Amid a recession caused by the pandemic, Bob Barker has seen some evidence that some contractors might be desperately trying to underbid each other in the hopes of winning whatever work they can.
“There’s been two projects in the last month that — one was only for $400,000, the other was for $600,000 — and there were at least 10 bidders on both of those,” said the executive vice president of the Associated General Contractors of Wisconsin.
Advocates of public bidding tend to argue that competition is always a good thing, especially for taxpayers. Industry representatives, though, have long warned of a dark side. Contractors can become so desperate to win work that they submit bids that are far below what’s needed to cover their costs.
In doing so, they might think they’ll make up the money by submitting change orders after securing a binding contract. Other times they’ll simply plan to eat the cost. Neither option is particularly beneficial to the public or industry as a whole.
One commonly proposed remedy is to tighten the state’s bidding standards. By taking steps to ensure only the most reputable contractors are submitting bids, public officials could possibly prevent the sort of low-balling that can lead to trouble.
Neither Barker nor the AGC of Wisconsin, though, is ready to go that far.
“I think anytime you put more government into the business of contracting, it causes problems for all contractors,” he said.
Representing contractors in 68 of Wisconsin’s 72 counties (the southeast corner of the state falls to the AGC of Greater Milwaukee), Barker and the AGC of Wisconsin have a big voice in construction-related policy decisions made in Madison. Barker recently sat down with The Daily Reporter to discuss the state’s bidding standards and the industry’s response to the coronavirus pandemic.
The Daily Reporter: So you think Wisconsin’s bidding standards are strong enough as they stand now?
Barker: I think the building standards as they are sufficient to ensure there’s quality construction done in the state. The state of Wisconsin and municipalities have a great deal of leeway and how they let contracts and they can ensure that the contractors are doing the right thing.
We have not been a big advocate for more government involvement in our contractors business. And our members are engaged in construction throughout the country. And I guess we’ve always been sensitive to the idea of trying to build walls around municipalities or the state of Wisconsin, period.
TDR: Have you seen much evidence that contractors are flooding in from out of state to compete for public contracts?
Barker: I think. in general, we’ve got a pretty good construction industry here in the state and a lot of really good contractors. Somebody from out of state does come in and do a job once in a while. But there’s really no data that really can dig down that I’ve seen that show a lot of contractors are coming in from out of state to do a project.
And then, who are their subcontractors? Generally, if a contractor comes in from out of state, they’re not bringing their crews. They’re going to hire local subcontractors and suppliers. So it’s a complicated issue, and we all want good contractors building our public works. But we’re, again, not really in favor of more government involvement in our contractors’ businesses.
TDR: What about alternatives to the state’s design-bid-build system of delivering projects? Do you support allowing the state to use design-build on projects?
Barker: As you review a project, there’s no question that design-bid-build isn’t always the best delivery model for a particular project. And I think you know you see that in the private sector every day and I think the key, when you’re dealing with taxpayer money, is to make sure that there’s fairness, objectivity and transparency in the process.
And, you know, if we are approached regarding alternative project delivery, you know, we’ll take that up as an organization on a case-by-case basis. And generally, if it makes sense for the project, we’ve supported it. I think we would continue to support it, but there has to be some level of transparency, fairness and objectivity to all those contractors involved in the process.
TDR: How has the coronavirus outbreak complicated the industry’s work to combat its labor shortage?
Barker: (The AGC) and a lot of other organizations have tried to infiltrate the high schools and get construction among the career-path opportunities for high school students. And I think it’s been pretty successful. And what that leads into is youth apprenticeship and the success that we’ve had in youth apprenticeship.
And now we have this pandemic to deal with. That has our high schools, they’re all kind of trying to figure things out as far as what they’re going to do. And, what we know that they’re probably not going to be doing is conducting in-person skilled trades training at the high schools.
This is a big concern for us, and it should be for the industry on how we respond to keeping our momentum in the high schools, and what we’ve tried to do is introduce some online safety training. So I think we all have to be creative and not give up on the idea of workforce development.