New Data Shows High Costs of No Competition - NewsChannel5.com | Nashville News, Weather & Sports

NewsChannel 5 Investigates: High-Dollar Highways

New Data Shows High Costs of No Competition

(Story created: 8/27/04)

For years, Tennessee's Department of Transportation knew exactly how much highway contractors might be jacking up their prices. But it never told taxpayers who were paying for the High-Dollar Highways.

Now, that has changed.

Before the ribbons are cut on a new state road --  back before the first load of asphalt is laid, even before the ground is broken -- TDOT's top experts crunch the numbers to estimate what a project should cost.

"You would hope you can come up with some reasonable numbers as to what you should get for bids," TDOT Commissioner Gerald Nicely tells NewsChannel 5's chief investigative reporter Phil Williams.

Nicely says those estimates have long been kept secret. But in response to requests by NewsChannel 5 and others, that's all changing.

"We made the decision to, in the spirit of openness, go ahead and release these after the contract has been let," he says.

The result: While TDOT says the bids on most road projects come in within 5 to 6 percent of estimates, it's a different story where there's only one bidder.

Take, for example, a project to resurface a six-mile stretch of I-40 on the Putnam County and Cumberland County line.

  • TDOT estimated it should have cost $3.7 million.
  • But the only bidder, Highways Inc., got the job with a $4.4 million bid.
  • That's $700,000, or almost 26 percent, above estimates.

Then, there was the paving of an eight and a half mile stretch of U.S. 45W in Gibson County.

  • TDOT's estimate: $6.1 million.
  • The only bidder, Dement Construction, got the job with a $7.3 million bid.
  • That's an extra $1.2 million, almost 20 percent over estimates.

There's also a resurfacing project for a 13-mile stretch of I-40 through Humphreys County.

  • TDOT's estimate: $6.5 million.
  • The only bidder, Eubank Asphalt, got the job with an $8 million bid.
  • That's a whopping $1.5 million, or 23%, over estimates.

In those cases, TDOT says it has checked and double-checked its estimates -- which leads the commissioner to one conclusion.

"We probably paid more than we should."

The lobbyist for the Tennessee Road Builders Association, Kent Starwalt, e-mailed the following statement:

"The TDOT methodology for determining estimates for road projects is secret. The Association does not know what factors TDOT uses to determine estimates for the likely cost of highway construction projects.

"Determining the likely cost of a job is a complicated process. Numerous factors, such as fuel and liquid asphalt prices, time frames involved, haul rates, the season of the year and scope of the job, etc., comprise the 'cost' of a project. As any Tennessean who has stopped for gas in the last week knows, transportation prices fluctuate daily. All these factors must be considered before submitting a bid on a job to take place sometime in the future. There is plenty of room for error on either side -- from the state or industry.

"The Department does not have to award a job if it believes the prices are too high. If the projects are indeed awarded, they may have determined that the estimate was too low."

Still, TDOT points out that its estimates have historically been pretty close.

Nicely says, since the Bredesen administration took over, he's decided that he'll reject any bid that's more than 15 percent over estimates -- unless someone can give a good reason why taxpayers should foot the bill.

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