Wausau bidding errors cause headaches

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A Wausau alderman contends that if construction companies had been more willing to blow the whistle, alleged irregularities in the city’s bidding procedures might have surfaced sooner.

Even so, Keene Winters, a financial planner who is on the Wausau City Council, said he understands why business owners were reluctant to raise the sort of questions that led to the resignation of the city’s public works and utility director, Brad Marquardt, on June 20.

Marquardt, who could not be immediately reached Wednesday afternoon, has been at the center of an internal investigation into the city’s failure to solicit bids and follow prevailing-wage rules for a $112,000 project to add steel bird statues and do irrigation work and landscaping to the median of the Highway 52 Parkway.

Winters said he never heard business owners complain about how that contract was awarded. But, he said, the grievances were out there.

“Contractors that could bid sometimes slink away and do not exert their rights because they are worried they are going to be blackballed forever,” Winters said. “I think a lot of companies shy away from exerting their rights. That’s certainly true for the construction industry.”

Winters said the irregularities were brought to light mostly through the work of his fellow alderman, David Oberbeck, who owns an architecture firm and is familiar with bidding procedures. Oberbeck could not be immediately reached Wednesday.

The scandal in Wausau is not the only recent case to raise questions about the role of private companies in making sure local officials abide by required bidding procedures. The Associated General Contractors of Wisconsin, a trade group with more than 230 members, sued the city of Middleton in March after local officials there awarded a contract to build a public works building to a company that was not the lowest bidder.

Middleton chose Madison-based Newcomb Construction Co. Inc. for the job even though that company’s price of nearly $9.4 million was about $59,000 higher than the low bid submitted by Fond du Lac-based C.D. Smith Construction Inc. Local officials justified the decision by noting that Newcomb was the only company to submit a proposal in response to alternative specifications calling for concrete walls rather than the steel walls designated in the primary design plans.

Besides defending the city’s right to award contracts to companies other than the lowest bidders, lawyers for the city and Newcomb raised doubts over the AGC’s participation in the case. The defendants argued the lawsuit should have been brought by aggrieved construction company executives, not a trade group.

A Dane County judge, though, found that Wisconsin case law has firmly established that the organizations have the right to “step into the shoes of their members.” The courts, according to documents filed in the case, have recognized that contractors are reluctant to raise questions on their own for fear of being labelled troublemakers and being excluded from bidding opportunities.

Trade groups, in contrast, tend to have few or no direct business dealings with local governments and lack the economic disincentive that probably prevents many private companies from asking tough questions.

The case against Middleton technically remains open, but the AGC agreed to a tentative settlement June 30, nearly two months after another Dane County judge declined to order a permanent halt to construction of the city’s public works building.

The judge, Peter Anderson, concluded Middleton probably violated the state’s bidding statutes, but he expressed doubt that a proper adherence to the required procedures would have resulted in the contract going to a different company. A representative of the AGC could not be immediately reached Wednesday.

Bob Barker, AGC of Wisconsin vice president, has said the unsuccessful outcome for his group should not be taken as a sign that the fight was not worth pursuing. He has said he thinks the lawsuit will serve as notice that construction industry representatives will make sure local officials follow proper procedures.

The message is getting across. Matt Fleming, a lawyer who represented Middleton in the case, has said the lawsuit gave city officials reason to rethink bidding procedures and make sure they do everything possible to head off perceptions of impropriety. Still, Fleming has said he thinks the AGC could have made its point without going before a judge.

On Wednesday, Fleming said the proposed settlement with the AGC would waive the city’s right to try to recoup court costs.

He said city officials want to put the dispute behind them.

“Ultimately, we got what we wanted out of defending the suit,” Fleming said. “We will get the building built for the price we were hoping to build it for.”

The AGC also got something it wanted: a precedent to cite when warning local officials of the many pitfalls in bidding requirements, according to past comments by Barker and others with the group.

In encouraging similar efforts, Winters said he and others on the Wausau City Council try to make sure public money is spent wisely. Still, he said, another set of eyes cannot hurt.

“A trade organization can really be the policeman on this beat,” Winters said. “We are all hurt when we pay too much for services.” Follow @TDR_WLJDan