Xerxes Wilson

The News Journal

New Castle County Council on Tuesday will debate whether to change controversial rules regarding who can win pricey, public construction contracts.

County Executive Matt Meyer said loosening rules that require contractors have apprentices can save millions by increasing competition for those who want to do big-ticket county jobs as well as lead to more work being done by Delaware firms.

"Our practice has shown that we are almost forced to hire out of state," Meyer said. "That is spending your tax dollar out of state for skills we have in the state."

James Maravelias, president of the Delaware Building Construction Trades Council that represents 24 affiliated local unions, said the county is turning its back on training low-skilled workers.

"This is what they are trying to eliminate: teaching and education," Maravelias said.

County law requires any company bidding on a government contract worth more than $100,000 to have apprentices through a state-approved program or guarantee they will be by the time the contract begins. Each year, the county has several such contracts through its capital spending plan, which appropriated about $50 million toward construction and land purchase projects this year.

Construction companies partner with a state program to train apprentices. Unions also administer apprenticeship programs that train workers through their member companies.

The apprenticeship requirement was created in 2008 along with a suite of other licensing and disclosure requirements for potential contractors. The law passed with high praise from local union organizations who trumpet their apprenticeship model as a benefit of membership. But in 2015, the Delaware chapter of the Association of Building Contractors, a group of mostly non-union contractors, sued the county, claiming the rules were unlawfully preventing participation by some of its 400 mostly nonunionized, industrial contractor firms.

The county, under former County Executive Thomas P. Gordon, defended the rule and the lawsuit was dismissed.

Now, Meyer's administration along with Councilmen Penrose Hollins, George Smiley and Bill Powers are pushing for a change.

The county is proposing to raise the threshold for jobs that require apprentices from $100,000 for contractors and $50,000 for subcontractors to $1 million for contractors and $500,000 for subcontractors.

The previous law required apprentices for each of the trades involved in the contract. The new law only requires an apprentice for one facet of the qualifying job. It also allows for county officials to waive the requirement if no bidders meet the criteria.

Supporters feel raising the threshold will lead to more smaller outfits being able to win county contracts.

At the heart of that push is the longstanding complaint that there are no apprenticeship program for some construction trades.

The state divides construction workers into 26 categories under the prevailing wage law. For 12 of those classifications, including masonry, tile setters and asbestos workers, the state has no approved program. Local trade associations offer apprenticeships for five other trades, but there are no local programs for 12 of the jobs.

Because of this, those behind the proposed change feel many local contractors, especially smaller firms, are shut out of the possibility of working on such projects. Many of those firms don't have a large enough, or inexperienced enough workforce to participate in apprenticeship programs, supporters of the changes argue.

Councilman Tim Sheldon, who does not support the proposed change, said some apprenticeships are done online, so the effect of not having all trades covered is minimal.

But Meyer's administration did a study comparing county contracting costs before and after the apprenticeship requirement came into law. They said the study shows the rules since implemented have resulted in more contracts, worth some $31 million, going to out-of-state firms as well as higher construction prices through decreased competition.

In the years since the requirement became law, 35 percent of county construction spending went to in-state contractors. That figure was 50 percent in the eight years before the law passed, according to Matt Rosen, an administration official who ran the numbers.

STORY: Builders say New Castle County rules are unfair

STORY: Public construction rules called 'unfair'

State government has no such requirement and approximately 80 percent of its contracting work stays with in-state firms.

As an example, when the Bear library was built in 2012, the county requested bids for the millwork and casework twice and only received one bid each time from an out of state contractor, Rosen said.

"There are some jobs we even have trouble getting covered because of the requirements," Smiley said.

Since the law, the county has received fewer bids, both in and out of state, for its work. Overall, the county has received 25 percent fewer bids than before the requirement became law, Rosen said. Meyer's administration estimates the lack of competition is costing between $2 million and $5 million annually.

This drives down competition and leads to delays for projects, Hollins said.

"As we started to build the Route 9 library, it became crystal clear we were trending in the wrong direction," Hollins said.

Hollins said he voted for the original requirement more than a decade ago to help minority workers get training and county business. He said that hasn't happened. As an example citing administration figures, he said less than 1 percent of the county's current contractors are black-owned contractors. That figure was 2.6 percent before the apprenticeship law came into existence.

As an example, 58 percent of the wages to build the $31 million Route 9 library are being paid to out of state workers.

STORY: Library to anchor other improvements along Del. 9

STORY: NCCo Executive Matt Meyer: No tax hike in coming year

Maravelias accused those behind the push of "playing with the numbers" in a way that fails to consider other economic factors on county contracting like the 2008 financial collapse.

He said because apprentices are paid less, there is a cost savings built into the requirements.

He also argued that part of the reason for decreased interest from Delaware firms is because they have been concentrating on doing work out of state where more construction projects are taking place. He said the effect of not having apprenticeships for all trades in Delaware is minimal because several local contractors participate in apprenticeship programs out of state.

In his view, the apprenticeship requirement demands the county work with contractors who care about education and that care filters into the work that gets done.

"They not doing their fiduciary duty to make sure my tax dollar is not being used correctly and wisely," Maravelias said. "Changing this ordinance without looking at the details hurts people."

Council President Karen Hartley-Nagle said she will vote against the proposal because she feels it would lead to higher county costs due to unsafe job sites and lower quality workmanship.

"Apprenticeships lead to good paying jobs, grow our middle class and ensure safe quality work," Harley-Nagle said in an emailed statement.

Sheldon said the threshold does need to be increased, but at a much smaller jump than what is proposed.

"I don't understand," Sheldon said. "You have people that don't know how to put up an erector set writing the law."

Meyer said he supports apprenticeships and the rule change will not affect the training of skilled workers and that hiring more in-state contractors will actually lead to more local apprenticeship opportunities.

"I'm very confident it will create more apprentices," Meyer said.

The changes will be debated at the County Council's Executive Committee meeting at 4 p.m. The council will then vote on the proposed changes at its regular meeting at 6:30 p.m. Both meetings are scheduled at council chambers on the first floor of the City/County Building at 800 N. French St. in Wilmington.

Contact Xerxes Wilson at (302) 324-2787 or xwilson@delawareonline.com. Follow @Ber_Xerxes on Twitter.