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Professional engineers, architects and contractors enjoy
access to the design and construction market offered by the
State of Wisconsin. State projects constitute a substantial
portion of revenue earned by the private sector each year.
Unlike private construction projects, the State of Wisconsin
utilizes its status as a sovereign, immune from suit, by
limiting the pursuit of claims to the remedies and procedures
allowed by the legislature, and by the Wisconsin Department
of Administration, Division of Facilities Development. This
article is intended to give the reader a quick overview of
those remedies and procedures.
Section 16.85 of the Wisconsin Statutes prescribes the powers
and duties of the Wisconsin Department of Administration
(“the Department”) in letting contracts for professional engineering
or architectural work and in taking charge of and supervising all
engineering or architectural services, or construction work performed
for the State of Wisconsin or any of its departments or agencies.
Section 16.855 of the Wisconsin Statutes covers the subject of
construction project contracts which must be let by the Department
to the lowest qualified responsible bidder where the estimated
construction cost of a project exceeds $30,000.00. The Department
is required to give preference to bidders domiciled in Wisconsin,
in the absence of compelling reasons to the contrary. Section 16.855,
Stats., prescribes the procedure to be undertaken by a bidder if
the bidder discovers an error, omission or mistake in the bid, either
before or after bid opening. Of particular importance is § 16.855(4),
Stats., which prescribes the procedures to be followed in the event
the bid error is found after the bids are open. Unless the procedures
are followed, the bidder is not entitled to recover the bid guaranty
unless it can prove in the circuit court for Dane County that in making
the mistake, error or omission, the bidder was free from negligence.
If the estimated construction cost of a state project exceeds
$100,000.00, the Department is required to take both single bids
and separate bids on any division of construction work. Below
that threshold of $100,000.00, the Department may take single
bids or separate bids.
Under the provisions of Chapter 16, the State is not liable
to a prime contractor for damage from delay caused by another
prime contractor provided the Department takes reasonable action
to require the delaying prime contractor to comply with its contract.
Where the State is not liable under the statute, the delayed prime
contractor may bring an action for damages against the delaying
prime contractor.
The Department promulgates rules to implement the advertising
and award of contracts, and the arm of the Department that handles
state construction projects is the Division of Facilities Development
(“DFD”).
The DFD publishes the bidding and contract requirements for the
state projects undertaken by the Department. DFD publishes the
invitation to bid, instructions to bidders, bid form, bid bond,
general conditions of the contract, supplementary general conditions
and miscellaneous forms for subcontractor approval, minority business
enterprises, value enhancement proposals, designation of confidential
and proprietary information, and the construction contract and
performance and payment bond form. DFD also administers state
procedures for the submission and review of bids, award of contracts,
and the detailed authority exercised by the State over state construction
projects.
The DFD, along with the architects and professional engineers
performing work for the State, as state employees or as professional
firms under contract, determine and publish the plans and technical
specifications for the project and have input in the general conditions.
The general conditions provide for a specific claim procedure for
contractors who are interested in pursuing claims, demands and legal
causes of action. First, a contractor is required to present its
claim to DFD’s project representative. If DFD’s project representative
denies the claim, the contractor may appeal to the administrator of DFD.
The project representative has 21 calendar days after presentation of
the claim to notify the contractor in writing of his or her decision.
Failure of the project representative to act within that time constitutes
a rejection of the contractor’s claim. If the contractor’s claim is
rejected by the project representative, the contractor may appeal in
writing to the administrator of DFD, provided that the appeal is made
within 21 calendar days after it is rejected by DFD’s project representative.
If no appeal is taken, the decision of DFD’s project representative
is final and binding on the contractor. If the contractor files a
timely appeal from DFD’s project representative, the administrator
of the Division of Facilities Management acts on the claim and is
required to render a decision in writing within 14 calendar days
of the appeal. Failure by the administrator of DFD to act within
that time constitutes a rejection of the claim.
If the claim is rejected by the administrator of DFD after
following the administrative route outlined above, a statutory
claims procedure comes into play. It consists of filing a claim
with the Wisconsin claims board under § 16.007, Stats. The claims
board is required to investigate and make recommendations on the
claim to the legislature. When a claim has been referred to the
claims board, the board may, on its own motion, or shall upon the
request of the claimant, schedule the claim for hearing. The
board keeps a record of its proceedings and may require sworn
testimony, the attendance of witnesses and the production of
documents. Any member of the board may sign and issue a subpoena.
The board reports its findings and recommendations to the legislature.
If the claims board concludes that on legal or equitable principles
the State should in good conscience assume and pay the claim, it
causes a legislative bill to be drafted and submitted to the
legislative committee on finance. It must be therefore acted
upon as any other legislative proposal. If the legislature
rejects the claim or finally adjourns without acting upon the
claim, the claimant is then entitled to commence a judicial
proceeding against the State in the circuit court for Dane
County, Wisconsin.
This protracted claims procedure suggests to both the
State of Wisconsin and professional engineers, architects
and contractors pursuing a claim, that sincere and productive
efforts should be undertaken to settle the claim in order to
avoid both the legal and commercial costs associated with the
claim process. Yet, the Court of Appeals and Supreme Court
in Wisconsin frequently issue decisions in those cases where
settlement was not achieved.
I have spent five years as a state and federal attorney
representing the government’s position on claims cases, and
43 years representing private claimants before the state and
federal government. I can say with confidence that Wisconsin
has a fair and balanced claims procedure and is blessed with
a high quality DFD staff. However, DFD employees will no doubt
expect design professional and contractors to adhere to contract
terms, as those terms are interpreted by state lawyers. It is
therefore important for design professionals and contractors to
acquire a detailed knowledge of claims procedures which can be
found in the Wisconsin Administrative Code, the Wisconsin Statutes,
and in the general and supplementary conditions of the specifications
issued on state construction projects.
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