Subcontractors searching for state project deliveries perfectly free of bid shopping might have to settle for a good-enough compromise.
“Is trying to stop any bid shopping after the general contractor’s bid better than what there is now? Yeah,” said Jeff Beiriger, executive director of the American Subcontractors Association of Wisconsin. “But is that the best solution? No.
“The best solution is still bidding directly to the owner.”
Bid shopping occurs when a general contractor, before winning a contract, discloses low subcontractor bids to other subs in an attempt to get lower bids or to team up with a particular sub.
Although unpopular, bid shopping is legal. It also likely will not go away, said David Helbach, administrator in the Wisconsin Department of Administration’s Division of State Facilities and secretary to the state Building Commission.
“You’ll always have some going on,” he said. “Contractors are changing their bids up to five minutes before opening, trying to get the lowest price they can.”
The best the state can do, he said, is offer a compromise that would require general contractors on single-prime construction projects provide a list of their mechanical, electrical and plumbing contractors when submitting a project bid.
That would eliminate the state’s seven-day window between the state opening generals’ bids and the general giving the state the sub list. It’s during that window, Helbach said, that generals shop bids.
The compromise is now an amendment to a bill introduced by state Sen. Fred Risser, D-Madison, that would let the state change the way it selects delivery for state building projects.
Wisconsin law now requires multiple-prime contracting, in which the state contracts with each major construction discipline on a project and opens all bids at the same time to ensure the project is fairly awarded.
It’s a law that works, Beiriger said, and one that subcontractors support.
However, the multiple-prime system requires the state handle each contract. The process can lead to a lack of project coordination and scheduling problems.
So the state can seek project waivers to use deliveries such as single-prime contracting, in which the state contracts with one primary contractor that accepts and manages the bids, contracts and work of each subcontractor. Risser’s bill would eliminate the need for waivers and let the state determine when it’s best to use alternate delivery methods.
If that means increased use of single-prime contracts, it cuts off subs’ direct contact with the state and leads to bid shopping, said S. Michael Christensen, president of Madison-based H&H Industries Inc.
But Jim Boullion, government affairs director for the Associated General Contractors of Wisconsin, said the amendment is the best the state can do to prevent bid shopping.
“If the bill doesn’t pass, the seven-day rule stays the way it is for single-prime,” he said. “This at least cuts off the games after the opening. You can’t stop it before that.”
Christensen said the state can. He said the state can open all contracts for work on a single-prime project, identify the lowest bidders and then hand them to the general contractor to manage.
But that, Boullion said, would be worse than a multiple-prime project.
“Then the general contractor has no control over who’s working on the project but still has to handle all the risks that come with it,” he said. “The general would have all the responsibility of making each bid work.”
Despite the differences and limited time left in the session, Risser said the project delivery bill is “not dead yet.” He said he expects there to be more amendments but did not say what those would be or when there would be an executive session.
If the bill does not pass, Helbach said, Wisconsin is stuck favoring multiple-prime contracts and allowing waivers for other delivery methods.
“It’d be a shame,” he said, “if all these ideas went to waste.”