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Losing DOT Bids Get Consolation Prize


The Tampa Tribune

Published: May 29, 2008

Updated: 12:22 am

TAMPA - Companies that win major state transportation contracts aren't the only ones that get paid for their efforts. The losing bidders get money, too.

For years, the state Department of Transportation has compensated losing bidders for the costs of submitting proposals on large, complicated projects. This year, state lawmakers approved the practice, though not all of them think it's a good idea.

It's "ridiculous," said state Sen. Mike Fasano, R-New Port Richey and chairman of the Senate Transportation and Economic Development Appropriations Committee.

Approval for the payments was added to the Senate's transportation bill earlier in the session, and Fasano removed it, he said. Other lawmakers, however, restored it later to another bill that was passed in the confusion of the final hours of the session.

"This is one of the most ludicrous things I've heard of a government doing," he said.

DOT officials have said the payments go to engineering firms that bid on large projects that involve both design and construction of everything from sidewalks to bridges and require collecting information from several companies.

Since 2001, the DOT has paid losing bidders about $6.2 million, DOT records show.

Two losing bidders on a $242.7 million project to replace sections of the Escambia Bay Bridge, east of Pensacola, received $500,000 each, documents show. The contract was approved in 2005, and federal funds were used to pay the losing bidders. The bridge was heavily damaged by Hurricane Ivan in 2004.

The amount paid to losing bidders depends on the complexity and nature of the work, as well as contract size, DOT officials say. Compensation is commensurate with the level of effort required to develop a bid proposal. Some losing bidders receive no money. The payments encourage the companies to bid on future projects, state officials say.

Fasano said he had met with representatives of firms who sought the losing bidder provision and wanted him to reconsider his opposition.

It Looks Bad During Budget Cuts

"They were concerned because they spend a lot of money putting in these bids. ... But it just concerns me in a year when we're cutting the budget," he said. "We're having to tell education and nursing homes, 'Sorry, we're going to have to cut you, but oh, by the way, we're going to continue to pay companies that put in bids and don't get selected.'"

This year the department tried to make the payments official by writing a provision into the DOT's administrative rules.

The Legislature's Joint Administrative Procedures Committee reviewed the proposed new rule and told the DOT it needed state lawmakers' approval. "They were found out," Fasano said. "They were told they couldn't do this."

Several other states pay losing bidders on transportation projects, said Shane Artim, of the American Association of State Highway and Transportation Officials. "It's mostly for large, complicated projects. These can take a lot of time and money."

Practice Has Been Questioned

Missouri, North Carolina and Texas are among the states that pay stipends, but two years ago, the head of the agency that oversees the Texas Department of Transportation questioned the practice.

Ric Williamson, chairman of the Texas Transportation Commission before his death in December, said the practice of paying losing bidders was "nutty as a fruitcake," even though it was state law.

Among the states that don't pay are Illinois and Georgia. "I've never heard of anything like that," said Mark McKinnon of Georgia's transportation department. "Here, the lowest bidder gets the contract, and everyone else moves on to the next project."

The bill passed this session in Florida says that the stipends' purpose is to "encourage competition and compensate unsuccessful firms for a portion of their proposal development costs." Also, the department retains the right to use the unsuccessful bidders' ideas in other projects.

DOT officials say the stipends have gone to bidders on complex projects that are costly to estimate. However, the bill doesn't single out such projects, saying only that stipends can be paid "to unsuccessful firms who have submitted responsive proposals for construction or maintenance contracts."

Also, the bill puts no limit on the amount of money the losing bidders can receive.

There may be good reasons to pay these stipends, Fasano said, but the DOT never explained them to him. Before next year's legislative session, he said, he plans to bring DOT officials before his committee to talk about it.

"I think what happens is DOT gets into a mode that they're so used to doing things and not being questioned. Now they're going to be questioned. Things like this need to be done through committees and the legislative process. They can't just be added onto a bill," he said.

"When I asked other members about this, most just looked at me. They had no idea what I was talking about."

The bill with the stipend provision contains several other transportation measures. Gov. Charlie Crist has yet to sign it. He told the Palm Beach Post that giving money to losing bidders "didn't sound right," but he would have to look at the issue more closely.

"He looks forward to reviewing it when he gets the bill," said Crist spokesman Thomas Philpot.

Reporter Lindsay Peterson can be reached at (813) 259-7834 or [email protected]
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