Illinois provides for suspension of errant contractors through its administrative code. (Title 44, subtitle B; chapter XXI; Part 1400 of the Illinois Administrative Code.) Illinois has a separate debarment process specifically any contractor, including building contractors, who disregard their obligations under the Prevailing Wage Act. Suspensions may not be imposed without a due process hearing. The Illinois Code provides suspension sanctions for a number of bidding- and contract-related actions, similar to those listed under the Department's proposed rule in sections Adm 24.05(2) and 24.06(2). Illinois suspensions may be for an indefinite period of time.

Minnesota enacted its suspension/debarment rule in its administrative code as well. (Chapter 1230 of the Minnesota Administrative Rules.) Minnesota also requires a due process hearing for suspension and debarment, with a list of causes also similar to those in proposed rule Adm 24. Minnesota has no specific term limit on either its suspensions or debarments.

Iowa also provides for a suspension/debarment procedure through its administrative code. (11-Chapter 105.18(2), Iowa Administrative Code.) Suspension or debarment may occur without a hearing, but the contractor may request a hearing through an appeal process. The offending contractor is allowed a time to cure the alleged cause before actual suspension/debarment is imposed. Suspensions may be up to one year; debarments have no limit.

Michigan has adopted a debarment procedure by written policy, not by statute or rule. (Debarment Policy; Purchasing Operations; Department of Management and Budget.) Its policy does not provide for a suspension, but does provide for an administrative hearing upon request. Again, the list of causes is similar to Illinois, Minnesota and the Department's proposed rule. Debarment is not to exceed 8 years with the policy specifically noting that 3 years is the usual maximum.

The proposed rules were drafted by Department staff in the Legal Services Office and the Division of State Facilities Development based upon similar rules adopted in 1983 by the Wisconsin Department of Transportation as Chapter Trans 504, as well as the rules from the adjacent states referenced above.

This rule is intended to address potential issues encountered by the Department of Administration's Division of State Facilities as it manages building contracts for the State of Wisconsin. The small businesses involved would be expected to include small building contractors and their subsidiaries and affiliates, as well as developers and other firms involved in the design and construction of state facilities.

The Department lacks salary and other necessary data to estimate the comparable costs incurred by private sector contractors in defending themselves during these proceedings. However, the staff time involved would be approximately the same as that required of the DOA staff attorney and staff. Differences in cost would be a function of the billing rate of the private sector legal counsel.

Based upon limited information from the WisDOT, and upon this Department's experience with problematic contractors, it is anticipated that no more than 6 suspensions or debarments will occur annually, making the impact on small businesses as a class negligible. The impact will be felt only on individual contractors, and then only due to their own contractual and legal behavior. In all cases, the Department will fund the cost of fact-finding hearings with no provision to recover those costs from the contractors involved.

In summary, on an annual basis, DOA anticipates that expenses for debarment proceedings will be $5,508 and suspension proceedings will require a further $2,656. The total estimated fiscal impact is $8,146. The following chart summarizes these estimates. These costs will be absorbed by the Department as a cost of operations.

DOA lacks salary and other necessary data to estimate the comparable costs incurred by private sector contractors in defending themselves during these proceedings. However, it estimates that the time involved would be approximately the same as that required of DOA staff. Differences in cost would be a function of the billing rate of private sector legal counsel. In all cases, DOA will fund the cost of fact-finding hearings with no provision to recover those costs from the contractors involved.

Increase costs. May be possible to absorb within agency's budget.

PRO.

Section 20.505 (1) (kr) — Legal services.

Section 20.505 (1) (kc) — Capital planning and building construction services.

None.

Indeterminate.

Adm 24.01 Scope and policy. (1) SCOPE OF CHAPTER. This chapter:

(a) Prescribes certain policies and procedures governing the debarment and suspension of contractors from contracts pursuant to subchapter V, Chapter 16 of the Wisconsin Statutes.

(b) Provides for the listing of suspended or debarred contractors and subcontractors, and of contractors declared ineligible for department engineering-related contracts.

(c) Sets forth the treatment accorded contractors listed as debarred, suspended, or ineligible.

(2) POLICY. (a) The department shall solicit bids from, award contracts to, and approve subcontracts with only responsible, qualified business entities and individuals. Debarment and suspension are appropriate means to effectuate this policy.

(b) Debarment and suspension are serious actions imposed only to protect the public interest, not for punishment.

Adm 24.02 Definitions. In this chapter:

(1) “Adequate evidence" means information sufficient to support a reasonable belief that a particular act or omission has occurred.

(2) “Affiliate" means a business entity or individual having a relationship whereby one directly or indirectly controls or can control the other or whereby a third business entity or individual directly or indirectly controls or can control the subject business entity or individual.

(3) “Consolidated list" means a list compiled and maintained by the department and containing the names of contractors that have been debarred or suspended under this chapter or that have been declared ineligible under statute, rule, order or legal authority other than this chapter.

(4) “Contractor" means any individual or any legal entity, including its officers and directors, which submits bids or proposals for, or is awarded or may reasonably be expected to submit bids or proposals for or be awarded a department contract. This definition includes any subcontractor of a contractor that conducts business with the department as an agent or representative of a contractor and any individual or legal entity that conducts business with the department as an agent or representative of a contractor.

(5) “Conviction" means a judgment or conviction of a criminal offense by any court of competent jurisdiction, whether entered upon a verdict or a plea and includes a conviction entered upon nolo contendere plea.

(6) “Debarment" means action taken by the department under s. Adm 24.05 to exclude a contractor from contracting with the department and from department-approved subcontracting for a specified period. A contractor so excluded is “debarred."

(7) “Department" means the Wisconsin department of administration.

(8) “Hearing examiner" means a designee of the secretary who is authorized to conduct a fact-finding hearing and to prepare written findings of fact and who may be authorized to issue debarment and suspension decisions pursuant to this chapter.

(9) “Ineligible" means excluded from contracting with the department and, if appropriate, from department-approved subcontracting, under statute, rule, order or legal authority other than this chapter.

Note: Examples of reasons for ineligibility are wage-rate violations, civil rights violations and deficient progress.

(10) “Indictment" includes an indictment for a criminal offense, an information or any other filing by a competent authority charging a criminal offense that results in finding probable cause to believe a felony has been committed and in binding the defendant over for trial.

(11) “Judgment" means a judgment in a civil action by any court of competent jurisdiction.

(12) “Secretary" means the secretary of the department or an authorized representative or designee.

(13) “Suspension" means action taken by the department under s. Adm 24.06 to exclude a contractor from contracting with the department or from department-approved subcontracting temporarily pending the completion of an investigation or of a debarment decision-making proceeding. A contractor so excluded is “suspended."

Adm 24.03 List and records of debarred and suspended contractors. (1) LIST. (a) The department shall compile and maintain a current, consolidated list of debarred, suspended and ineligible contractors.

(b) The department shall use the consolidated list to ensure that it does not solicit offers from, award contracts to, or consent to subcontract with listed contractors, except as otherwise provided in this chapter.

(2) RECORDS. The department shall maintain records relating to each debarred or suspended contractor. Records shall contain the following:

(a) Names and addresses of all debarred or suspended contractors.

(b) Cause or causes for each debarment or suspension.

(c) Any limitations on or deviations from the normal effect of debarment or suspension.

(d) Effective date of the debarment or suspension and, in the case of a debarment, the contract termination date.

Adm 24.04 Treatment of listed contractors. (1) EFFECT. (a) The department may not knowingly solicit bids from, award contracts to, renew an existing contract with, or consent to subcontracts with a debarred or suspended contractor, unless the secretary determines, in writing, that a compelling reason for such dealing with the contractor exists.

(b) The department shall not enter a contract with an ineligible contractor and, if applicable, shall exclude ineligible contractors from subcontracts under the conditions and for the period set forth in the applicable statutes, rules, orders or legal authorities. The department may not knowingly solicit bids from, award contracts to, renew an existing contract with, or consent to subcontract with these contractors except in accord with the applicable statutes, rules, orders or legal authorities.

(2) CURRENT CONTRACT CONTINUATION. (a) Notwithstanding the listing of a contractor, the department may continue contracts or subcontracts in existence at the time the contractor was debarred or suspended, unless the secretary determines that contract termination is in the public interest.

(b) Contract termination decisions under sub. (2) (a), if any, may be made only after review by and consultation with both department contracting personnel and department legal counsel to assure the propriety of the proposed contract termination.

(c) The department shall not renew existing contracts or subcontracts with debarred or suspended contractors, unless the secretary determines and states in writing a compelling reason for the contract renewal or extension.

(3) SUBCONTRACT RESTRICTIONS. When a debarred or suspended contractor is proposed as a subcontractor for any subcontract subject to department approval, the department may not give approval unless the secretary determines and states in writing a compelling reason for the approval.

Adm 24.05 Debarment. (1) GENERAL. (a) The department may, in the public interest, debar a contractor for any of the causes contained in sub. (2), using the procedures in sub (3). The existence of a cause for debarment as specified in sub. (2), however, shall not necessarily require that a contractor be debarred; the seriousness of any contractor's acts or omissions and any mitigating factors shall be considered in making any debarment decision.

(b) Debarment of a contractor constitutes debarment of all divisions or other organizational elements of the debarred contractor, unless the debarment is explicitly limited to specific divisions, organizational elements or commodities.

(c) The department may extend the debarment to include any affiliates of a debarred contractor, if the affiliates are specifically named and are given written notice of the proposed debarment and an opportunity to respond pursuant to sub. (4).

(d) When no suspension is in effect pursuant to s. Adm 24.06 at the time the department contemplates debarment of a contractor, no contracts shall be awarded to, and no subcontracts shall be approved for, the contractor, pending a debarment decision by the department.

(2) CAUSES FOR DEBARMENT. The secretary may debar a contractor for any one or more of the following causes:

(a) Conviction, civil judgment or admission of:

1. Fraud, collusion or any criminal offense in connection with obtaining, attempting to obtain or performing a public contract or subcontract;

2. Violation of any federal or state antitrust statute relating to the submission of bids or proposals;

3. Embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, receiving stolen property or obstruction of justice; or

4. Any other offense indicating a lack of business integrity or of business honesty which offense seriously and directly affects the responsibility of the contractor or subcontractor.

(b) Violation of the terms of any government contract or subcontract when that violation is so serious as to justify debarment, including:

1. Willful failure to perform in accordance with a contract; or

2. A history of failure to perform or of unsatisfactory performance of one or more contracts.

(c) Any other cause that is so serious or compelling that it affects the responsibility of a contractor or subcontractor.

(d) Debarment for any of the above causes listed in pars. (a) through (c) by another state or federal entity.

(3) PROCEDURES FOR DEBARMENT. (a) Referral. Department and other state employees having information appropriate for department consideration under this section shall promptly report that information to the secretary.

(b) Decision-making process; fact finding. 1. The debarment decision-making process shall be as informal as practicable, consistent with fundamental due process of law principles. The debarment decision-making process shall permit contractors and any specifically named affiliates to submit information and arguments in opposition to a proposed debarment. The department may require that a contractor's opposition be submitted in writing or may permit an oral presentation in person or through a representative.

2. Whenever a proposal to debar is based upon a conviction, judgment or debarment by another state or federal entity for any of the causes listed in sub. (2), the department need not conduct a fact-finding hearing.

3. Whenever a proposal to debar is not based upon a conviction, judgment, admission or debarment by another state or federal entity, and if the department finds that the contractor's opposition raises a genuine dispute over facts relevant to the proposed debarment, the department shall conduct a fact-finding hearing. A department hearing examiner shall:

a. Permit the contractor to appear with counsel, to submit documents, to present witnesses and to confront and cross-examine any person the department presents;

b. Ensure that a transcript of the hearing is prepared and made available to the contractor at a reasonable cost, unless the contractor and the department mutually waive the transcript requirement; and

c. Act in accord with and have the authority provided by s. 227.46, Stats.

(4) NOTICE OF PROPOSAL TO DEBAR. The department shall initiate a debarment proceeding by informing the involved contractor and any specifically named affiliate by certified mail return receipt requested. The mailed notice shall state:

(a) That the department is considering a debarment;