Rules Clearinghouse No. ________
Proposed Hearing Draft
July 15, 2016
PROPOSED ORDER OF THE WISCONSIN
DEPARTMENT OF WORKFORCE DEVELOPMENT
The Wisconsin department of workforce development proposes the following order to renumber DWD 293.01; to renumber and amend DWD 293.01 (Note); to amend DWD 293.02 (1) (a) to (c) and (2) (a) to (c); and to create DWD 293.01 (2) relating to payment and performance assurance requirements.
Analysis Prepared by the Department of
Statutes Interpreted: Section 779.14, Stats.
Explanation of statutory authority
Section 779.14, Stats., sets the cost thresholds for the payment and performance assurance bond requirements that apply to contracts for performing, furnishing, or procuring labor, services, materials, plans or specifications for a public improvement or public work. Under s. 779.14 (1s), Stats., if a dollar amount is to be indexed, the Department of Workforce Development (DWD) is required to adjust the dollar amount biennially and be in proportion to any change in construction costs. If the adjustment to be made is less than 5%, no adjustment shall be made. Under s. 103.005 (1) the DWD has authority to adopt reasonable and proper rules and regulations relative to the exercise of its powers and authorities and proper rules to govern its proceedings and to regulate the mode and manner of all investigations and hearings.
Related statutes or rules
Chapter 779, Stats. – Liens DWD Ch. 293 – Payment and Performance Assurance Requirements
Plain language analysis
DWD is required to adjust the contract prices that determine the payment and performance assurance requirements that apply to contracts with state and local governments for the performance of labor or furnishing materials for a public improvement or public work on a biennial basis if the adjustment to be made is 5% or greater. No adjustment is required if the adjustment is lower than 5%. The contract prices are adjusted based on the change in the construction cost index as published by the Engineering news-record, a national construction trade publication.
The proposed rule adjusts the contract price thresholds to reflect a 6.15% increase in construction costs from December 2009 to December 2011 and a 5.4% increase in construction costs from December 2011 to December 2013. There is no adjustment in 2016 because increases in construction costs from December 2013 to December 2015 were less than 5%.
In addition, the proposed rule will create s. DWD 293.03 relating to indexing future contract thresholds. On each January 1 in an even calendared year, DWD will calculate the percentage difference between the construction cost index for December of the preceding year, and the construction cost index for December two years before the preceding year, and adjust those amounts by that percentage difference. Any calculated adjustment equal to 5% or greater will be published, and become effective upon publication, in the Wisconsin Administrative Register.
Summary of, and comparison with, existing or proposed federal statutes and regulations
The Miller Act (40 USC 3131 – 3134) applies to contracts awarded for the construction, alteration, or repair of any public building or public work of the Federal Government. While the Act provides that these bonds must be posted on contracts exceeding $100,000 in cost, the Federal Acquisition Regulation (CFR 48 Part 28) requires the bonds only on contracts that exceed $150,000.00.
Comparison with rules in adjacent states
Iowa: Contracts for the construction of a public improvement shall, when the contract price equals or exceeds $25,000, be accompanied by a bond, with a surety, conditioned for the faithful performance of the contract, and for the fulfillment of other requirements as provided by law.
Illinois: Any contractor entering into a contract for public work of any kind costing over $50,000 with any state officials, boards, commissions or agents, or any political subdivisions, is required to supply and deliver a bond to the state or political subdivision, with good and sufficient sureties.