Budget deficits have been a way of life for Wisconsin in recent times. Earlier this year, state lawmakers scrambled to pass a repair bill designed to close a $652 million shortfall in the current state budget running through June 2009. When work begins on the next biennial budget, the governor and Legislature will be staring a $1.6 billion structural deficit in the face.
Unfortunately, the state Department of Administration may not have noticed. In May, officials there awarded a $29.5 million contract to the construction firm Shaw-Lundquist Associates, Inc. to renovate and expand a science building on the University of Wisconsin-Stout campus. The bid from Shaw-Lundquist won despite coming in $1.3 million above the lowest bidder.
State officials do not claim the extra $1.3 million will result in a better-constructed science building. Rather, they ponied up the extra money because Shaw-Lundquist is a minority-owned business. The company, located in St. Paul, Minn., was founded in the 1970s by a Chinese immigrant who now goes by the name of Fred Shaw.
In giving the nod to Shaw-Lundquist, officials invoked a 1984 law that allows ?– though does not require ?– the state to award contracts to qualified minority-owned firms so long as their bid comes within 5 percent of the lowest bidder. Last year, the Doyle administration made it a requirement if the bid still comes in under the state’s projected cost.
Shaw-Lundquist’s $29.5 million bid came in below the $33 million the state estimated for the UW-Stout project. Neenah-based Miron Construction Co. submitted the lowest bid at $28.2 million, or 4.5 percent less than Shaw-Lundquist’s. Another Wisconsin firm submitted a bid between the two.
The size of the price differential ?– $1.3 million — is raising eyebrows at the Capitol. Sen. Glenn Grothman, R-West Bend, has called for a special session of the Legislature to eliminate racial preferences in the awarding of state contracts.
State Rep. Dean Kaufert, R-Neenah, has taken a less aggressive approach. Kaufert, who represents the district where low-bidder Miron is located, says the policy should be tweaked to avoid benefiting thriving minority-owned firms that need no special help. A cap should be established to limit the program to businesses under a certain size, he says.
Indeed, though Shaw-Lundquist is not as large as the two Wisconsin companies that underbid it, it is not a small business. It claims to be the largest minority-owned construction contractor in the Midwest and largest Asian-owned contractor in the nation, boasting more than $75 million in annual revenue.
Kaufert’s notion that nuance is needed in affirmative action programs is not unique. Democratic presidential nominee Barack Obama has acknowledged that blindly elevating race above other factors — such as class — may not always make sense. Asked last year whether his daughters, whose parents both hold advanced degrees and earn far more than the average American, should be given preferential treatment from college admissions officers, he admitted they “should probably be treated” the same as other children from privileged backgrounds.
The Doyle administration would do well to explain why Shaw-Lundquist is any different than Obama’s daughters. With $75 million in annual revenue and a track record spanning back decades, it can hardly be said the firm could not compete without special treatment. Similarly, the notion of diversity — which is used to justify race-based affirmative action irrespective of economic status — cannot be claimed in the context of a construction contract. (I make the small assumption that Shaw has no plans to move his personal residence to the new UW-Stout science building.)
The ultimate insult, of course, is that the Shaw-Lundquist contract will line the coffers of a Minnesota-based company, instead of supporting a company like Miron that is located in — and employs residents of — Wisconsin.
But hey, when a state is in as good of financial shape as Wisconsin is, why would we worry about such things anyway?
Ryan Masse ([email protected]) is a second-year law student.