The court case could have significant cost and time implications for one of the largest freeway projects ever in Maryland, which would add four toll lanes to Interstate 270 and part of the Capital Beltway. . This is Maryland Gov. Larry Hogan’s (right) flagship ‘traffic reduction’ plan, who has touted public-private partnerships as a way to build expensive infrastructure.
On Wednesday, Maloney expressed dismay at the Maryland Department of Transportation’s legal argument that the winning team complied with the rules of the solicitation and the losing bidder was too late to challenge those rules. The judge appeared incredulous that the state had not attempted to counter the losing bidder’s argument that the winning proposal was based on unrealistic construction cost assumptions that could lead to massive delays and cost overruns.
“You say it’s good [for a winning proposal] be financially infeasible because the time to protest was when [MDOT] came up with these rules? asked the judge.
Later in the hearing, the judge said, “Isn’t financial feasibility something to consider? … It’s a little hard to hear from our state government.
The losing private consortium, known as Capital Express Mobility Partners, sought judicial review from the Circuit Court in September after MDOT twice dismissed protests against the bid.
The court case relates to a “pre-development deal” awarded in August to Australian toll road operator Transurban and Australian investment bank Macquarie. The team has begun designing the toll lanes for up to $54 million at its own expense and will have the right of first refusal on a decades-long deal worth billions to build and operate the lanes. Under a larger public-private partnership contract, the companies would build the lanes and fund their construction in return for retaining the bulk of the toll revenue over 50 years.
The Cintra team argues that the winning Transurban team “gamified” the selection process by assuming artificially low markups on construction company overhead and profits. This approach, according to Cintra, will lead to increased construction costs and delays down the line and, potentially, the departure of construction companies – what Cintra attorney Douglas F. Gansler called a “purple line”. on steroids.”
Maryland’s light rail line, which is also being built through a public-private partnership, is 4.5 years behind schedule and recently went over budget by $1.46 billion – an increase by almost 75% – after the departure of the initial construction contractor from the private consortium. following disputes with the state over increasing delays and costs.
The protest filing asks MDOT to disqualify the Transurban team or reopen the contest, which would add months to the project. However, that would likely only happen if MDOT loses what could be a protracted court battle. If Maloney decides the bid protest was filed in time, the matter will revert to MDOT for another decision. Gansler, the Maryland gubernatorial candidate, said he assumed the MDOT would uphold its two previous rejections, which would force Cintra to take the case to the Circuit Court.
Although legal actions are common in major infrastructure projects, they pose significant risks as they can delay construction and increase costs. Higher construction costs could also be passed on to motorists via higher toll rates.
MDOT said it offered all bidders “flexibility in managing financial risk” and that Cintra did not object to the formula by which financial proposals would be judged. Transurban’s winning proposal had a “significantly higher” financial score – twice as high as Cintra’s – while Cintra had a “slightly higher” score on technical merits, MDOT said.
Lydia B. Hoover, Assistant State Attorney General, said the Cintra team was required to submit any protests against the bidding rules before financial proposals are due in January 2021. She said that the team had the “worst” financial proposal of the three bids. .
Cintra “would have seen things she didn’t like weeks or even months before losing the competition, but she waited until she lost before filing a lawsuit,” Hoover told the judge. “…It’s an attempt to bite the apple twice.”
The judge intervened, asking Hoover how the Cintra team could have realized his claim that the Transurban offer was “not financially feasible” before the offers were submitted.
“How could they have known that?” Maloney asked.
Hoover said all teams know how financial arguments will be scored, including how cost assumptions will be judged.
“Are you saying that it is acceptable for a bidder to [include] no charge for permits or fees or anything? asked Maloney. “…Is that right? No pay? No insurance?”
Hoover said the toll lanes would be built and operated “at zero net cost to the state.” The decades-long contract for the public-private partnership, she said, will be for a “bankable project”.
Gansler said the Cintra team could not have known about the issues with the winning financial proposal until Cintra learned why its bid was not selected. He said the Cintra team also couldn’t have known sooner that the state would select a team that didn’t include significant construction expertise — something he said the bidding rules required and which made the Transurban team less qualified.
The Transurban and Macquarie team initially included Atlanta-based Archer Western Construction, but that was not part of the final proposal. Transurban and Macquarie’s proposal named itself as the main construction contractor.
“Seriously?” Gansler said. “How are you going to get a main contractor to be the toll guys and the money guys?”
A Transurban spokeswoman said ahead of the hearing that the team had begun soliciting proposals from construction contractors and planned to select one this summer.
MDOT said the Cintra consortium should have opposed the construction company’s departure from the Transurban team in January 2021, when it first learned of it in a press release, rather than a month later, after losing the contract.
MDOT said crews only need to have construction management experience, which the Transurban team does. Transurban operates 53 miles of toll lanes in Northern Virginia.
Maryland plans to add two toll lanes in each direction to the ring road between the Virginia side of the American Legion Bridge and the I-270 spur, as well as on I-270 toward Frederick. On lower I-270, a car pool lane would be converted to a toll lane, while MDOT says the lane configuration north of Interstate 370 is still under consideration. The regular tracks would be rebuilt and would remain free.