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Subcontractors seek project delivery guarantees

By Paul Snyder

Subcontractors want guarantees the lowest responsible bid still will win the jobs before the Wisconsin Legislature passes a bill changing delivery methods for state projects.

The bill right now does not include those guarantees, leading some subs to argue in favor of the status quo.

“The system right now is completely transparent,” said S. Michael Christensen, president of Madison-based H&H Industries Inc. “When bids are opened, everybody knows the numbers and can be sure it’s a fair outcome.”

Christensen said he has no way to know for sure that will be the case if the state expands its preference for project-delivery methods from multiple-prime to single-prime and construction manager at risk. The Senate Committee on Ethics Reform and Government Operations and the Assembly Committee on Consumer Protection held a joint public hearing Tuesday on a bill introduced by the state Building Commission that would expand the preference.

State law favors multiple-prime bidding, in which the state contracts with each major construction discipline on a project. The law allows case-by-case waivers for alternate project deliveries.

In single-prime bidding, the state would contract with one primary contractor, which then would accept bids from subcontractors.

For construction manager at risk, the contractor would be a consultant before construction begins and general contractor during the project. The contractor would negotiate with the state a guaranteed maximum price for the project and would be required to meet that price.

Many state building projects, primarily new residence or academic halls for the University of Wisconsin System, have become more complex, prompting calls for single-prime or CMAR waivers to reduce the administrative headaches created when each contractor has a separate contract with the state.

But subcontractors Tuesday argued if they must submit bids to contractors and construction managers rather to than the state, the process must be as open and transparent as the multiple-prime system.

David Helbach, administrator in the state Department of Administration’s Division of State Facilities and Building Commission secretary, said the concerns are legitimate, and there are several subcontractor protections and guarantees that would be added as administrative rules after the bill passes.

“The issues of transparency have to be addressed,” he said. “This is government work; not the private sector.”

But Christensen said subcontractors want those guarantees in the bill, rather than added after the fact.

“Once the bill’s passed, we lose control of the rules,” he said. “We don’t know when they’ll be put in place or what they’ll be.”

Helbach said the subcontractor protections proposed as administrative rules could be put into the bill.

“Right now it’s a bit more open, and I like more flexibility,” he said. “But I don’t think it would be an issue to put them into the bill. Whether (subcontractors) accept them is another thing.”

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Prime protection

The state’s Division of State Facilities is offering protections for subcontractors if Wisconsin expands its preference for project delivery beyond the multiple-prime system. Those protections include:

* require bidders submit a list of major subcontractors along with the bid
* require prime contractors submit pay requests within a specified time frame and pay subcontractors promptly
* give primary subcontractors access to WisBuild, the state’s online project management tool, to monitor project work flow and change orders
* require prime contractors pay out subcontractor retainer costs when sub work is completed to the satisfaction of state construction representatives

Source: Wisconsin Department of Administration’s Division of State Facilities

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