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Circuit Court Judge Rules Contractors Must Be Added to No-Bid Suit in Ark.

Mon August 13, 2007 - Southeast Edition
Construction Equipment Guide

LITTLE ROCK (AP) Ten construction firms that have pending contracts with the state must be added as defendants to a lawsuit targeting the way state projects are awarded without taking bids, a Pulaski County judge ruled Aug. 6.

Lawyers for the state say wording in the constitution includes the phrase “in any county,” and they argue that the wording limits application of the provision to projects carried out by counties.

But lawyers for a group of contractors unhappy with the no-bid process, which they say favors larger companies, interpret the phrase as applying to publicly funded projects anywhere in the state. They want a 2001 law allowing contracts to be awarded without bids to be declared unconstitutional.

A hearing was scheduled Aug. 6 in Pulaski County Circuit Court in the case, filed by the Contractors for Public Protection Association.

Judge Jay Moody did not rule on the state’s motion to dismiss the suit, but ordered the plaintiffs to add the additional defendants to the suit. Moody gave the contractors 30 days to add the firms with ongoing contracts to the suit.

“They will be seriously and adversely affected by this because they’re in the process of performing these contracts,” Senior Assistant Attorney General Lori Freno told Moody in a brief hearing.

Ron Hope, attorney for the association, accused the state of trying to create a “cumbersome delay” by forcing the association to enjoin the contractors.

At issue are more than $800 million in state building contracts, including agreements to build dozens of academic and residential buildings on college campuses and the $32.6 million contract to build Mount Magazine lodge.

The provision in the state constitution at issue says, “All contracts for erecting or repairing public buildings or bridges in any county, or for materials therefore ... shall be given to the lowest responsible bidder, under such regulations as may be provided by law.”

But the 2001 state law allows awarding contracts based on factors other than cost when the project costs, excluding the land, exceed $5 million.

Hope said the constitutional provision plainly says that all building and bridge projects must be competitively bid.

The state asserts that the provision applies only to county government projects.

The association also claims that the no-bid selection process is open to abuse and ultimately a bad deal for taxpayers. The group argues that state law does not override constitutional law and that the 2001 law gives Arkansas’ bigger construction companies control over most of the larger state-funded building projects.

David Gatzke, a lead plaintiff in the case, said most of the work his company did was state work until the law went into effect. Gatzke is co-owner of Wilkins Construction Inc. in Little Rock.

The suit asks that the no-bid process be declared unconstitutional, that the contracts made under the 2001 law be voided, and that money spent according to those contracts be declared illegal exactions.

According to the Arkansas Building Authority, which guides most state building projects outside of higher education, general contractors have been selected without competitive bids for all but one of the eligible projects the agency has reviewed since 2001.

The Arkansas chapter of Associated General Contractors, an organization that represents nearly 300 contractors throughout the state, said the law is good for taxpayers.

Bigger construction companies are getting the high-dollar projects because they’re most qualified and are eligible for the bond insurance required, said Doug Wasson, president of Associated General Contractors and also president of Kinco Inc.

“If the price isn’t right, they’ll get rid of us and go to another contractor,” Wasson said.

Act 1626 of 2001 requires agencies to advertise for written proposals from contractors and requires a committee to interview up to five applicants. The selection is to be based on experience as well as an applicant’s record of completing projects on time, on budget and with a quality product.

Wasson said the process was more open than competitive bidding because the state agencies have the opportunity to review the ongoing costs of construction down to the penny.

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