Surety companies better to evaluate firms

The Linn County Board of Supervisors is considering a Project Labor Agreement for the Community Services and Administrative Office Buildings. A PLA is an agreement negotiated between a public owner (Linn County) and labor unions before construction contracts are awarded and workers hired. The unions want to use a PLA to disqualify certain contractors from performing contracts. We feel a PLA would add unnecessary costs to taxpayers while saddling the county with the appearance of favoritism.

Iowa law requires contractors to provide bonds on public projects. This process of pre-qualifying bidders through surety companies is far more efficient than a PLA. Currently, surety companies, not taxpayers, assume the risk of contractor failure. Surety companies have many years of loss-experience data that is used by highly trained underwriters to evaluate the contractor's financial wherewithal and capacity to perform contracts.

For a PLA to be more effective than the current system, the Linn County Board must evaluate the risk of contractor failure better than a professional bonding company. PLA proponents don't understand that passing the risk of contractor disqualification to the public owner ultimately will increase taxpayers' cost.

We would advise Linn County to continue to use surety companies' expertise to pre-qualify contractors and avoid the more inefficient, politically motivated disqualification process of a PLA.

Devin H. Pipkin

Robert L. Kollsmith

Risk management specialists

True North

Cedar Rapids