DOA secretary questions AGC’s single-prime concerns

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The secretary of the state Department of Administration is questioning the motives behind the Associated General Contractors of Wisconsin’s persistent inquiries into the state’s new single-prime system of managing construction projects, according to an email attributed to Secretary Mike Huebsch and sent to a lawmaker last week.

The email was written in response to questions state Rep. Dean Kaufert, R-Neenah, had about the new system, which replaces a multiple-prime system that let mechanical, electrical and plumbing companies have contracts with the state. The single-prime policy, which took effect Jan. 1, makes a general contractor the only company to have such a direct relationship.

“As you may recall, AGC membership was split on their position on this legislation as it was being debated last year,” according to the email, which was provided by DOA Communications Director Stephanie Marquis. “It now appears their Executive Vice President either doesn’t understand the clear requirements of the law or is intentionally trying to confuse in a continued effort to oppose the law as passed by the legislature and signed by the Governor.”

Bob Barker, executive vice president of the AGC of Wisconsin, declined to comment on the email Thursday.

READ A COPY OF THE EMAILS

Kaufert, in the email he had sent prompting Huebsch’s response, asked some of the same questions the AGC raised in a Jan. 10 letter sent to the DOA.

Both Kaufert and the AGC said they have learned that construction companies, as part of the certification process to bid on state work, are being told by the DOA that they cannot bid on projects exceeding a certain amount. But those thresholds, which are different for each company, are being set lower than the bonding coverage those same companies can obtain through surety companies.

Kaufert and the AGC have asked the DOA to explain the discrepancy. They also contended that preventing companies from taking full advantage of their bonding capacity could remove some competition from bidding.

“I am concerned that having less bidders on these projects,” according to the email attributed to Kaufert, “could drive up project costs and increase the cost to our taxpayers.”

According to Huebsch’s email reply, a bonding limit is one of many pieces of information state officials take into consideration when setting a company’s project threshold.

“When passing the law,” according to the email, “the legislature realized the state should be obligated to go further than simply looking at the bond limit provided by a third party.”

According to a notice the DOA sent to contractors to inform them of policy changes related to the adoption of the single-prime system, companies may not bid on state work that is worth more than twice as much as the largest project they have completed in the past. They also may not compete for a contract without showing they have “access to all equipment, organization capacity, and technical competence” needed to finish the job.

According to Huebsch’s email, any one of those requirements might be the reason why a company’s threshold is less than its bonding capacity. But, according to the email, even though a certification to work on state projects lasts for two years, nothing prevents a contractor from applying for and obtaining a higher project threshold during that time.

“For example, if a contractor was certified to bid on projects up to $4,000,000 and satisfactorily completed a $4,000,000 project during the two-year certification period,” according to the email, “they could submit a revised application with this information to seek a higher bidding threshold.”

Kaufert said Thursday that he still thinks some questions need answers, and he has made tentative plans to meet with Huebsch, possibly as early as next week. Kaufert said his priority will be to get a list of the policies the DOA follows when setting companies’ project thresholds.

On Wednesday, Kaufert had threatened to ask his fellow members of the state Building Commission to sign a letter demanding answers from the DOA. On Thursday, though, he said he would rather first rely on a relationship with Huebsch that was forged when they worked alongside each other in the state Assembly.

“All I want,” Kaufert said, “is that when contractors contact me with issues about why they are getting changed for what jobs they qualify for, is to be able to tell them what the criteria are to give them that score.”

Kaufert said that if he meets with the DOA, he doubts AGC representatives also will be present.

But the request for explanations extends beyond AGC.

John Mielke, president of the Associated Builders and Contractors of Wisconsin, said some of his members have wondered why they are being certified for project thresholds that are below their official bonding capacities.

Dan Gibson, vice president of the Surety Association of Wisconsin, said other states have certification processes that are similar to Wisconsin’s but are more open about their policies.

“The issue is: What is the criteria?” he said. “We have some ideas of what it is. But I don’t want to speculate.”

According to Huebsch’s email, though, the answers are clearly spelled out in state statute. He can only wonder, according to the email, at the confusion the AGC seems to have spread about the new single-prime system, adding that he is “disappointed in their action considering the time my staff has spent communicating the process.”

“Regardless of their opposition and actions,” according to Huebsch’s email, “single prime delivery is the law and DOA is working diligently to implement it in a fair and timely manner.” Follow @TDR_WLJDan