Small firms angry over safety center bid system
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Small firms angry over safety center bid system

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Tensions ran high Thursday as Native American construction companies on the Pine Ridge reservation met to debate why they had only been awarded a quarter of the bids for a $28.5 million justice center project.

Reservation-based construction companies face several challenges when they bid to work on large construction projects. For one thing, contractors on the reservation cannot use land to take out bonds to fund projects, because reservation land is trust land and not taxed by the federal government.

“Banks won’t come anywhere near the reservation,” said Dustin Twiss, who with his father lost a bid on a communication system for the new facility. “You’d be lucky to make a payday loan, let alone a half a million dollar bond down here, unless you have 100 percent of the assets.”

Some contractors, like Mike Carlow, who has been in business 23 years and owns Carlow Enterprises, think the tribal government should step in and designate funding to back their businesses. Other companies think startups should have to earn their own ability to take out bonds, said Cordelia White Elk, director of the Tribal Rights Employment Office.

The bidding process, which was designed to give Native American reservation-based companies preference in the project, allowed reservation companies an early bidding period; contractors typically all bid at the same time. Some contractors at the meeting were concerned that the method allowed their contractors and suppliers to let other sub-contractors know what people were bidding, so they could underbid.

After the early bidding period, Denver-based Milender White Construction Company opened the bidding process to off-reservation companies for leftover parts of the project.

Louis and Dustin Twiss said they felt treated unfairly because off-reservation companies might be able to find out what they bid and underbid them later in the process.

“We feel like we can go to Denver and bid on the open market and be competitive,” said son Dustin Twiss. “Yet we can’t be competitive right here in our corner, in the middle of nowhere in South Dakota.”

The project will house the Oglala Sioux Tribe’s jail, police force and judicial system in one 93,642-square-foot building southwest of the current adult jail near the Nebraska border. It is being overseen by Milender White, which is obligated to give preference to Native Americans in the subcontractor bidding process because the project is on the reservation.

Companies from the Pine Ridge reservation put in 22 bids on the project. Adam Mack, operations manager for Milender White, considered six of those bids, totaling about $10 million, and the rest of the project was bid off the reservation. The reservation bids were for earthwork, utilities, concrete, food service equipment and mechanical and electrical work.

About a dozen other tribal contractors were at a heated, 90-minute special meeting of the Oglala Sioux Tribe Department of Public Safety on Thursday.

Tribal and construction companies overseeing the bidding process have communicated poorly, said Carlow. He bid on six parts of the justice center and was recommended as a contractor for two.

In addition, many companies are used to handling $200,000 or $300,000 projects and don’t have the employees or budget to jump to a several million dollar project, Mack said.

“They’re not exposed to this many large opportunities, so if we were doing housing, some foundations, siding, painting — great, fantastic,” he said. “If you’ve got a guy that tries to get 10 times bigger all at once, he will fail. It just happens.”

Ken Soderlin, owner of Sod’s Mechanical, was recommended to provide plumbing and heating work for the building. He bid the project at $6,553,500, less than 4 percent over the bid budget of $6,316,152. He said he reached an agreement with Milender White and was planning to take on the project when the company said he needed to cut his budget further. The construction company was working to cut $3 million from the project budget at the tribe’s request.

“They’re basically saying we’re $1 million over budget when we were supposedly within thousands of dollars,” he said. “It’s quite a contrast, when you think you have the job.”

Contact Ruth Moon at 394-8415 or ruth.moon@rapidcityjournal.com.

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