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Intergovernmental Agreements Between Municipalities for the Purchase of Services are Exempt from Competitive Bidding Laws, Van Hollen's Opinion Also Holds
MADISON - Attorney General J.B. Van Hollen today issued a formal opinion responding to two questions concerning written agreements between municipalities that were asked by Senator Russ Decker on behalf of the Senate Committee on Organization. Agreements between municipalities are authorized by section 66.0301(2) of the Wisconsin Statutes. Agreements between municipalities may also occur under specific statutes, such as sections 83.035 and 83.04(1) of the Wisconsin Statutes, which are applicable to county highway contracts.
The first question asked whether or not intergovernmental agreements where one municipality purchased services from another was subject to competitive bidding requirements. Attorney General Van Hollen answered no. The second question asked whether certain public works projects performed by one municipality for another pursuant to an intergovernmental agreement were subject to the prevailing wage law. The Attorney General answered that Act 28 (the 2009-2011 Budget Act) changed existing law to apply prevailing wage law to projects performed under those agreements. The change will go into effect January 1, 2010.
Responding to Senator Decker's first inquiry, Van Hollen indicated that when one municipality purchases services from another municipality under an agreement that is authorized by a state statute, the purchase of the services is exempt from competitive bidding requirements. Although the Legislature has specified that cities, villages, counties, and towns generally are subject to competitive bidding requirements, Van Hollen noted that section 66.0131(2) contains an exemption from competitive bidding requirements: "Notwithstanding any statute requiring bids for public purchases, any local governmental unit may make purchases from another unit of government, including the state or federal government, without the intervention of bids." Van Hollen indicated that the statutory language exempting municipalities from competitive bidding requirements is unambiguous and is applicable to purchases of both goods and services. Van Hollen also identified other statutory provisions that exempt purchases of services between municipalities from competitive bidding requirements in specific instances. For example, section 59.52(29)(a) of the Wisconsin Statutes exempts certain county highway contracts from competitive bidding requirements.
Responding to Senator Decker's second inquiry, Van Hollen indicated that beginning on January 1, 2010 applicable prevailing wage rates determined by the Department of Workforce Development must be paid to municipal employees when one municipality purchases services from another municipality under an agreement that is authorized by a state statute. Van Hollen noted that a provision in the Budget Bill, 2009 Wisconsin Act 28, section 1480c, created a new statutory provision. The new provision, section 66.0903(2)(b) of the Wisconsin Statutes, specifies that prevailing wage rates must be paid upon "[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." The effective date of that provision is January 1, 2010. Van Hollen stated that the newly-enacted statutory language includes highway projects that are performed by one local unit of government for another local unit of government. Van Hollen stated that prior to January 1, 2010 there is no requirement that prevailing wage rates be paid to municipal employees when one municipality purchases services from another municipality under an agreement that is authorized by a state statute. Van Hollen indicated that no statutory language comparable to that contained in the budget bill provision creating section 66.0903(2)(b) exists for the period prior to January 1, 2010.