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Editorial: Lawmakers going too far, too fast with design-build proposal

When a trades group representing mostly nonunion contractors and the state’s biggest construction union are united in their opposition to a legislative proposal, it should give lawmakers pause.

Unfortunately, that doesn’t seem to be the case with elected officials’ latest attempt at allowing projects to be delivered using alternatives to the lowest-bid-wins system. State Rep. Joe Sanfelippo, a Republican from New Berlin, put out a news release this week announcing that he and 47 other Republicans lawmakers had put their names to legislation that would allow design-build and similar methods as part of a broad “DOT Reform Bill.”

Proponents of these alternatives often say they will save money by letting contractors exercise influence over a project much earlier than they can now under design-bid-build. They may very well be right. Minnesota is one of many states that can boast of good results from its use of design-build on certain projects.

But before Wisconsin lawmakers commit themselves to a huge overhaul of current practices, they should take note of just who their critics are.

It probably comes as little surprise that Local 139 of the International Union of Operating Engineers is not a fan. This 9,000-member construction union has regularly found itself at odds with Republicans in recent years, whether it be on prevailing-wage repeal or a proposed ban on certain types of project-labor agreements.

Republican lawmakers might do a double take, though, when they see their critics also include the Associated Builders and Contractors of Wisconsin, a mostly non-union group that tends to embrace GOP policies. Although Local 139 and the ABC have seldom seen eye-to-eye in the past, on this much they can now agree: Lawmakers should not rush into allowing alternatives to the design-bid-build system.

When it comes to design-build, the organizations’ concerns are essentially the same. The system, they say, would not favor the small- to medium-sized contractors commonly found in Wisconsin, but rather industry giants who would have to come into the state from elsewhere.

Here, the fear isn’t really that only firms with in-house designing teams would be able to compete for public contracts. Small companies could always form partnerships with independent architecture and engineering firms to submit design-build proposals.

Rather, it’s a question of whether smaller firms would be capable of taking on the risks associated with design-build work. That’s because one of the biggest changes that would come with a switch to the design-build system would be a massive transfer of liability from governments to contractors.

With the current design-bid-build system, it’s the government and its designers that take the blame when a project that is built according to specs goes awry. But when contractors agree to take on the additional responsibilities entailed in design-build, they also agree to shoulder most of the associated liability.

Among the various types of construction companies, it would be the small ones that would have the hardest time getting the insurance and bonding needed to cover these outsized risks. All but the biggest contractors could find themselves excluded from the start.

And these are just the concerns with the design-build system proposed by lawmakers. Other alternatives to design-bid-build proposed in the DOT Reform Bill give equal reason for pause.

The Construction Manager/General Contractor method, for instance, would make it possible for a single company to take a project from its earliest stages to completion without having to face any real competition. Some people in the industry have already expressed worries that projects would be awarded in “beauty contests” in which government officials would return to the same favored companies over and over again largely for subjective reasons.

In general, lawmakers’ DOT Reform Bill goes too far, too fast. Rather than introducing four new methods of delivering projects, elected officials should start with one. Design-build should be tried by itself for a few years to see if the benefits prove as great as hoped.

Lawmakers should also abandon their rather ham-handed proposal calling for these alternative methods to be used on a predetermined percentage of projects over the next few years: on at least 5 percent of DOT projects by the end of June 2019, 10 percent by the end of June 2021, and 20 percent by the end of June 2023.

Lawmakers’ faith in WisDOT might be near an all-time low. Still, elected officials should resist their urge to tie the hands of the very professionals who are in the best position to know when design-build delivery can be used to the greatest effect.

If WisDOT engineers and planners were given leeway to do their jobs as they see fit, they could reserve design-build for the biggest jobs. Those would also be the very same projects for which the possibility of savings would most likely be greatest.

Even better, they are the projects that, regardless of how they are awarded, would be beyond the reach of all but the largest companies. Small contractors in Wisconsin could take comfort in knowing they would still be in the running for most projects — that is, provided they could keep their bid prices low.

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