The two low bidders that lost sewer contracts to Milwaukee’s local-contractor preference law will challenge the city ruling this week.
“We are going to file a protest either today or tomorrow,” Mike Dretzka, project manager for Underground Pipeline Inc., New Berlin, said Wednesday. “We feel that the local-bid preference is unfair because there is money being spent from the state and federal level.”
American Sewer Services Inc., Hartford, and Underground Pipeline submitted low bids for Milwaukee sewer projects receiving money from the Wisconsin Clean Water Fund. But they lost to Milwaukee-based MJ Construction Inc. because of a city law, approved in March, that gives local builders a 5 percent cushion on bid prices.
“I think it’s the first step,” said Dennis Biondich, president of American Sewer Services, of his company’s appeal. “Our association did not care for the ordinance when it first came out, but there was nothing we could do about it until the 5 percent bid preference took effect.”
American Sewer’s bid for a series of sewer jobs was $22,270 less than MJ’s, and Underground Pipeline’s bid was $3,351 less than MJ’s offer.
Representatives of MJ Construction were unavailable for comment before deadline on Wednesday.
As American Sewer and Underground Pipeline prepare their appeals to the city Department of Public Works, the Wisconsin Underground Contractors Association is working with city attorneys. Joe Olson, WUCA attorney in the Milwaukee office of Michael Best & Friedrich LLP, said the association wants to nail down which projects the preference covers.
The association argues the law cannot apply to water and sewer projects that get federal or state money, Olson said.
The two contracts from last week were the first for which the local preference came into play. Dretzka said he wanted the city projects because they would keep his crews working. Without the contract, his workers, roughly 30 percent of whom are Milwaukee residents, could be laid off sooner, he said.
“The big thing is that right now, we’re at the end of the season,” Dretzka said, “and we’re all vying for work to try to keep our guys busy.”
Milwaukee Alderman Robert Bauman said he has heard contractors’ arguments — it’s a waste of city money to spend more to hire Milwaukee-based firms, and the law hurts city residents who work for contractors in other cities. He said the local-contractor preference was his favorite portion of the ordinance, which, among other things, requires builders working on city projects hire enough city residents to represent 40 percent of the hours worked on those projects.
“Those precise arguments were considered,” Bauman said, “and the eight (aldermen) who voted in favor of the ordinance, including me, felt the costs were worth the benefits.”
Bauman said contractors should move to the city if they do not like competing against Milwaukee builders with a 5 percent preference.
“That’s how capitalism kind of works,” he said. “People will respond to the opportunity and adjust their affairs accordingly.”
Biondich said he owns property in the city of Milwaukee, but does not want to get caught up in a real estate shell game to gain a local preference. And even if he did, he said, the city stands to lose because it is trading the valuable local preference for only about $4,000 in property taxes from the local company.
“That,” Biondich said, “doesn’t make sense to me.”