OAG5-09

¶ 25. Another principle of statutory construction is that “penal statutes must give a clear and unequivocal warning, in language people generally understand, about actions that would result in liability and the nature of potential penalties.” 3 Singer & Singer, Sutherland Statutory Construction § 59:3 (7th ed. 2008). Wisconsin Stat. § 66.0903(12)(e) provides that DWD “shall promulgate rules to administer this subsection.” The rules of construction that are applicable to statutes are also applicable to administrative rules. See DaimlerChrysler c/o ESIS v. LIRC, 2007 WI 15, ¶ 10, 299 Wis. 2d 1, 727 N.W.2d 311. If possible, administrative rules should therefore be construed together with related statutes to produce a harmonious whole. Id. When construing statutes and administrative rules together, unreasonable and absurd results are to be avoided. See Orion, 290 Wis. 2d 421, ¶ 32, citing Kalal, 271 Wis. 2d 633, ¶ 46.

¶ 26. Wisconsin Admin. Code ch. DWD 294 is entitled “DEBARMENT OF PUBLIC WORKS CONTRACTORS.” Under that chapter, public works contractors are subject to debarment “from performing work, either as a prime contractor or subcontractor, for any state agency or local governmental unit for a specified period.” Wis. Admin. Code § DWD 294.02(5). Wisconsin Admin. Code § DWD 294.02(3) defines the term “contractor”:

  “Contractor” means any individual or legal entity in a construction business involved on a public works project, including its responsible officers, directors, members, shareholders, or partners, irrespective of the name by which the group is designated, provided that any officer, director, member, shareholder, or partner is vested with the management of the affairs of the individual or legal entity.

¶ 27. Wisconsin Admin. Code § DWD 294.02(2) defines the term “construction business”:

  (2)  “Construction business” means:

  (a)  Any business engaged in erecting, constructing, remodeling, repairing, demolishing, altering, painting or decorating buildings, structures, or facilities; and

  (b)  Any business engaged in the delivery of mineral aggregate or the transporting of excavated material or spoil as provided by s. 66.0903(4) or 103.49(2m), Stats.

¶ 28. Under DWD’s current rules, only businesses and individuals associated with businesses are subject to debarment. DWD’s current rules contain no indication that local units of government can be considered businesses. Construing the prevailing wage and debarment statutes and rules applicable to periods prior to January 1, 2010 together, the Legislature did not clearly specify that local units of government can be considered “contractor[s], subcontractor[s] or agent[s]” within the meaning of Wis. Stat. § 66.0903(12)(c) and DWD did not clearly specify that local units of government can be considered “‘[c]onstruction business[es]’” within the meaning of Wis. Admin. Code § DWD 294.02(2). In my opinion, prior to January 1, 2010 local units of governments that perform or undertake any public works or public construction projects pursuant to valid intergovernmental agreements under Wis. Stat. § 66.0301 or Wis. Stat. § 83.035 therefore are not required to pay prevailing wage rates under Wis. Stat. § 66.0903(3) to their employees who perform work upon those projects.[6]

CONCLUSION

¶ 29. I therefore conclude that statutorily-authorized intergovernmental agreements for purchases of services are exempt from municipal competitive bidding requirements and procedures under Wis. Stat. § 66.0131(2). Projects involving county highway contracts entered into by the county highway committee or the county highway commissioner under Wis. Stat. §§ 83.035 and 83.04(1) are also exempt from county competitive bidding requirements. Municipal competitive bidding statutes also do not apply to projects undertaken by intergovernmental agreement or where the municipalities that will perform the work have made a determination to do the work themselves with their own employees. Effective January 1, 2010, with respect to any public works or public construction project whose estimated cost exceeds $25,000 state prevailing wage rates must be paid to the employees of a local unit of government that enters into an intergovernmental agreement under Wis. Stat. § 66.0301 or Wis. Stat. § 83.035 to perform services for another local unit of government upon such a project. Prior to January 1, 2010, state prevailing wage rates are not required upon such projects. State prevailing wage rates are not required before or after January 1, 2010 upon public works or public construction projects performed or undertaken pursuant to intergovernmental agreements involving the joint exercise of any power or duty by two or more local units of government.

            Sincerely,

            J.B. Van Hollen

            Attorney General

JBVH:KMS:FTC:cla

x:\public\van hollen\decker, russ.doc

1

  You have submitted a detailed legal analysis prepared by the Construction Business Group prior to the passage of 2009 Wisconsin Act 28 concerning the two questions posed in your opinion request. The Construction Business Group is a joint labor-management industry trust fund established by Operating Engineers Local 139, Associated General Contractors of Wisconsin, Wisconsin Transportation Employers Council/Wisconsin Transportation Builders Association, and Wisconsin Underground Contractors Association.

2

  38 Op. Att’y Gen. 175 (1949), discussed extensively in the submitted materials, did not consider the applicability of what is now Wis. Stat. § 66.0131(2).

3

  Unlike other municipal competitive bidding statutes such as Wis. Stat. §§ 59.52(29)(a) and 62.15, the town competitive bidding statute, Wis. Stat. § 60.47, does not mention making an explicit determination that the town will perform all or a particular class of public construction or public work itself in lieu of competitive bidding.

4

  Although you have not inquired about competitive bidding requirements for towns under Wis. Stat. § 60.47, the submitted materials emphasize that the town competitive bidding statute, Wis. Stat. § 60.47(4), explicitly provides that “[t]his section does not apply to public contracts entered into by a town with a municipality, as defined under s. 66.0301(1)(a).” Historically, the town competitive bidding statutes have been particularly unclear. See 66 Op. Att’y Gen. 284, 289-90 (1977). The town government statutes, Wis. Stat. ch. 60, were updated and modernized in 1983 Wisconsin Act 532. The notes to Wis. Stat. § 60.47 by the Legislative Council’s Special Committee on Revision of Town Laws that are included in 1983 Wisconsin Act 532, sec. 7, state in part:

  Subsection (4) is based on that part of s. 60.29(1m) which permits a town to enter into a public contract with the county in which the town is located without utilizing competitive bidding procedures. It expands the exemption from bidding to include public contracts between a town and any municipality, as defined under s. 66.30(1)(a) [now Wis. Stat. § 66.0301(1)(a)]. . . . The committee concluded that the concerns that underlie a competitive bidding requirement for public contracts entered into between towns and nongovernmental entities have less weight in relation to contracts between towns and other governmental entities.

Neither the prior town competitive bidding statute nor the updated town competitive bidding statute is applicable to situations in which the governing body of a local unit of government has made a formal determination to perform all or a particular class of public works projects itself.

5

  In practice, it may prove difficult to distinguish between intergovernmental agreements involving services performed by one local unit of government for another local unit of government and intergovernmental agreements involving the joint exercise of powers or duties. Cf. OAG 8-08 (October 1, 2008), at 4 (parties to an intergovernmental agreement must “have legal authority to act deriving from some source other than the intergovernmental agreement itself.”)

6

  The submitted materials refer to a circuit court case in which a city, acting unilaterally, sought and obtained a prevailing wage rate determination for a highway project from DWD under Wis. Stat. § 66.0903(3)(am). The city then sought and obtained competitive bids on the project. The city subsequently requested the county to submit a proposal to do a portion of the work upon which competitive bids had already been obtained. The city accepted the county’s proposal, and rejected the competitive bids for that portion of the work. A circuit court upheld DWD’s determination that the county was required to pay prevailing wage rates to its employees. In that case, there was no intergovernmental agreement under Wis. Stat. § 66.0301(2).