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Wisconsin changes minority firms contracting policy(Wisconsin State Journal, The Via Acquire Media NewsEdge) Sep. 26--State officials have thrown out a strict policy requiring preference for minority firms in state building contracts after a major project was awarded to an out-of-state company at a cost of $1.3 million over the next-lowest bidder. In an announcement to agency staff earlier this week, state Department of Administration officials said they are returning to an earlier practice that allows them to show preference to minority contractors but doesn't force them to do so. In May an established minority-owned firm from the Twin Cities won a $29.5 million contract to renovate and expand a UW-Stout science building, even though two Wisconsin firms underbid the Minnesota contractor. That building contract -- possibly the largest ever awarded by the state to a minority firm -- will still go forward. Last month, the Wisconsin State Journal reported on the concerns of lawmakers and a state contractors group about the policy and the project. One of those lawmakers, Rep. Dean Kaufert, R-Neenah, praised the change in policy. "If you have rigid rules, you run into these problems," Kaufert, a member of the state Building Commission, said. "This (change) is good for taxpayers and contractors around the state and it still allows for smaller minority firms to get some of the business from the state." For more than two decades, state officials have unsuccessfully sought to meet a goal laid out in a 1984 state law of doing 5 percent of state business with minority-owned companies. DOA secretary Michael Morgan, the first African-American to head the agency, has made meeting that target a priority. He said this week's change wouldn't hurt the state's outreach to minority businesses. "With sensible guidelines and more discretion, we can strengthen our efforts to provide opportunity to minority-owned businesses to work with the state," Morgan said in a statement to the State Journal. The 1984 law gives officials the option of awarding a state contract to a qualified minority-owned firm if that company's bid on the job is within 5 percent of the lowest bid. But a January 2007 policy adopted by then state facilities administrator Rob Cramer required that the price preference on state building projects be given to any responsible and qualified minority firm, so long as costs stayed within the project's budget. The policy was intended to avoid any appearance of favoritism in applying the price preference. At the time it was adopted, administration department employee Georgia Thompson was in prison after she was convicted of fraud as part of an alleged bid-rigging of a state travel contract. Her conviction was later dramatically overturned by a federal appeals court. "The mandatory policy was created during a time when a member of the agency was subject to what was found to be a baseless criminal prosecution," Morgan said. David Helbach, administrator of state facilities at DOA, rescinded the policy on Monday with a two-sentence order that once again gives state officials discretion in awarding the price preference. The new order calls for establishing guidelines within 30 days that will help state officials in deciding when the preference should be given. Helbach said that cost would be an important factor in weighing that preference. He declined to speculate on other criteria suggested by critics, such as not favoring large, established minority firms. The state can't change its awarding of the UW-Stout contract retroactively and can only change its policies going forward, he said. The unusually large and technically complicated contract on the UW-Stout project involves renovating and expanding the Jarvis Hall science wing on the northwestern Wisconsin campus. Shaw-Lundquist Associates, a contractor based near St. Paul, Minn. with experience in similar projects, won the contract with a $29.5 million bid. That bid was about 4.5 percent higher than the $28.2 million offered by low-bidder Miron Construction Co. of Neenah but was still below the state's $33 million project estimate. Shaw-Lundquist vice-president Hoyt Hsiao said in an interview last month that his firm has been ranked as the largest Asian-owned contractor in the nation. But Hsiao, who could not be reached for comment for this story, also said then that the contract award was fair, since Shaw-Lundquist is still many times smaller than Miron Construction. The university, which was not involved in the project award, has been pleased with Shaw-Lundquist's work so far on the project, UW-Stout spokesman Doug Mell said last month. Harold Hardy, an African American who runs Hardy Construction in Madison, said in-state minority firms like his also benefited from the old rule and that state officials should be cautious and talk with them before changing it because of one "isolated" contract. Last month, the builders group Associated General Contractors of Wisconsin also questioned the state's policy that resulted in the award to Shaw-Lundquist, saying the state should consider restricting incentives to smaller minority firms that aren't yet well established. General counsel David Bohl said the contractors group would have no comment on the administration department change until it sees the final guidelines expected next month. To see more of The Wisconsin State Journal, or to subscribe to the newspaper, go to http://www.wisconsinstatejournal.com. Copyright (c) 2008, The Wisconsin State Journal Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. |