Auditor General says PENNDOT met federal requirements in awarding of I-99 project

Auditor General Robert P. Casey, Jr. today released a review of the Pennsylvania Department of Transportation’s (PENNDOT) bidding procedures which determined that the I-99 transportation contract appears to have been properly awarded under state and federal guidelines and was awarded consistent with other similar projects across the state.
However, at Casey’s recommendation, PENNDOT has refined the time guidelines used in awarding bids.
After PENNDOT awarded the I-99 construction contract to New Enterprise Stone & Lime Co. in January 2003, dozens of taxpayers contacted Casey’s office and asked him to determine why, after rejecting the apparent lowest bid, PENNDOT awarded the I-99 project to the next lowest bidder rather than re-bid the project. Casey’s staff reviewed the award process and found PENNDOT rejected the apparent lowest bidder on the project, Trumbull Corporation, because it failed to timely submit required documentation proving that it made an effort to obtain participation from businesses run by socially and economically disadvantaged individuals. The project is funded with state and federal dollars, and therefore must meet both state and federal requirements.
In response to the concerns raised by taxpayers, Casey’s staff also reviewed PENNDOT’s procedures to determine if Trumbull’s bid was rejected for adequate cause and if the project was properly awarded to New Enterprise Stone and Lime Co.
They concluded that PENNDOT was required to award the contract to New Enterprise.
Taxpayers had voiced concerns that New Enterprise’s bid was more than $12.6 million higher than Trumbull’s.
However, Casey determined that New Enterprise’s bid of $72.5 million was only 2.6 percent higher than the cost estimate that was approved by the Federal Highway Administration prior to bidding.
Awarding the bid to New Enterprise was consistent with a federal requirement that bids must be reasonable in comparison with the estimated price.
As a result, Casey’s review noted that because the project specifications were not changed, the next lowest bid did not substantially exceed the FHWA approved cost estimate, and PENNDOT appeared to lack a sufficient justification to reject all bids, PENNDOT could not have re-bid the project.
In response to concerns that the awarding of the I-99 contract was inconsistent with procedures followed in other projects, Casey’s staff determined that 24 other projects that were opened for bids between July 1, 2001 and December 31, 2002 and were not awarded to the apparent low bidder. These projects were either awarded to the next lowest bidder (similar to the I-99 project), or re-bid either because of significant changes in project specifications or because the next lowest bid was substantially higher than the approved cost estimate.
PENNDOT officials also told Casey’s staff that the timing of the award was consistent with other projects. However, Casey expressed some concern with the speed in which the contract was awarded and recommended that PENNDOT consider implementing standard, uniform timeframes for the issuance of awards and notices to proceed so that taxpayers can have reasonable expectations as to when such matters will be resolved.
“Clear timeframes will help minimize perceptions that a delay or rush in a particular bidding and award process is being driven by factors unrelated to legitimate project issues,” Casey said.
In their response to Casey’s review, PENNDOT officials said that they follow timeframes established by statute and contract specifications. Nevertheless, they said they will now “institute guidelines that projects will not be awarded, except for emergency projects, within one week of the bid opening.”
Casey’s performance review focused on interviews with PENNDOT employees and documents.