Despite union objections, Waukesha considering $94M offer on water pipeline project

Over objections from a union group, the Waukesha Common Council was planning on Tuesday to consider a non-union company’s $94 million offer for part of a project to build a water pipeline to Lake Michigan.

In May, SJ Louis Construction of Rockville, Minnesota, submitted low bids for two segments of Waukesha’s $284 million project calling for the construction of a pipeline to supply the city with water from Lake Michigan. The company’s offers — which came in significantly lower than those of its competitors — earned approval from two Waukesha committees and were scheduled to go before the full common council for final approval Tuesday evening.

The non-union contractor’s offers, however, have drawn the ire of the labor-backed Construction Business Group, which argues the company has a track record marred by safety violations, contract disputes and other difficulties.

Waukesha officials initially barred the company from bidding on its pipeline work, but reversed that decision after the company appealed. Dan Duchniak, general manager of the Waukesha Water Utility, said the company has resolved initial concerns about its performance, and has submitted bids that are far lower than other offers — saving ratepayers millions.

“We don’t have the basis to throw SJ Louis’ bid out,” Duchniak said. “By law, we have to go with the low bidder. We do appreciate the support that we have been given by the union. We know that they’re unhappy with the results, but we’re obligated to follow the law.”

Officials with Construction Business Group and SJ Louis didn’t return messages seeking comment by press time Tuesday.

The Waukesha Water Utility is in the early phases of bidding out work for a pipeline that would replace the city’s existing water source: wells that are contaminated with radium. According to a court order, the city must complete the construction of the project by September 2023.

On May 14, SJ Louis submitted bids for packages four and five of the Waukesha pipeline project — the first two major jobs to go up for bid in the project. The company’s offers in each case came in significantly lower than those from its competitors, and two city panels unanimously approved the offers last month — despite statements from the union group objecting to the bids.

For package 5, SJ Louis’s $33.7 million offer came in nearly $3 million under the next-lowest bid from Kansas City-based Garney Companies. On package 6, the company’s $60.2 million bid arrived well under a $64.8 million offer from Menomonee Falls-based Super Excavators and a $74.2 million bid from Walsh Construction, of Chicago.

Duchniak said those offers will put the project under-budget for now and save ratepayers millions.

Initially, Waukesha Water Utility officials had barred SJ Louis from bidding on the project. The utility requires contractors to pre-qualify in order to bid on the job, and while vetting the company’s application, water-utility staff found a previous court case in which SJ Louis and the project’s general manager Black & Veatch had each been named.

Duchniak said the lawsuit tripped a red flag and the utility declined to pre-qualify the contractor. But SJ Louis appealed the decision, causing water-utility staff to examine the case more closely. Ultimately, the utility found the case didn’t pertain to the contractor’s competence, Duchniak said. He said the utility also heard positive comments about the contractor from officials in Racine, where SJ Louis had performed a utility job.

And Duchniak said the utility looked at the company’s safety record after Construction Business Group had raised concerns and found no cause for concern.

“We did do our due diligence,” he said. “We did do our investigation of each of the contractors.”

Duchniak said the utility isn’t able to legally reject SJ Louis’ bids on the project despite concerns from the union. The utility, however, did adapt its bidding documents to follow suggestions that Construction Business Group offered last winter. The job includes a 30% local-hiring requirement, a mandate that general contractors hire Disadvantaged Business Enterprises for 10% of subcontracts and that wages comply with Davis-Bacon requirements.

SJ Louis’ bid commits it to meeting or exceeding these metrics, Duchniak said.

“There’s enough safety within the bidding documents themselves,” he said.