Industry associations are withholding support for proposed contractor debarment rules until the state can prove it will not unfairly prevent companies from bidding on jobs.
The threat of debarment is a useful tool for the Wisconsin Department of Administration to make sure contractors play by state rules, said John Mielke, vice president of the Associated Builders and Contractors of Wisconsin Inc. But suspending a company’s right to bid during an investigation could be as damaging as debarment, he said.
“Missing out on six months, one year or two years of bidding projects could be a death knell for a contractor,” Mielke said. “Especially in this economy, one job can make a big difference.”
The DOA is proposing the debarment rules. If approved, the rules would let DOA prevent contractors from bidding on state work for as long as three years if the contractor is convicted of or admits to crimes such as fraud, theft, forgery or violating antitrust laws.
But, according to the proposed rules, the department could suspend a contractor’s bidding rights based on evidence of wrongdoing or while a legal investigation is under way. The suspension could last for six months, or it could last longer if there is a continuing investigation.
The Wisconsin departments of Workforce Development and Transportation already follow debarment and suspension rules. Some DWD suspensions have lasted for more than two years, said Mark Saunders, DOA’s legal counsel.
But Saunders said he thinks DOA’s use of debarment would be limited and suspension would be even more infrequent.
“Generally speaking, if we’re going to go this far, I would think we would just go with debarment,” he said. “In the 20 years I’ve been here, I could think of maybe a dozen situations where we would’ve used it. Typically, we try to work out problems with the contractor.”
Current law requires DOA review every low bid for state work even if a contractor keeps violating state qualifications to submit that low bid, and Saunders said there are contractors whose bids are rejected repeatedly.
“But even if we had problems, it doesn’t prevent them from submitting bids on other projects,” he said. “Debarment prevents trouble and headache for everybody.”
There is nothing wrong with punishing contractors that break state bidding rules, said Jeff Beiriger, executive director of the American Subcontractors Association of Wisconsin. But the state should consider contractors innocent until proved guilty, he said.
“Some contractors bid state work because they see an opportunity,” Beiriger said. “Others do it because that’s simply what they do, and to be held in limbo for some period of time without due process can destroy a contractor.
“To take someone offline for two or three years to investigate them and then find out, ‘Oh, you know what, I guess they’re OK after all,’ would be devastating.”
The DOA is accepting written comments on the proposed rules through Friday and will submit a final version of the rules to the state Legislature this summer. Saunders said he expects the rules to take effect in fall.
Mielke said ABC’s attorney is reviewing the proposal and the association still is on the fence.
“I think we’d like to have a better idea of how long a suspension could go on,” he said.