unfortunately some companies will complain.
“I think the benefits will outweigh the complaints.”
Biondich said even though his company is not based in Milwaukee, about 50 percent of his workers are Milwaukee residents that will lose work because of the rule.
Barrett said if Milwaukee residents are losing work because of the ordinance, the City Council can review it in the future, but for now the 5 percent margin is adequate, even if it does cost the city more money for work.
“If it becomes burdensome,” he said, “then we don’t do it anymore.”
The ordinance’s success must be judged over a long period, Coggs said, and not two bids.
“Unfortunately, there will be cases, whether it’s fair or not, where the low bidder does not get the project,” she said. “But it’s not as if we made this law and said, ‘This is how it’s going to be forever.’ There is a review component, and if we have problems, we have the opportunity to improve it.”