What's to reform? Wicks Law protects taxpayers

(Rochester Business Journal)By: James V. Bertolone, President, and Aron J. Reina, Lead Field Organizer
Rochester & Genesee Valley Area Labor Federation, AFL-CIO

Over the past months we’ve been assaulted with claims that the Wick’s Law is the only thing preventing our economy from seeing the massive upswing of the early 1990’s. Claims of expensive labor always top the list, as do the need for multiple contracts requiring additional administration. Each time groups like the Rochester Business Alliance advocate for Wick’s Law reform, we hear how these changes will save us, the taxpayers, money in our pockets. Little could be further from the truth.

In order to truly understand the debate, we first need to understand the issue. The Wick’s Law is a New York State Law requiring state and local construction projects to be bid in multiple packages/contracts (general, electrical, HVAC and plumbing). Any project exceeding $50,000 in cost is currently subject to this breakdown. While many advocates of reform suggest that this process creates a minimum of 4 contracts per project, the reality is different. Up to 4 contracts are needed if all components exist on a given project, though more are permissible, and likely, in an effort to get the lowest bids.

This law, created to reduce “bid shopping”, is designed to make the bidding process on public projects more fair. Imagine a public works project, bid at $1,000,000. Under the current Wick’s Law regulations, that project would be divided into 4 or more separate contracts (per the explanation above). All bids on this project would be received by the appropriate governmental authority, reviewed simultaneously, then awarded. This causes bids to be submitted at competitive rates, which are lower than situations where only one bid is considered. Without this public bidding process, costs are increased through the original bidding process. In this circumstance, private bidders gain contracts at higher values, removing competition, and increasing the cost of the project to the taxpayer.

While many politicians and government workers are honest, hardworking and respectful people, we all know of stories, even here in Monroe County, where contracts have been awarded in close relation to campaign contributions. And, why not? A single $25,000 contribution in exchange for a $1,000,000 project seems like a small price to pay. Competition is reduced, risk is reduced, and profit is maximized. But who is earning the money, and who is paying the bill?

Through public bidding, each bid will by necessity be lower than it would be if there were not such a system in place. Likewise, favoritism is eliminated from the equation, allowing all businesses an equal starting point on projects paid for with public funding (read: your taxes). Surely we should maximize our cost savings, while maintaining our community’s high standards. If it’s our money being spent, it should be spent here, at home, on neighbors doing the work, and on their health and well being.

So, why does the RBA insist that the levels need to be increased from $50,000 to $10,000,000? Or is it the $2,000,000 when we debated? Or better yet, is it $1,000,000 which the RBA first stated months ago, and appears to have settled upon when reported in a Rochester Business Journal editorial this past month? Why is the business community so determined to do away with the Wick’s Law? The answer is easy – eliminating the Wick’s Law on public works projects accomplishes two goals: it weakens trained building and construction union workers while permitting private contractors the ability to work the political system for their own personal gains. There is no public savings and no public benefit to the weakening of the Wick’s Law.

Though the Rochester Business Alliance has been claiming a 20-30% savings by increasing the threshold of the Wick’s Law, the evidence simply does not exist. Studies, conducted in New York and throughout the United States, find that on average, single prime and multiple prime contracts are largely equivalent (often a 2% margin if any). There are sometimes additional costs in overruns, change orders and administrative fees, though the large percentage of these costs are nullified, if not outweighed, by the bidding process which is proven to reduce project expenses. If all else is equal, the savings and/or benefits must be elsewhere.

Assuming the costs to be equal, or lower, for multiple prime contractors under the Wick’s Law, there should be an advantage gained for someone for changing the system, right? In this case, the benefit is not the community – I’ve already displayed how there is little if any cost savings. If the community is not saving, who would be? In this case, increasing the limit allows a municipality to award a contract to a contractor. That contractor can then “shop around” for a lowest bidder (sub-contractor). The contractor pockets the difference in the form of profit.

Clearly profit is a great thing. Without profitable businesses, Labor cannot thrive. However, with a single bid on the previous example, the community is still paying $1,000,000 for the project, the sub-contractors are not making enough to pay prevailing wage, health and retirement benefits to his/her employees, and the prime contractor is increasing profits – from publicly collected tax dollars. Add the unseen lack of health & retirement benefits to the taxpayer cost, and not only has the public lost money, but they have fallen victim to the capitalistic intentions of a business owner.

We all agree that capitalism is the driving force behind our economy, but it should not be the driving force behind our public system. Nor should the capitalistic intentions of a single contractor further deprive our community of resources. We are more intelligent, more determined, and more capable of finding ways to help our community. Emptying our pockets to supplement a contractor’s pockets is not Labor’s way – and I’m certain it’s not even something fiscal conservatives would find appropriate.

The Wick’s Law is there for a reason – fairness and protection in the marketplace. Fairness for contractors, and protection for taxpayers.