Wisconsin Retainage Guide and FAQs

Wisconsin does not provide a specific retainage statute for private projects.

(1g) In this section:

(a) “Mechanical, electrical, or plumbing subcontractor” is a contractor that performs mechanical, electrical, plumbing, or fire protection work and enters into a contract with a general prime contractor to perform their division of work.

(b) “Qualified bidder” means a person that the department certifies under sub. (9m) (b) 1.

(c) “Qualified responsible bidder” means a person who is a qualified bidder and who is a responsible bidder.

(e) “Responsible bidder” means a person that the department certifies under sub. (9m) (b) 2.

(f) “Single prime contracting” means bidding and contracting through a process in which only a general prime contractor has a contractual relationship with the state and all mechanical, electrical, or plumbing subcontractors are identified by the department and are subcontractors to the general prime contractor.

(1m) The department shall let by contract to the lowest qualified responsible bidder all construction work when the estimated construction cost of the project exceeds $50,000, except for construction work authorized under s. 16.858 and except as provided in sub. (1r) or (10m) or s. 13.48 (19). If factors other than dollar amounts are required to be evaluated for a project, the department shall specify a formula that will convert the other factors into a dollar value for comparison.

(1r) If a bidder is not a Wisconsin firm and the department determines that the state, foreign nation or subdivision thereof in which the bidder is domiciled grants a preference to bidders domiciled in that state, nation or subdivision in making governmental purchases, the department shall give a preference over that bidder to Wisconsin firms, if any, when awarding the contract, in the absence of compelling reasons to the contrary. The department may enter into agreements with states, foreign nations and subdivisions thereof for the purpose of implementing this subsection.

(2) Except for projects authorized under s. 16.858, whenever the estimated construction cost of a project exceeds $50,000, or if less and in the best interest of the state, the department shall:

(a) Advertise for proposals by publication of a class 1 notice, under ch. 985, in the official state newspaper. Similar notices may be placed in publications likely to inform potential bidders of the project. The department may solicit bids from qualified contractors to insure adequate competition. All advertisements shall contain the following information:

1. Location of work and the name of the owner.

2. Scope of the work.

3. Amount of bid guarantee required.

4. Date, time and place of bid opening.

5. Date when and place where plans will be available.

6. That the department shall consider only bids from persons who are responsible bidders and, unless sub. (9m) (ar) 2. applies, qualified bidders.

(b)

1. Require that a guarantee of not less than 10% of the amount of the bid shall be included with each bid submitted guaranteeing the execution of the contract within 10 days of offering, if offered within 30 days after the date set for the opening thereof. The parties may agree to extend the time for offering of the contract beyond 30 days after the opening of bids.

2. Require that a guarantee of not less than 10% of the amount of the bid shall be included with each bid submitted guaranteeing the execution of the contract within 10 days of offering, if offered within 30 days after the date set for the opening thereof. The parties may agree to extend the time for offering of the contract beyond 30 days after the opening of bids.

(c) Publicly open and read aloud, at the time and place specified in the notice, all bids. Within a reasonable time after opening, tabulations of all bids received shall be available for public inspection.

(d) Not allow or make any correction or alteration of a bid, except as provided in sub. 6.

(3) At any time prior to the published time of opening, a bid may be withdrawn on written request submitted to the department by the bidder or the bidder’s agent, without prejudice to the right of the bidder to file a new bid.

(4) If a bid contains an error, omission or mistake, the bidder may limit liability to the amount of the bidder’s bid guarantee by giving written notice of intent not to execute the contract to the department within 72 hours of the bid opening. The department of administration, with the approval of the attorney general, may settle and dispose of cases and issues arising under this subsection. However, if no such settlement is obtained, the bidder is not entitled to recover the bid guarantee unless the bidder proves in the circuit court for Dane County that in making the mistake, error or omission the bidder was free from negligence.

(5) Any or all bids may be rejected if, in the opinion of the department, it is in the best interest of the state. The reasons for rejection shall be given to the bidder or bidders in writing.

(6) Nothing contained in this section shall prevent the department from negotiating deductive changes in the lowest qualified bid.

(7) The department may issue contract change orders, if they are deemed to be in the best interests of the state.

(9m) 

(ag) In this subsection, “bidder” includes a potential bidder.

(ar)

1. The department shall certify bidders as qualified bidders under par. (b) 1. and responsible bidders under par. (b) 2. and shall administer a registration process for all bidders submitting bids on any construction project under this section. The department shall issue, in a timely manner, a certification decision on a complete application for certification. A certification under this subdivision is valid for 2 years except the department may decertify a bidder if the department determines that the bidder no longer meets the qualifications under par. (b) and if the department follows a decertification process developed by rule that provides to the bidder notice, hearing, and a means to appeal.

2. Notwithstanding sub. (1m) or (14) (d), the department may waive the condition of certification as a qualified bidder if the project is of such magnitude as to limit competition if the conditions under par. (b) 1. were required.

3. The department shall consider for certification under par. (b) associations consisting of at least 2 contracting firms that are organized for the purpose of entering into a construction contract as a single entity if at least one of the contracting firms is qualified under par. (b) and if the assignment of, and provisions for the continuity of, the various responsibilities within the association are agreed upon before the contract is awarded.

(b)

1. To be certified as a qualified bidder, a bidder must meet all of the following conditions:

a. The bidder has completed at least one project that involved similar work to the work being bid and the project was at least 50 percent of the size or value of the division of the project being bid. If the department determines that more experience is necessary for a particular project, the department may include additional requirements in the specifications and certify bidders accordingly.

b. The bidder has access to all necessary equipment and the organizational capacity and technical competence necessary to perform the project work properly and expeditiously.

c. If the department so requires or the bidder will be considered unqualified, the bidder has submitted a sworn statement as to financial ability, equipment, and experience in construction and other information as may be necessary to determine the bidder’s competency.

2. To be certified as a responsible bidder, a bidder must meet all of the following conditions:

a. The bidder maintains a permanent place of business.

b. The bidder submits a sworn statement, upon the department’s request, that indicates that the bidder has adequate financial resources to complete the work being bid, taking into account any other work the bidder is currently under contract to complete.

c. The bidder is bondable for the term of the proposed contract and is able to obtain a 100 percent performance bond and a separate 100 percent payment bond.

d. The bidder has a record of satisfactorily completing projects. In determining this factor, the department shall consider if the bidder has completed all contracts in accordance with drawings and specifications; diligently pursued execution of the work and completed contracts according to the time schedule, taking account of extensions granted; fulfilled guarantee requirements of contracts; if the contract included an affirmative action program requirement, complied with the requirement; and, if the contract included a safety program requirement, complied with the requirement.

e. The bidder is not on an ineligible list that the department maintains under s. 16.705 (9) or 16.765 (9) or on a list that another agency maintains for persons who violated construction-related statutes or administrative rules.

f. The bidder has been in business for at least 12 months.

g. The bidder is a legal entity and authorized to do business in Wisconsin.

h.The bidder has performed at least one other public project for a government entity.

i.The bidder can provide information, upon request, to the department on the bidder’s ownership, management, and control.

j. In any jurisdiction, the bidder, in the previous 10 years, has not been debarred from any government contracts and has not been found to have committed tax avoidance or evasion.

k. In any jurisdiction, in the previous 10 years, the bidder has not been disciplined under a professional license.

l. In any jurisdiction, none of the bidder’s employees and no member of the bidder’s organization has been disciplined under a professional license that is currently in use.

(10) When the department believes that it is in the best interests of the state to contract for certain articles or materials available from only one source, it may contract for said articles or materials without the usual statutory procedure, after a publication of a class 1 notice, under ch. 985, in the official state newspaper.

   (10m)

(ac) In this subsection, “disabled veteran-owned business” means a business certified by the department of administration under s. 16.283 (3).

(am)

1. In awarding construction contracts the department shall attempt to ensure that 5 percent of the total amount expended in each fiscal year is awarded to contractors and subcontractors which are minority businesses, as defined under s. 16.75 (3m) (a) 4.

2. In awarding construction contracts, the department shall attempt to ensure that at least 1 percent of the total amount expended in each fiscal year is awarded to contractors and subcontractors that are disabled veteran-owned businesses.

3. The department may award any contract to a minority business or disabled veteran-owned business, or a business that is both a minority business and a disabled veteran-owned business, if the business is a qualified responsible bidder and the business submits a bid that is no more than 5 percent higher than the apparent low bid.

(b) Upon completion of any contract, the contractor shall report to the department any amount of the contract that was subcontracted to minority businesses or disabled veteran-owned businesses.

(c) The department shall maintain and annually publish data on contracts awarded to minority businesses and disabled veteran-owned businesses under this subsection and ss. 16.87 and 84.075.

 (10n)

(a) In this subsection, “minority group member” has the meaning given in s. 16.287 (1) (f).

(b) The department shall enter into a memorandum of understanding with the state fair park board which shall specify procedures for construction work and professional services contracts to be performed for the state fair park board under which any person who is awarded such a contract shall agree, as a condition to receiving the contract, that his or her goal shall be to ensure that at least 25% of the employees hired because of the contract will be minority group members and at least 5% of the employees hired because of the contract will be women.

(10p) For each proposed construction project, the department shall ensure that the specifications require the use of recovered materials and recycled materials, as defined unders. 16.70 (11) and (12), to the extent that such use is technically and economically feasible.

 (10s)

(a) The department shall, by rule, prescribe and annually review and revise as necessary energy efficiency standards for equipment that is installed as a component of a construction project and that relates to heating, ventilation, air conditioning, water heating or cooling, lighting, refrigeration, or any other function that consumes energy. The standards shall meet or exceed current applicable guidelines of the federal environmental protection agency relating to energy efficiency of the functions specified in this paragraph, guidelines that apply to the federal energy management program under 42 USC 8251 et seq., and standards established by the American society of heating, refrigerating and air-conditioning engineers.

(b) The department shall ensure that the specifications for any equipment that is designed for heating, ventilation, air conditioning, water heating or cooling, lighting, refrigeration, or any other function that consumes energy under any construction project contract administered by the department meet applicable standards established under par. (a). If there is no standard under par. (a) applicable to the type of equipment being purchased or if the equipment meeting that standard is not reasonably available, the department shall ensure that energy consumption within a building, structure, or facility and all equipment that is purchased under each contract administered by the department maximizes energy efficiency to the extent technically and economically feasible. The department shall not determine that equipment that meets the applicable standard under par. (a) either is not reasonably available on the basis of cost alone or is not cost-effective unless the difference in the cost of the purchase and installation of the equipment that meets the standard and the equipment that would otherwise be installed is greater than the difference in the cost of operating the equipment that meets the standard and the equipment that would otherwise be installed over the anticipated life of the equipment.

(11) A contractor shall be liable for any damages to another contractor working on the same project caused by reason of the former’s default, act or nonperformance.

(12) Nothing contained in this section shall be construed so as to make contracts let under this section subject to s. 66.0901.

(13)

(a)

1. In any project under this section let under single prime contracting, the department shall identify, as provided under par. (b), the mechanical, electrical, or plumbing subcontractors who have submitted the lowest bids and who are qualified responsible bidders. A general prime contractor who is submitting a bid under sub. (14) shall include the subcontractors so identified.

2. In any project under this section that is let under s. 13.48 (19), the department shall identify, as provided under par. (b), the mechanical, electrical, or plumbing subcontractors who have submitted the lowest bids and who are qualified responsible bidders. The contractor awarded a contract under s. 13.48 (19) shall contract with the mechanical, electrical, or plumbing subcontractors so identified.

(b) For purposes of identifying subcontractors under par. (a), the department shall develop and administer an open and public bidding process and follow the requirements and procedures under sub. (2). Within 48 hours of the deadline for a mechanical, electrical, or plumbing contractor to submit a bid, the department shall post on the department Internet site the names of the bidders and the amount of each bid. No more than 5 days after the deadline, the department shall post on its Internet site and provide public notice of the lowest bidders who are qualified responsible bidders. The department shall post on its Internet site the bids, including the bid documents, identified under this paragraph as the lowest bids and they shall be open to public inspection under s. 19.35 (1). No other bids under this paragraph may be on the Internet site or open to public inspection.

(14)

(am) Except as provided in s. 13.48 (19), the department shall let all construction projects that exceed $185,000 through single prime contracting. The department may not request or accept any alternate bids when letting a construction project through single prime contracting.

(b)

1. he state is not liable to a contractor for damage from delay caused by another contractor if the department takes reasonable action to require the delaying contractor to comply with its contract. If the state is not liable under this subdivision, the delayed contractor may bring an action for damages against the delaying contractor.

2. Except as otherwise provided by law, the state is not liable for any damages to a subcontractor identified under sub. (13) (a) that enters into a contract with a general prime contractor under par. (e).

(bm) If the bid is being let through single prime contracting, bidders for the general prime contractor who are responsible qualified bidders shall submit their bids to the department no later than 5 days after the successful subcontractor bids become available to the public under sub. (13) (b). Within 48 hours of the deadline for a general prime contractor to submit a bid, the department shall post on the department’s Internet site the tabulations of all bids that identify the names of the general prime contractors that bid and the amount of each bid and shall make the tabulations and amounts available at the department if they are unavailable on the department’s Internet site.

(c) The department shall reject any bid for the general prime contractor from a bidder who submits a bid that includes contractors other than the ones identified under sub. (13) (a). The award of a contract may not be finalized until the department approves the required performance bond and certificate of insurance.

(d) Except as provided in sub. (10m) (am), the department shall award all single prime contracts to the lowest bidder who is a qualified responsible bidder that results in the lowest total construction cost for the project.

(e) Within 30 days after the deadline under par. (bm) for bidders for the general prime contractor to submit their bids, the department shall notify the general prime contractor bidder that was awarded the contract under par. (d). The contractor who is awarded the contract shall enter into contracts with the mechanical, electrical, or plumbing subcontractors identified under par. (13) (a), shall ensure that any contract meets the requirements under sub. (14m) (a) and (b), and shall comply with the requirements under sub. (14m) (c) and (d). The department shall make the final bid results available on its Internet site at the time it provides the written, official notice to the successful general prime contractor bidder notifying the contractor that the contract is fully executed and that the contractor is authorized to begin work on the project.

 (14m) 

(a) Any contract entered into between a general prime contractor and a subcontractor under sub. (14) (e) must contain all of the following clauses:

Prompt Payment. (General prime contractor) shall pay (mechanical, electrical, or plumbing subcontractor) in accordance with section 16.855 (19) (b), Wisconsin stats., for work that has been satisfactorily completed and properly invoiced by (mechanical, electrical, or plumbing subcontractor). A payment is timely if it is mailed, delivered, or transferred to (mechanical, electrical, or plumbing subcontractor) by the deadline under section 16.855 (19) (b), Wisconsin stats.

If (mechanical, electrical, or plumbing subcontractor) is not paid by the deadline in this contract, (general prime contractor) shall pay interest on the balance due from the eighth day after the (general prime contractor) receives payment from the Department of Administration for the work for which payment is due and owing to (mechanical, electrical, or plumbing subcontractor), at the rate specified in section 71.82, Wisconsin stats., compounded monthly.

A (mechanical, electrical, or plumbing subcontractor) that receives payment as provided under this contract and that subcontracts with another entity shall pay those subcontractors, and be liable for interest on late payments to those subcontractors, in the same manner as (general prime contractor) is required to pay (mechanical, electrical, or plumbing subcontractor) under this contract.

Insurance and Bonds. (Mechanical, electrical, or plumbing subcontractor) shall not commence work under this contract until it has obtained all necessary insurance required of (mechanical, electrical, or plumbing subcontractor) in the contract between the (general prime contractor) and the Department of Administration.

(Mechanical, electrical, or plumbing subcontractor) shall provide a separate 100 percent performance bond and a separate 100 percent payment bond to the benefit of the (general prime contractor) as the sole named obligee. Original bonds shall be given to the (general prime contractor) and a copy shall be given to the Department of Administration no later than 10 days after execution of this contract.

Indemnification. To the fullest extent permitted by law, (mechanical, electrical, or plumbing subcontractor) shall defend, indemnify, and hold harmless (general prime contractor) and its officers, directors, agents, and any others whom (general prime contractor) is required to indemnify under its contract with the department, and the employees of any of them, from and against claims, damages, fines, penalties, losses, and expenses, including but not limited to attorney fees, arising in any way out of or resulting from the performance of the work under this contract, but only to the extent such claim, damage, fine, penalty, loss, or expense: (1) is attributable to bodily injury, sickness, disease, or death, or to injury to or destruction of property, including but not limited to loss of use resulting therefrom and is caused by the negligence, or acts or omissions, of (mechanical, electrical, or plumbing subcontractor), its subcontractors, any of their employees, and anyone directly or indirectly employed by them or anyone for whose acts they may be liable, or (2) as related to such claims, damages, fines, penalties, losses, and expense of or against (general prime contractor), results from or arises out of the negligence of (general prime contractor) or other fault in providing general supervision or oversight of the work of (mechanical, electrical, or plumbing subcontractor) or (3) as related to claims, damages, fines, penalties, losses, and expense against the Department of Administration, arises out of the department’s status as owner of the project or project site

In addition (mechanical, electrical, or plumbing subcontractor) shall defend, indemnify, and hold harmless (general prime contractor) and its officers, directors, agents, and any others (general prime contractor) is required to indemnify under its contract with the department, and the employees of any of them, from any liability, including liability resulting from a violation of any applicable safe place act, that (general prime contractor) or the state incurs to any employee of (mechanical, electrical, or plumbing subcontractor) or any third party where the liability arises from a derivative claim from said employee, when the liability arises out of the failure of the (general prime contractor) or the state to properly supervise, inspect, or approve the work or work area of (mechanical, electrical, or plumbing subcontractor), but only to the extent that the liability arises out of the acts or omissions of (mechanical, electrical, or plumbing subcontractor), its employees, or anyone for whom (mechanical, electrical, or plumbing subcontractor) may be liable, or from (mechanical, electrical, or plumbing subcontractor’s) breach of its contractual responsibilities or arises out of (general prime contractor’s) negligence or other fault in providing general supervision or oversight of (mechanical, electrical, or plumbing subcontractor’s) work or arises out of the Department of Administration’s status as owner of the project or project site. In claims against (general prime contractor) or the state by an employee of (mechanical, electrical, or plumbing subcontractor) or its subcontractors or anyone for whose acts (mechanical, electrical, or plumbing subcontractor) may be liable, the indemnification obligation of this paragraph is not limited by a limitation on amount or type of damage, compensation, or other benefits payable by or for the (mechanical, electrical, or plumbing subcontractor) or its subcontractors under workers’ compensation act.

Except as identified above, the obligations of (mechanical, electrical, or plumbing subcontractor) under this indemnification do not extend to the liability of (general prime contractor) and its agents or employees arising out of (1) preparation or approval of maps, drawings, opinions, reports, surveys, change orders, designs, or specifications; (2) the giving of or failure to give directions or instructions by the (general prime contractor) or the Department of Administration or their agents or employees provided the giving or failure to give is the cause of the injury or damage; or (3) the acts or omissions of other subcontractors.

Retainage. Retainage shall occur and be in amounts and on a schedule equal to that in the contract between (general prime contractor) and the Department of Administration.

(b) A contract entered into under sub. (14) (e) between a general prime contractor and a mechanical, electrical, or plumbing subcontractor must include a scope of work clause that is identical to the scope of work clause on which the mechanical, electrical, or plumbing subcontractor bid under sub. (13).

(c)

1. Except as provided in subd. 2., a general prime contractor and a mechanical, electrical, or plumbing subcontractor may not enter any agreement other than the contract entered into under sub. (14) (e) if the agreement is in connection with bids submitted under sub. (13) or (14) that would alter or affect the scope or price of the contract entered into under sub. (13) or (14) (e).

2. The prohibition under subd. 1. does not apply to change orders by the department that result in changes to the plans or specifications or to back charges allowed by the contract under sub. (13).

(d) The general prime contractor shall base its project schedule on the schedule in the specifications or bid instructions under sub. (2) (a) unless otherwise agreed to by the mechanical, electrical, or plumbing subcontractor.

(15) The department shall promulgate rules to implement the advertising and award of contracts.

(16)

(a) This section does not apply to contracts between the state and federal government or any agency thereof, or with any political subdivision of the state. Subject to the approval of the governor, the requirements of this section may be waived in emergency situations involving the public health, welfare or safety or with respect to contracting with public utilities, but only when any such waiver is deemed by the governor to be in the best interests of the state.

(b)

1. In this paragraph, “agency” has the meaning given in s. 16.70 (1e)

2. In emergency situations, the governor may approve repairs and construction of a building, structure, or facility in lieu of building commission approval under s. 13.48 (10), and for such purposes, may authorize the expenditure of up to $500,000 from the state building trust fund or from other available moneys appropriated to an agency derived from any revenue source. The governor may delegate to the secretary the authority to grant approvals under this subdivision. The governor shall report any such authorization to the building commission at its next regular meeting following the authorization. In this subdivision, “emergency” means any natural or human-caused situation that results in or may result in substantial injury or harm to the population or substantial damage to or loss of property.

(17) This section does not apply to any project on which the work is to be performed by inmates or patients in institutions under the jurisdiction of the department of corrections or the department of health services working under the supervision or with the assistance of state employees.

(18)  This section shall not apply to restoration or reconstruction of the state capitol building, historic structures at the old world Wisconsin site and at Heritage Hill state park when the department determines that a waiver of this section would serve the best interests of this state.

(19)

(a) As the work progresses under any contract for construction of a project the department, from time to time, shall grant to the contractor an estimate of the amount and proportionate value of the work properly completed, which shall entitle the contractor to receive the amount, less the retainage, from the proper fund. The retainage shall be an amount equal to not more than 5% of the estimate until 50% of the work has been completed. At 50% completion, no additional amounts shall be retained, and partial payments shall be made in full to the contractor unless the department certifies that the job is not proceeding satisfactorily. At 50% completion or any time thereafter when the progress of the work is not satisfactory, additional amounts may be retained but in no event shall the total retainage be more than 10% of the value of the work completed. Upon substantial completion of the work, any amount retained shall be paid to the contractor, less the value of any required corrective work or uncompleted work. For the purposes of this section, estimates may include any fabricated or manufactured materials and components specified, previously paid for by contractor and delivered to the work or properly stored and suitable for incorporation in the work embraced in the contract.

(b)  As the work progresses under any subcontract under sub. (14) (e) for construction of a project, the general prime contractor shall, upon request of a subcontractor, pay to the subcontractor an amount equal to the proportionate value of the subcontractor’s work properly completed, less retainage. The retainage shall be an amount equal to not more than 5 percent of the subcontractor’s work completed until 50 percent of the subcontractor’s work has been completed. At 50 percent completion, no additional amounts may be retained, and partial payments shall be made in full to the subcontractor unless the department certifies that the subcontractor’s work is not proceeding satisfactorily. At 50 percent completion or any time thereafter when the progress of the subcontractor’s work is not satisfactory, additional amounts may be retained but the total retainage may not be more than 10 percent of the value of the work completed. Upon substantial completion of the subcontractor’s work, any amount retained shall be paid to the subcontractor, less the value of any required corrective work or uncompleted work. All payments the general prime contractor makes under this paragraph shall be within 7 calendar days after the date on which the general prime contractor receives payment from the department.

(c) This subsection does not apply to contracts awarded under s. 16.858.

(20) This section does not apply to construction work performed by University of Wisconsin System students when the construction work performed is a part of a curriculum and where the work is course-related for the student involved. Prior approval of the building commission must be obtained for all construction projects to be performed by University of Wisconsin System students, except projects specified in s. 13.48 (10) (c).

(21) This section does not apply to contracts by the department of natural resources for construction work related to hazardous substance spill response under s. 292.11 or environmental repair under s. 292.31.

(22)  The provisions of this section, except sub. (10m), do not apply to construction work for any project that does not require the prior approval of the building commission under s. 13.48 (10) (a) if the project is constructed in accordance with policies and procedures prescribed by the building commission under s. 13.48 (29). If the estimated construction cost of any project, other than a project constructed by or for the University of Wisconsin System that is exempted under sub. (23), is at least $50,000, and the building commission elects to utilize the procedures prescribed under s. 13.48 (29) to construct the project, the department shall provide adequate public notice of the project and the procedures to be utilized to construct the project on a publicly accessible computer site.

(23) This section does not apply to construction work for any project constructed by or for the University of Wisconsin System involving a cost of less than $500,000 that is funded entirely with the proceeds of gifts and grants made to the system.