Contractors look to Congress to ban bid preferences

By Sean Ryan

A proposed federal ban on bid preferences for local companies could also prevent Milwaukee from forcing contractors to hire local residents on sewer projects.

Wisconsin contractors’ concern over Milwaukee’s 5 percent local bid preference spurred the Clean Water Construction Coalition to lobby members of Congress for a law change. The change would forbid local preferences on projects that receive low-interest loans through the federal government for water and sewer projects, said Bob Briant, chairman of the coalition.

“It would outlaw local preferences of any sort,” he said.

The 2009 Milwaukee law that gave Milwaukee-based contractors a 5 percent bid preference on public works projects also changed long-standing city hiring requirements for projects, called the Residents Preference Program.

Earlier, the program required builders to hire workers who live in low-income U.S. Census tracts in the city. But the 2009 law requires 40 percent of project hours are worked by people who live in the city and have been unemployed for 30 days or worked fewer than 1,200 hours in the past 12 months.

Dennis Biondich, president of American Sewer Services Inc., Rubicon, has been the industry’s most active opponent of the local company preference. His company has lost four contracts because of the law, with the potential for a fifth this month. He said he wants a state or federal mandate that the bidder with the lowest price wins every contract, but does not want to wipe out a city hiring program in the process.

“That’s going to be a little bit harder issue,” Biondich said. “Politically, that is a very good ordinance for the city of Milwaukee. I know there’s a lot of contractors who do not like that ordinance, but it really helps the city.”

Briant said his organization opposes all preferences because they can increase construction costs.

The organization that lobbied for years to make the city adopt new hiring laws has not taken a position on the local company preference, said Matt Brusky, director of Good Jobs and Livable Neighborhoods, a project of Citizen Action of Wisconsin.

“We also see the value of other contractors who want to hire and train our workers,” he said.

Brusky said the group wants the Residents Preference Program to stay in effect.

Although the proposed change to federal law would remove local worker rules as well as a bidder preference, a change in state law that Biondich and the Wisconsin Underground Contractors Association may seek would not. Biondich said the state law change, which the association may seek in 2011, depending on the outcome of the governor’s race, would require the contractor with the lowest bid win any contract worth $25,000 or more.

Biondich said he expects the rule would be difficult to write into state law if Milwaukee Mayor Tom Barrett, a Democratic candidate for governor, wins the election. As mayor, Barrett signed the city law that created the local bidder preference

“In my opinion,” Biondich said, “it is going to be a campaign issue.”

A statement attributed to Phillip Walzak, communications director of Barrett’s campaign, said Barrett must see the legislation before deciding whether he would sign it as governor.

Milwaukee County Executive Scott Walker, the endorsed Republican candidate for governor, opposes local preferences on contracts, according to a statement issued by his campaign office.

Mark Neumann, another Republican candidate for governor, said he does not support bidding rules that generate higher contract costs, but also does not want to impede local governmentsí rights to set policies.

As to how he would balance those values if faced with a bill to prevent Milwaukee’s bidder preference, he said he would have to see the specifics of the legislation.

Briant said members of Congress have until the end of 2010 to decide whether to include the bid preference ban in a bill regulating use of low-interest loans the federal government provides to local sewer and water work.

“What we brought to their attention, they were not aware of,” he said of members of Congress, “and they are looking into this concern.”