Contracts Controversy Rooted in 20-Year-Old Scandal - NewsChannel5.com | Nashville News, Weather & Sports

NewsChannel 5 Investigates: High-Dollar Highways

Contracts Controversy Rooted in 20-Year-Old Scandal

(Story created: 5/25/04)

NewsChannel 5's six-month investigation first exposed questions about possible bid-rigging on state highway contracts. But the stage for this bid-rigging controversy may have been set during a similar scandal more than 20 years ago.

Go back in Tennessee history, just over two decades ago, and you'll find a time when headlines recounted efforts by road builders to fix prices on state highway projects.

The result: dozens sentenced to prison, including members of then-Gov. Ray Blanton's family.

It was a bid-rigging scandal that spread across the Southeast.

"I sat here and watched all this crap go on," says Rep. Frank Buck, D-Dowelltown, vice chair of the House Transportation Committee.

"And they literally stole millions off the state of Tennessee. There's no question about that."

But every day, Tennessee's counties live with vestiges of that era -- a 1976 law that, the county highway officials association says, still allows road builders to squeeze taxpayers.

"We are actually held captive by our own law," says Rodney Carmical, executive director of the Tennessee County Highway Officials Association.

(Story created: 5/25/04)

That law prohibits state and local governments from owning asphalt plants, forcing them to have to buy from the state's road building industry -- no matter how high the price.

"Is there any doubt in your mind that that law was passed to help the bid-riggers?" NewsChannel 5's chief investigative reporter Phil Williams asks Buck.

"No doubt in my mind," he replies.

But Kent Starwalt, executive director of the Tennessee Road Builders Association, says, "That asphalt legislation stems from the fact that the counties wanted to compete with the private sector."

"It's just bad public policy we believe for government to be in competition with the private sector," he adds.

The problem, however, is the lack of competition from anyone.

In fact, a NewsChannel 5 survey found more than a quarter of Tennessee's counties routinely get just one bid on their asphalt projects.

For example, Sumner County. While two companies may show up for the bid-letting, only one ever bids, Carmical says.

"I can't understand why any company would not be interested in bidding on about $2 million worth of product, when they are only about 20 miles away," he adds.

That leaves the company able to charge whatever they want.

A mile of road may cost $22,000 to pave in Wilson County, which gets two bids, according to the highway officials association.

But it costs $40,000 in Dickson County and $42,000 in Lewis County. Both get just one bid.

"We can rebid it, but if you only have one bidder, you will probably get the same bid again," Carmical tells Phil Williams.

"So you have to take what you get," Williams responds.

"There is nothing else we can do."

In fact, Greene County saw its prices almost double, after it went from a two-bid county to a one-bid county.

"The asphalt materials that go into manufacturing a product is the same - it's exactly the same," road superintendent J.C. Jones tells Williams.

"So the difference in price is?"

"How much profit they want to make."

Starwalt responds, "People are in the business to make money. That's what the capitalistic system is all about."

He says the road building industry is no different from any other business.

"It's the same as, every little town probably has a Wal-Mart. But not every little town has a Wal-Mart and a Target and a Kmart."

Here in Greene County, competition moved in twice over the past decade, according to highway officials.

Both times, the dominant player bought them out -- in one case, before the plant could even produce its first load of asphalt.

"If you control the market, you can buy the competition out and pay them whatever they want really - and still come out to the good by holding your price," Jones adds.

Campbell County Mayor Jerry Cross, who served in the legislature, says it seems that road builders "got more sophisticated since they got in trouble back in the late 70s, early 80s."

He tried a few years ago to repeal the asphalt law. Road builders fought back that effort.

Then, he says, a local highway contractor targeted him for defeat.

"They just came after me big time and probably made a difference in the election," Cross adds.

Buck says counties need the threat to say to highway contractors, "Look, if you gouge us, we'll go into business on our own."

But, now, critics say that every day they see reminders of the past... a past from which they fear some contractors have learned very little.

"They probably got more sophisticated," Cross says, "that they just don't type the bid on the same typewriter, like they used to do."

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