When Colorado leaders held their first groundbreaking ceremony to showcase the use of federal stimulus funds, they picked a Littleton highway project whose costs closely matched the government’s estimates.
They planted a sign heralding the $552,000 repavement job along West Belleview Avenue. And Gov. Bill Ritter showed up to praise the speed with which the Colorado Department of Transportation obligated federal dollars.
“We’re moving fast,” Ritter assured the crowd.
A hundred miles to the west and 8,000 feet up in the mountains, a lonelier stretch of road presents a different story.
The cost and size of the $4.2 million project, repaving 12.5 miles of U.S. 24 and U.S. 285 near Buena Vista, grew by nearly 50 percent after the low competitive bid was awarded.
Because the quote for the initial project’s size came in so low, state highway engineers opted to use the savings to pay the contractor, Asphalt Paving Co., to pave an additional 4 miles included in original plans instead of seeking bids for the extra work.
That scenario, critics say, clashes with the full spirit of competitive bidding. Federal government watchdogs are trying to track how often such approaches are happening around the country.
In recent years, Colorado Department of Transportation officials have sought to limit project extensions to ensure that as much work as possible is competitively bid, an agency memorandum shows. The conventional wisdom is that pitting contractors’ prices against each other forces greater cost savings on materials and labor, especially when projects grow by a quarter to half in size.
The U.S. 24 project and two other state projects that were extended after bidding highlight the tension confronting Colorado and other states across the nation. They have to balance the stimulus-law’s mandate for swift job creation with sometimes streamlined management processes that could potentially compromise savings to taxpayers.
The American Recovery and Reinvestment Act, signed in Denver last March, emphasizes the need for competitive bidding on stimulus-financed projects while also imposing strict deadlines on obligating the dollars.
“There are competing interests here — bidding to get the best value and fast job creation — and they’re both legitimate,” said Sid Hymes, a Missouri-based construction consultant with experience monitoring government work. “I suspect the other bidders would have come in with a lower unit price. The flip side is that the state is under a heavy mandate to get that money out onto the street. The state is between a rock and a hard place.”
Tight deadlines
State highway officials, who have been widely praised for quickly meeting federal stimulus deadlines to generate jobs, say their approach to project expansions satisfies their own policies, as well as the Federal Highway Administration.
Although they didn’t seek specific bids for the expanded work in the original advertisements for the three projects, they point out that a sentence inserted into the plans notified contractors that additional work might be included. If they had sought separate bids for the extra work, a time-consuming process, they may have disrupted their scheduling and missed ARRA deadlines.
“The bidding process we used for Recovery Act-funded projects is the same one we have been using for decades, with the approval of the Federal Highway Administration,” according to a statement from Russ George, executive director of CDOT. “We designed the process to use tax dollars most efficiently and effectively, and we are confident taxpayers are getting the most for their investment.”
Colorado will take in more than $500 million in federal recovery funds for transportation projects. CDOT was well ahead of its first 120-day deadline, obligating $162 million in projects weeks before the June deadline. The majority of the bids came in sharply below estimates, and the projected costs are on track to fall below budget projections.
The three projects that were extended after bids include: Colorado 62 near Telluride, by 20 percent; U.S. 160 near Alamosa, 21 percent; and U.S. 24, at 47 percent.
Originally, they were envisioned as bigger. When officials advertised the plans earlier this year, engineers scaled back the original scope, adding a sentence saying the work may be extended.
A 2004 policy memo endorsed that process. But another option was available: Allowing for an alternate schedule of bids so contractors could provide a separate quote for the original scope of work.
“If we have the opportunity to bid work, we should,” the memo states.
The debate over rebids
The “alternate” schedule option, said Hymes and other industry experts, is the more effective route to true competitive bidding for large project expansions, especially those jobs that grow as much as 50 percent. No law apparently exists for dictating when separate bids must be sought before a construction project kicks off.
“When they put in the alternates, everyone gets to bid on the same exact thing,” Hymes said.
Kyle Alpha, a Mesa County contractor who lost a bid on a state stimulus job that was extended, said if a project is going to dramatically expand, then “it would be proper to rebid” or to ensure that alternate bids are available.
An official with the Government Accountability Office, Congress’ watchdog arm, said extensions are being watched across the country.
“It’s an issue we’re concerned about,” said John Needham, who heads up procurement for GAO. “A lot of projects are coming in at low bid.”
State officials stress that they typically use separate bidding schedules on more complex projects like bridges, not resurfacing. They also say their enlargements still meet the spirit of competitive bidding because the same unit prices are being used, even though the projects are larger.
They have defenders, such as Keith Molenaar, a construction engineering professor at the University of Colorado.
“If they’re getting a bid that’s substantially lower than the engineer’s estimate, I would say it’s a good value to the state,” said Molenaar, who acknowledged performing work of his own for CDOT.
Both government officials and experts concede that it’s impossible to know how much savings could be gleaned from separate bidding on the additional work.
“Generally speaking, unit prices (for materials and labor) go down as volume increases,” Hymes said. “You’ve got a lot of hungry contractors out there right now who would do just about anything.”
Miles Moffeit: 303-954-1415 or mmoffeit@denverpost.com
