Workforce Development order on prevailing-wage law forces utility to pay $308,000 more on maintenance contracts
An order by the Wisconsin Department of Workforce Development will force the Village of Grafton to pay at least $308,000 more than originally expected on maintenance contracts for two water towers.
The order, which was issued in 2012 and subsequently challenged unsuccessfully by the village’s water utility, is based on a ruling that the utility violated the state’s prevailing-wage law.
As a result, the utility has been ordered to pay prevailing wages to contract employees and a penalty.
“It does come as a disappointment,” Village Administrator Darrell Hofland said of the order.
“The village still contends that, as a maintenance project, this should not be subject to the prevailing-wage law, but that was not what the department decided.”
The Public Works Board is scheduled this month to consider amending a pair of 14-year contracts with Utility Service Co. of Perry, Ga., to maintain towers on North Street and Highway 60.
The work — which will include exterior and interior renovations and repairs, applying new logos, washouts and annual inspections — was negotiated as part of contracts signed in 2011 and 2012.
In a report to the board, Utility Program Coordinator Larry Roy stated that the utility requested quotes that didn’t include prevailing wages because it believed the work was “not subject to prevailing wage rules.”
The original contracts called for maintenance of the towers to cost a combined total of at least $712,183, including $326,468 for the North Street tower and $385,715 for the Highway 60 tower.
Roy said that to comply with the order, the cost of North Street tower contract will have to be increased $142,373. The Highway 60 tower charges will have to be increased by between $166,264 and $178,096.
The increases include back pay for work done on the North Street tower and a 100% penalty, which total $59,169.
Hofland said the utility “made a significant effort” to convince the department that the work should not be subject to the prevailing-wage law. That effort included extensive correspondence between the village attorney, former utility director, Utility Service Co. and Workforce Development officials, he said.
The village also tried unsuccessfully to get assistance from locally elected Wisconsin officials, Hofland said.
Hofland said the department began investigating the contracts after an unsuccessful bidder for the work expressed concern about negotiated wages.
The amended contracts were expected to be considered by the Public Works Board on Aug. 11, but the meeting was cancelled due to lack of a quorum.
Final approval on the contract changes is required by the Village Board.
Hofland said the utility staff will decide how the increased cost should be covered, including potential impact on water rates.
The last water rate increase for Grafton utility customers was approved early this year by the Public Service Commission and went into effect March 19.