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Judge rejects ban on local preference (UPDATE)

By Sean Ryan

Two contractors are taking their fight against Milwaukee’s local preference law to a state agency after a judge Thursday rejected their arguments.

Underground Pipeline Construction Inc., New Berlin, and American Sewer Services Inc., Rubicon, sued Milwaukee over its 5 percent bidding preference for local companies but could not convince a judge the case could succeed. Judge William Pocan’s preliminary ruling was not a dismissal, but he wrote the legal arguments have “no reasonable probability of success.”

The city first applied the preference to two sewer contracts. Milwaukee-based MJ Construction Inc. was not the low bidder but would win the contracts because of the local preference.

The low bidders on those two contracts — Underground Pipeline and American Sewer — sued in Milwaukee County Circuit Court to prevent the city from awarding the two contracts.

Pocan’s rejection means MJ Construction will win the jobs if the state signs off on Milwaukee’s local-bidder preference. Both projects received low-interest loans from the Wisconsin Department of Natural Resources Clean Water Fund.

Milwaukee will not award the contracts until the DNR approves the local preference, said Ghassan Korban, coordination manager for the Milwaukee Department of Public Works.

“That was going to be our intent regardless,” Korban said.

The Wisconsin Underground Contractors Association and the attorney representing Underground Pipeline and American Sewer also are waiting for the DNR’s decision, said Richard Wanta, executive director of the association. He said state law prohibits local preferences on projects that receive state money, and the low-interest rate on the Clean Water Fund loans means the Milwaukee projects are in that category.

“The reason they are getting this money is they are subsidized,” Wanta said, “and that has value.”

The DNR has not yet made a decision. Dan Olson, a member of the DNR’s environmental improvement budget staff, will listen to both sides of the argument before recommending a DNR ruling.

Olson was not available to comment before deadline Thursday.

Underground Pipeline and American Sewer now must decide if they will continue with their circuit court case or appeal Pocan’s preliminary decision, said Joe Olson, the attorney representing the contractors.

Pocan also rejected the contractors’ request to prevent the city from using its local preference on future contracts that get Clean Water Fund loans. The city next week will open bids on three sewer contracts using Clean Water Fund loans that Underground Pipeline, MJ and American Sewer are vying for.

The city delayed the late October due dates for the contracts so bids would come in after Pocan’s decision, Korban said.

Pocan has yet to decide on the core issues of the lawsuit, and has ordered a scheduling hearing for Feb. 4.

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