Lobbying group argues state should give edge to Wisconsin contractors

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A lobbying group is considering pushing for changes that would give Wisconsin contractors an edge over out-of-state companies — a policy it says might be needed in response to a recent increase in the number of out-of-state contractors that are winning local projects.

Wisconsin Independent Businesses, which bills itself as a organization lobbying for the interests of small businesses, released an analysis last week of municipal-construction spending showing an increase in the amount of work out-of-state contractors had won in the state in 2018. The group is led by former Wisconsin Assembly Speaker John Gard, who has lobbied on behalf of a number of construction industry interests such as Miron Construction and an infrastructure advocacy group backed by the International Union of Operating Engineers Local 139.

Gard said the fact that so many out-of-state companies appear to be winning work is alarming since it’s sapping Wisconsin of economic activity. He said his group may wait to the “tail end” of lawmakers’ current budget deliberations and then begin pushing for new rules establishing a bidding preference for Wisconsin contractors.

He didn’t say exactly what the rules might entail. But he did note that states such as Iowa have in place reciprocity provisions that essentially allow Iowa officials to treat out-of-state companies the same way that Iowa companies are treated in other states.

“Depending on what municipal contract is awarded, my sense is that a chunk of it is undercutting Wisconsin contractors on price,” Gard said.

According to the group’s analysis, the proportion of contracts awarded by local governments in Wisconsin to outside contractors rose 1.7 percentage points from 2015 to 2018. In 2015, out-of-state companies won $72.6 million, or 4.15%, of all municipal contracts. By 2018, the figure had increased to $145.9 million, or 5.92%, of all contracts.

Meanwhile, the total amount of spending by municipalities rose, too, from $1.7 billion in 2015 to $2.4 billion in 2018. Wisconsin companies won $1.7 billion worth of work in 2015 and $2.3 billion in 2018.

The group says it did its analysis using various sets of public-bidding data, including the Daily Reporter’s JobTrac service, Quest CDN, Lead Manager and municipal websites.

This is not the first time there has been a push at the state level to give Wisconsin companies a bidding advantage. In 2015, Rep. Joel Kitchens, R-Sturgeon Bay, was the chief author of a bill that, had it been passed, would have required the Wisconsin Department of Administration and local governments to give preference to Wisconsin contractors who bid against companies hailing from states with their own residency requirements.

The proposal would have primarily applied to contractors from Michigan and Illinois, each of which has its own rules giving a home-field advantage to contractors. Michigan requires that contracts go to in-state companies when there is no significant difference between bids from an outside company and an in-state rival. Illinois has rules requiring 90 percent of the jobs on some projects to go to state residents — a mandate that takes effect only after the state’s unemployment rate rises above 5 percent for two consecutive months.

Kitchens’ proposal failed to win supporters, according to Wisconsin Ethic Commission information, and drew opposition from the Wisconsin Association of General Contractors and the Wisconsin Transportation Builders Association, two construction-industry trade groups. The bill was eventually passed in the state Assembly but failed in the Senate. Adam Tobias, chief of staff for Kitchens, said bidding preferences are “not a priority” during the current legislative session.

But some big projects, and cities, have found their own ways to funnel work to local projects and residents. Foxconn Technology Group, for instance, has said it will give a preference to Wisconsin companies that bid for contracts on the $10 billion flat-screen factory it is building in Racine County. Milwaukee likewise has required lead contractors on projects such as the Fiserv Forum to meet goals for hiring city residents and so-called disadvantaged businesses.

Gard said a broader preference requirement could benefit the state by keeping in Wisconsin more of the profits generated from construction contracts.

“Wisconsin taxpayer-funded projects should benefit Wisconsin, not Kentucky or Louisiana,” he said. “We need stronger measures in place to keep Wisconsin projects with Wisconsin employers.” Follow @natebeck9