Losing Bidder Signals Intent to Sue MDOT Over Transurban Contract

Traffic on the Capital Beltway near the American Legion Bridge. WTOP photo by Dave Dildine.

Capital Express Mobility Partners (CEMP), a consortium that unsuccessfully sought a multi-billion dollar contract to finance and build toll lanes on interstate highways in Montgomery County, signaled in its strongest terms to date that it intends to sue the Maryland Department of Transportation.

The consortium’s determination to litigate is conveyed in an Aug. 10 letter sent by its attorney, former Maryland Attorney General Douglas F. Gansler (D), to the Board of Public Works.

The letter, undisclosed until now, also lays out in broad detail the legal arguments that the consortium is likely to present if its case goes to court — and it hints at a belief that MDOT’s lawyers are slow-walking the protest-resolution process to keep CEMP from filing suit.

Capital Express, a consortium led by two Madrid-based firms — Cintra Global and Ferrovial Construction — was one of three groups that submitted bids to rebuild the American Legion Bridge and add variably-priced toll lanes to portions of Interstate 270 and the Capital Beltway, a top priority of Gov. Lawrence J. Hogan Jr. (R).

Earlier this year the agency chose Accelerate Maryland Partners (AMP), a consortium led by Transurban, which manages a network of managed lanes in Northern Virginia.

The Board of Public Works approved a $54 million “predevelopment” contract with AMP last week, a vote that gives the Transurban-led group the right-of-first-refusal on billions in construction work down the road.

The award, on a 2-1 vote, came over the formal objections of CEMP, whose protest was never mentioned during the board’s two-hour discussion.

Under the state’s public-private partnership law, a losing bidder can “protest” to an agency’s procurement official and then “appeal” a negative ruling to the secretary’s office. Firms wishing to pursue a protest after that must must file suit in circuit court.

Capital Express argued its case before MDOT Deputy Secretary R. Earl Lewis Jr. in June but has yet to get a ruling.

“CEMP intends to fully exhaust these administrative and judicial procedures,” Gansler wrote. “MDOT is aware that, as soon as it dismisses CEMP’s protest, CEMP will file a petition for judicial review in Maryland circuit court.”

In an interview on Tuesday, Transportation Secretary Greg Slater rejected the suggestion that MDOT is sitting on its ruling to keep CEMP from pressing forward in court.

“It couldn’t be further from the truth,” he said. “I’m certainly sensitive to that. But I don’t know what the outcome of the process is going to be, so I’m not sure how they could know what the outcome of that process is.”

Much of CEMP’s appeal, as expressed in the letter, focuses on the Transurban group’s lack of a construction partner.

When AMP formed, Archer Western Construction was included as a partner, but that firm was dropped from the consortium not long after Comptroller Peter V.R. Franchot (D), a Board of Public Works swing vote and a candidate for governor, insisted that the I-270/I-495 project go to a union-friendly bidder.

Archer Western was not replaced, but AMP won the bid without them, a decision Gansler said “violated the terms of the solicitation and [MDOT’s] duty to identify the best proposal for the State.”

“AMP’s initial team included a well-experienced national construction firm, Archer Western, that possessed extensive experience executing the predevelopment, pre-construction, and development stages of major infrastructure construction projects,” the former attorney general — also a candidate for governor — wrote.

Gansler called Transurban “a toll-road operator with no experience executing major infrastructure construction projects as Lead Contractor.” He called their finance partner, Macquarie Capital, “an investment bank with no toll-road construction experience.”

“By analogy, the acceptance of Transurban and Macquarie as ‘Lead Contractor’ in the place of Archer Western is like awarding a contract to construct a skyscraper, where the only parties to the contract are the turnstile operator in the lobby and the investment bank backing the construction, but not the entity that will build the skyscraper itself,” he added.

Gansler called Ferrovial Construction “a highly-experienced multinational company that carries out the design and construction (among other things) of major transportation infrastructure projects.”

Transurban spokeswoman Tanya Sheres said that Accelerate Maryland Partners is conducting a search for a design and construction contractor.

“The Request for Qualifications phase is just concluding and we expect to announce our shortlist of qualified teams later this week,” she said. The consortium expects to make a selection early next year, several months before the BPW is asked to approve a construction contract.

“As a long-term operator, Transurban has used this developer-led approach on all of its Virginia Express Lanes projects — all delivered on time and on budget,” she added.

“Also considering Macquarie Capital’s development experience, ​Dewberry Engineers & Stantec Consulting’s expertise in engineering design, and Bechtel Infrastructure’s record with construction management, AM Partners has elected to adopt this approach and is confident that through a thorough search for the most qualified contractor and advantageous pricing, we will be able to optimize value for the state.”

CEMP’s letter to the BPW was co-written by Dana Dembrow, a consultant and former state legislator who served as the top procurement officer at the Maryland Department of Health until he was asked to resign last year.

Their letter also sought to rebut numerous other reasons that MDOT has offered for advancing the AMP contract in the middle of a bid protest — including claims that a delay would slow the replacement of the American Legion Bridge, the need to move forward while interest rates are low (dismissed as “conjecture”), and the fear that a delay would “harm” the state’s reputation in the business world.

“MDOT fails to recognize that there will be greater harm to Maryland’s reputation if it rushes to approve a contract, during an ongoing bid protest, that was awarded to a proposer that fails to deliver the best value to the State,” the letter concludes.

The losing bidder also said AMP generated a superior procurement score because the consortium “utilized unrealistically low values for certain cost- and contractor-markup percentages” in a manner “that do not comport with the terms of the [Request for Proposals].”

In testimony before the Maryland Transportation Authority and elsewhere, MDOT officials have vigorously defended the process that led to the selection of AMP.

Echoes of the much-litigated Purple Line

CEMP’s pledge to “fully exhaust” its administrative and legal appeals conjures memories of the Purple Line, observers of the project said. The Purple Line, now under construction — but years behind schedule — in Prince George’s and Montgomery counties, was dogged by lengthy citizen lawsuits.

“The main risk is a risk of delay,” said Gary V. Hodge, a former elected official from Southern Maryland and a leading critic of the I-270/I-495 project. “The state is in a race with the clock to get this… wrapped up before Hogan leaves office.”

Hodge said that if a court found the procurement wasn’t handled properly, MDOT could be forced to “to re-bid the project. … There’s a hell of an array of options that a judge or jury would have.”

Slater knows all too well how lawsuits can impact big-ticket projects. Colleagues say he endured many sleepless nights working to keep the Purple Line from collapse after the lead subcontractor successfully sued to withdraw from the project following a cost-overruns dispute.

“The appeal process is very fresh for us,” the secretary said on Tuesday. “You have to be able to work through that. And you can’t control that. What you can control is that you have a good process that has a lot of integrity and honesty and a lot of professionals in it.”

Hodge and other close observers have suggested that the speediest path for both MDOT and AMP might be to bring the losing bidder into the fold.

Sheres said that the Transurban group is not in discussions with Capital Express Mobility Partners.

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