OAG5-09

¶ 18.

Prevailing wage determinations are made by the Department of Workforce Development (“DWD”) under Wis. Stat. § 66.0903(3)(am), as amended by 2009 Wisconsin Act 28, sec. 1480e, which provides:

A local governmental unit, before making a contract by direct negotiation or soliciting bids on a contract for the erection, construction, remodeling, repairing or demolition of any project of public works, shall apply to the department to determine the prevailing wage rate for each trade or occupation required in the work contemplated.

¶ 19.

Wisconsin Stat. § 66.0903(2), as amended by 2009 Wisconsin Act 28, sec. 1480c, provides in part:

  (2)  APPLICABILITY. Subject to sub. (5), this section applies to any project of public works erected, constructed, repaired, remodeled, demolished for a local governmental unit, including all of the following:

  (a)  A highway, street, bridge, building, or other infrastructure project.

  (b)  A project erected, constructed, repaired, remodeled, demolished by one local governmental unit for another local governmental unit under a contract under s. 66.0301(2), 83.03, 83.035, or 86.31(2)(b) or under any other statute specifically authorizing cooperation between local governmental units.

¶ 20.

Wisconsin Stat. § 66.0903(2)(b) makes prevailing wage rates applicable to public works projects performed or undertaken pursuant to state statutes authorizing intergovernmental agreements under Wis. Stat. § 66.0301(2) or Wis. Stat. § 83.03 involving any of the five specified services (erection, construction, repair, remodeling, demolition), provided that the service is performed “by one local governmental unit for another local governmental unit[.]” This language encompasses highway projects performed by one local unit of government for another local unit of government because such projects typically involve construction and/or repair. Wisconsin Stat. § 66.0903(2)(b) does not, by its terms, extend to intergovernmental agreements involving the “joint exercise of any power or duty required or authorized by law” within the meaning of Wis. Stat. § 66.0301(2) or pursuant to other statutes authorizing intergovernmental agreements between local units of government.[5] Wisconsin Stat. § 66.0903(5)(a), as amended by 2009 Wisconsin Act 28, sec. 1482d, makes Wis. Stat. § 66.0903(2)(b) inapplicable to “[a] project of public works for which the estimated project cost of completion is below $25,000.”

¶ 21.

The effective date of the amendments to Wis. Stat. § 66.0903(2), (3)(am), and (5) is January 1, 2010. See 2009 Wisconsin Act 28, sec. 9546(1x). 2009 Wisconsin Act 28, sec. 1480c requires that state prevailing wage rates 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 upon a public works or public construction project for another local unit of government if the estimated cost of the project exceeds $25,000. The amendments contained in 2009 Wisconsin Act 28, sec. 1480c, do not require that prevailing wage rates be paid in connection with 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.

¶ 22.

With respect to the period prior to January 1, 2010, no statutory language comparable to that now contained in Wis. Stat. § 66.0903(2)(b) exists. “When the legislature enacts a statute, it is presumed to act with full knowledge of the existing laws, including statutes.” Mack v. Joint School District No. 3, 92 Wis. 2d 476, 489, 285 N.W.2d 604 (1979). In determining the meaning and effect of the newly-enacted statutory language, “‘It must be presumed that the legislature did not intend to legislate in vain, and that it had a specific purpose in mind.’” Haas v. Welch, 207 Wis. 84, 86, 240 N.W. 789 (1932), quoting Harris v. Halverson, 192 Wis. 71, 76, 211 N.W. 295 (1927). “It should never be presumed that any part, much less all, of a statute is meaningless.” 73 Op. Att’y. Gen. 120, 121 (1984), citing Associated Hospital Service v. Milwaukee, 13 Wis. 2d 447, 109 N.W.2d 271 (1961). Accord State v. Wisconsin Telephone Co., 91 Wis. 2d 702, 714-15, 284 N.W.2d 41 (1979).

¶ 23.

Applying these principles of statutory construction, I cannot conclude that 2009 Wisconsin Act 28, sec. 1480c was a superfluous enactment. Although Wis. Stat. § 66.0301(2) does refer to an intergovernmental agreement as a “contract,” I am of the opinion that an application for a prevailing wage determination is not required prior to January 1, 2010 in connection with any public works project performed or undertaken pursuant to a statutorily-authorized intergovernmental agreement between local units of government.

¶ 24.

“[S]tatutory language is interpreted in the context in which it is used, in relation to the language of surrounding or closely-related statutes[.]” Orion Flight Services v. Basler Flight Service, 2006 WI 51, ¶ 16, 290 Wis. 2d 421, 714 N.W.2d 130, citing Kalal, 271 Wis. 2d 633, ¶ 45. Wisconsin Stat. § 66.0903(12)(a) provides that DWD “shall notify any local governmental unit . . . of the names of all persons whom the department has found to have failed to pay the prevailing wage rate determined under sub. (3),” which is the provision containing the requirement that state prevailing wage rates be paid. Wisconsin Stat. § 66.0903(12)(c) provides that the debarment provisions of Wis. Stat. § 66.0903(12) “do[] not apply to any contractor, subcontractor or agent who in good faith commits a minor violation” of the prevailing wage requirements mandated by Wis. Stat. § 66.0903(3). This language indicates that prior to January 1, 2010 contractors, subcontractors, and agents are the entities to which the prevailing wage requirements contained in Wis. Stat. § 66.0903(3) apply. Absent resort to other statutory language such as that recently enacted in 2009 Wisconsin Act 28, sec. 1480c, this language contains no clear indication that local units of government can be considered contractors, subcontractors, or agents.

¶ 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).