As winning bidder Walsh Construction Co. moves trailers on-site and gears up to begin building a new $116.9-million maximum-security penitentiary in Ft. Madison, Iowa, the second-lowest bidder, Weitz Co. and the Master Builders of Iowa, have a few days left to decide whether they will continue legal appeals claiming that Iowa awarded the contract to Walsh improperly.

Decision To Further Appeal Iowa Prison Contract Pending; Construction Set For Early December
Image: Courtesy Iowa Das
Rendering of the Ft. Madison penitentiary

Earthmoving contractor McAninch Corp., Des Moines, Iowa, has completed site preparation work, which was awarded under a separate contract from construction of the prison itself. Walsh reportedly is planning to start work on the structure the week of Nov. 29.


‘Preference Rule’ at Center of Dispute

Weitz and Master Builders claim Walsh improperly filled out its bid by not declaring that its home state, Illinois, has a statute giving preference to contractors from Illinois on state projects. Iowa statues say contractors must declare that their state has such a statue when bidding on Iowa state projects.

When a contractor from a state that has bid-preference statutes is bidding on an Iowa state project, the state is supposed to give the same amount of preference to Iowa firms bidding on the Iowa job. “It’s a ‘mirror law,’” says Scott Norvell, president and CEO of the Master Builders of Iowa, an association of about 2,000 firms that do industrial contracting in Iowa.

“Master Builders opposes preference laws, but Illinois chose to adopt one,” he adds. “So what’s good for the goose should be good for the gander. It’s fair that Iowa reciprocate when Illinois contractors work here.”

Mike Tousley

Weitz Executive Vice President Mike Tousley says, “The bid documents said that the state was going to apply Iowa’s bid-preference laws. Weitz felt that labor should have been included in the preference consideration. The administrative-law judge did not agree.” Weitz submitted the lowest bid—$121.5 million—from an Iowa company.

Weitz’s and the Master Builders’ lawsuits, filed separately, both say the Iowa Dept. of Administrative Services (DAS), which is building the 800-inmate maximum-security prison in the southeastern corner of the state, acted improperly by not throwing out Walsh’s bid. The DAS argues, however, that the Illinois statute is a labor-preference standard that comes into play after bids have been awarded and is not, therefore, a bid-preference statute that would trigger Iowa’s mirroring preference requirement.

Appeals Process

Weitz and the Master Builders filed simultaneous lawsuits in Polk County Court, but the judge there ruled the two companies must exhaust administrative remedies before the county court will hear the cases.

The two companies also filed appeals in the Iowa DAS administrative appeals system. On Nov. 17, they lost the first round of those appeals, when judge Kerry Anderson of the Iowa Dept. of Inspections and Appeals ruled that the Illinois preference statute dealt with labor preference and not bid preference. Therefore, the judge said, Walsh did not have to declare its home state’s preference rule in its bid, and the DAS did not have to apply a corresponding level of preference when considering the bid.

Scott Norvell

Judge Anderson also ruled that the Master Builders did not have standing to file an administrative appeal because it wasn’t a losing bidder on the project.

Weitz and the Master Builders both say they are considering whether to pursue the case and say they have 15 days from Judge Anderson’s decision in which to appeal it.

Ray Walton, director of Iowa’s DAS, could not discuss the matter since he is “the next court” that will hear the case if Weitz and Master Builders appeal Judge Anderson’s decision. Walton did say, however, that his department does procurement for many state departments and that bidders appeal thousands of unsuccessful bids from many departments each year. “The only thing unusual about this particular appeal is the size of the job,” says Walton.

Labor Agreement Stirs Controversy

In addition to the bidding-process dispute, the Ft. Madison project marks the state of Iowa’s first-ever use of a project labor agreement. The new process has upset some contractors, who say using a PLA cuts down the pool of potential bidders by discouraging non-union contractors from bidding. It may also result in many of the project’s jobs going to out-of-state workers, they argue.

Iowa’s current governor, Chet Culver, used an executive order this spring to encourage the state to use PLAs on public projects.

Incoming Governor Terry Branstad has said he will undo the order when he takes office in January. “In case of the prison project in Ft. Madison,...