NOTICE IS HEREBY GIVEN That pursuant to ss. 16.004 (1), 16.855 (15), and 227.11 (2) (a), Stats., the Department of Administration will hold a public hearing on the proposed rule order to create Chapter Adm 24, relating debarment, suspension and ineligibility of Department of Administration contractors.

Interested persons are invited to appear at the hearing and present comments on the proposed rule. Persons appearing may make an oral presentation but are also urged to submit facts, opinions and arguments in writing as well. Facts, opinions and arguments may be submitted in writing without a personal appearance by mail addressed to: Donna Sorenson, Department of Administration, P.O. Box 7864, Madison, WI 53707-7864. Comments may also be made using the Wisconsin Administrative Rules Website at http:// adminrules.wisconsin.gov. The deadline for submitting comments to the Department is 4:30 p.m. on July 2, 2010.

Sections 16.85 and 16.855 (15), Stats.

Sections 16.004 (1) and 16.855 (15), Stats.

The Department is responsible for the supervision of all engineering, architectural services, and construction work performed by, or for, the state in the construction and acquisition of new buildings and improvements, and additions to existing buildings, pursuant to ss. 16.85 and 16.855, Wis. Stats. Section 16.855 (15), Wis. Stats., further authorizes the Department to adopt rules to implement the advertising and award of contracts for construction projects.

Chapters Adm 20 and 21, Wis. Adm. Code.

The Department solicits bids from, awards contracts to and approves subcontracts with only responsible businesses and individuals according to procedures specified in Chapters Adm 20 and 21. The proposed rule establishes the policies and procedures for the debarment and suspension of contractors that have either had past contract performance problems, or have committed offenses under the law. For example, criminal offenses in connection with a public contract, violation of an antitrust statute relating to bids, theft, forgery, false statements and obstruction of justice. Debarment and suspension are appropriate means to effectuate this policy.

Subpart 9.4 of Title 48 of the Federal Acquisition Regulations prescribes policies and procedures governing debarment and suspension of contractors for cause by federal government agencies. These regulations also provide for the listing of contractors debarred, suspended, proposed for debarment and declared ineligible, and sets forth the consequences of this listing.

Illinois, Iowa, Michigan and Minnesota all provide for the debarment and/or suspension of a contractor by statute, rule or policy. All of these states utilize procedures similar in design to proposed rule Adm 24. It is noteworthy that all these adjacent states have adopted debarment/suspension procedures under the auspices of their procurement laws, rather than under their state building program laws, as proposed Adm 24 does. However, all, with the possible exception of Iowa (with whom we were unable to confirm the practice), debar and suspend building construction contractors using their procurement debarment procedures.

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.