Wisconsin law requires certain public entities to engage in competitive bidding when the estimated cost of a “public works” or “public construction” project exceeds a specified dollar amount. The competitive bidding requirements were enacted to “prevent fraud, collusion, favoritism and improvidence in the administration of public business, as well as to ensure that the public receives the best work or supplies at the most reasonable price practicable.”
Wisconsin public contracts are governed by Wisconsin Statute §16.85, which requires that contracts be given let to the lowest responsible bidder for all projects on which the estimated costs of the public construction exceed $50,000.
Public projects are required to be advertised for proposals in a manner that is likely to inform potential bidders of the project. In addition, to ensure competitive bids, the department may solicit bids from qualified contractors. All advertisements for projects are required to provide the following information:
- Location of work and the name of the owner.
- The scope of the work.
- Amount of bid guarantee required.
- Date, time, and place of bid opening.
- Date when and place where plans will be available.
- That the department shall consider only bids from persons who are responsible bidders.
The Lowest Responsible Bidder
The lowest responsible bidder is a business whose financial capabilities, past performance, and reputation meet the required standards and has the lowest or best bid price. Most projects require Wisconsin contractors to be a “qualified bidder” before the contractor is able to bid on a project.
To be certified as a qualified bidder on a State project, a Wisconsin contractor must meet all the following requirements:
- The bidder has completed at least one project that involved similar work to the work being bid and the project was at least 50 percent of the size or value of the division of the project being bid.
- The bidder has access to all necessary equipment and the organizational capacity and technical competence necessary to perform the work.
- The bidder has submitted a sworn statement as to financial ability, equipment, and experience in construction and other information as may be necessary to determine the bidder’s competency.
- The bidder maintains a permanent place of business.
- The bidder submits a sworn statement, upon the department’s request, that indicates that the bidder has adequate financial resources to complete the work being bid.
- The bidder is bondable for the term of the proposed contract and can obtain a 100 percent performance bond and a separate 100 percent payment bond.
- The bidder has a record of satisfactorily completing projects.
- The bidder is not on an ineligible list that the department maintains under s. 16.705 (9) or 16.765 (9)—which are includes termination from other State Projects or those who have violated construction-related statutes or administrative rules.
- The bidder has been in business for at least 12 months.
- The bidder is a legal entity and is authorized to do business in Wisconsin.
- The bidder has performed at least one other public project for a government entity.
- The bidder can provide information to the department on the bidder’s ownership, management, and control.
- In any jurisdiction, the bidder, in the previous 10 years, has not been debarred from any government contracts and has not been found to have committed tax avoidance or evasion.
- In any jurisdiction, in the previous 10 years, the bidder has not been disciplined under a professional license.
- In any jurisdiction, none of the bidder’s employees and no member of the bidder’s organization has been disciplined under a professional license that is currently in use.
Given the extent of these requirements, Wisconsin contractors interested in bidding on public construction projects should begin the process of obtaining their qualifications well before a project that they are interested in is advertised.
Municipal Public Construction Projects
Wisconsin courts have recognized that the requirement that bids be awarded to the “lowest responsible bidder” implies the exercise of discretion by the municipality. One way that many Municipalities determine who is the lowest responsible bidder is by prequalifying bidders. Green Bay, for example, has a “Bidder’s Proof or Responsibility” application. Importantly, Wisconsin does not permit partial qualifications, and like the State’s qualification requirements, municipal bidders must also meet all the requirements to be “qualified,” the failure to do so, means the contractor may not bid on the project. Bidders found to be unqualified have the right to appeal the decision at a hearing before the Board of Public Works.
Bids Are to Be Opened Publicly
Wisconsin law requires that bids are publicly opened and read aloud, at the time and place specified in the notice. The bids are then available for public inspection.
Many Wisconsin construction disputes begin with misbid projects. With Public projects, such errors can be corrected without cost if caught early enough. At any time prior to the published time of opening, a contractor may withdraw their bid on a written request. A bidder who withdraws their bid may still file a new bid.
After the bid is opened, the bidder who has made an error may limit their liability to the bid bond by giving written notice of intent not to execute the contract to the department within 72 hours of the bid opening. The department of administration, with the approval of the attorney general, may settle and dispose of cases. However, if no such settlement is obtained, the bidder is not entitled to recover the bid guarantee unless the bidder proves in the circuit court for Dane County that in making the mistake, error, or omission the bidder was free from negligence.
A contractor may protest the award of a contractor where it believes the contract was awarded to the wrong bidder. Wisconsin courts have explained that It is expected that an aggrieved bidder will “zealously protect” the public interest and the public purse by taking legal action to ensure that a contract is not awarded to the wrong bidder. See Aqua-Tech, Inc. v. Como Lake Prot. & Rehab. Dist., 71 Wis. 2d at 553, 239 N.W.2d 25 (1976). To that end, if a bidder believes that it is entitled to the contract, Wisconsin law requires the aggrieved bidder to seek a temporary injunction to prevent the award of the contract to the party that was awarded the contract. If a bidder fails to do so, the buyer has no ability to protest the awarding of the contract. See e.g., PRN. Assocs LLC v. State of Wisconsin Dept. of Administration, 766 N.W.2d 559 (2009) (holding that there was no basis for judicial review and the bid protest was moot because the bidder had not obtained an injunction blocking the contract award.)
Public projects can be excellent work for contractors who can perform the work to the required standards and understand the requirements for publicly bid contracts.