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Transportation

Montgomery County Judge Rules Against MDOT in Toll Lanes Lawsuit

Boondoggle
Gov. Lawrence J. Hogan Jr. (R) announced plans to widen Interstates 270 and 495 on Sept. 21, 2017. Behind him is then-MDOT Secretary Pete K Rahn. Maryland Governor’s Office photo by Steve Kwak.

In a setback for Gov. Lawrence J. Hogan Jr.’s bid to build toll lanes on the Capital Beltway and Interstate 270, a Montgomery County Circuit Court judge on Thursday ordered the state to reconsider its decision to award a lucrative contract to an international conglomerate comprised of Transurban and another firm.

Judge John M. Maloney ruled that the Maryland Department of Transportation was wrong to reject on timeliness grounds a protest filed by a losing bidder, Capital Express Mobility Partners (CEMP), a consortium led by the Spanish firms Cintra and Ferrovial.

CEMP objected to the state’s decision to award a pre-construction contract to Accelerate Maryland Partners, the  consortium led by Transurban and a second Australian firm, Macquarie, in part because the winning bidder’s construction partner left the group in the middle of the procurement process and was not replaced.

During a hearing on Wednesday, CEMP’s attorney, former state Attorney General and gubernatorial candidate Doug Gansler, mocked Accelerate Maryland Partners’ claim that it could build toll lanes without a construction partner. “How are you going to have the lead contractor be the toll booth guys and the money guys?,” he asked.

He also claimed the financial portion of the winning bidder’s proposal was based on “unrealistic margins” on its subcontracts, an attempt to offer the cheapest bid in a manner that could make the project financially unsustainable over the long haul. The state could end up with “the Purple Line on steroids,” he said, a reference to the troubled light rail project in Prince George’s and Montgomery.

In his ruling, Maloney found for CEMP and ordered the agency to revisit the various proposals the state received in the next 60 days.

“I agree with the petitioner that the [MDOT] contracting officer’s opinion… appeared to be somewhat hard to follow…” Maloney said.

The ruling will force the agency to revisit its selection of Accelerate Maryland Partners. Hogan (R), who is term-limited, is pushing to get the controversial toll lanes project to a point of no return before he leaves office in January — and the court ruling could imperil the tight timeline.

Maloney’s ruling was not a surprise.

During Wednesday’s 75-minute hearing, held via Zoom, the judge expressed astonishment at the state’s contention that CEMP filed its protest later than the Maryland’s public-private partnership (or P3) law allows. He interrupted Assistant Attorney General Lydia B. Hoover and Phil M. Andrews, an attorney representing Accelerate Maryland Partners, repeatedly to challenge their assertions.

Hoover said that CEMP was aware that Archer Western Construction left Accelerate Maryland Partners in January 2021, but didn’t file a protest for approximately seven weeks, long after the five days allowed by law. “CEMP allegedly saw things that it didn’t like weeks or even months before it lost the competition, but it waited until it lost in order to file a complaint,” she said. “CEMP’s strategy and interpretation is an attempt to get two bites at the apple and two tries in a solicitation process that it lost because it had the worst financial proposal of all proposers.”

Because the Archer Western withdrawal is part of the basis of CEMP’s appeal, the state says a five-day deadline for filing a protest should have started in January. CEMP contends that the time limit was not relevant until the final contracting decision was made in February.

CEMP had the highest “technical rating” of the three proposals the state received, (“Good+”) and the lowest “financial score.” Accelerate Maryland Partners had a much higher financial score than its two rivals and a technical score rated “Good.”

Maloney appeared to find the state’s defense of MDOT’s grounds for denying CEMP’s two protests difficult to swallow.

“I get the feeling that you’re saying that financial feasibility is not even something to be considered. So what if the other side did a financially unfeasible proposal?” he asked. “That’s kind of hard to hear from state government.”

Andrews argued that the procurement’s “ground rules were set” during a collaborative process that included input from the firms interested in the multi-billion dollar toll lanes project. He called the agency’s decision to reject CEMP’s protest on timeliness grounds “entirely appropriate.”

Maloney pushed back against his claims as well. “A nine-billion-dollar project with the citizens of Montgomery County and you say, ‘So what, so what, we’ll see what happens!’ That’s a tough argument to be making.”

The ruling sends CEMP’s protest back to the agency for a second review. If it is again rejected, as expected, CEMP will likely file a second lawsuit in circuit court on the broader merits of its challenge.

How long it will take for all that to play out was not immediately clear in the wake of the judge’s ruling. Hogan hopes to ink a multi-billion construction contract with Accelerate Maryland Partners this fall.

The reasons for Archer Western’s withdrawal from the Transurban group have never been made public. Accelerate Maryland Partners has said it is interviewing firms to take Archer Western’s place.

After the judge’s ruling, an MDOT spokeswoman declined to comment, as did Gansler.

Transurban spokeswoman Tanya Sheres said the company is “assessing next steps.” She said AM Partners “remain(s) confident that Maryland conducted a fair and competitive procurement and that the selection of Accelerate Maryland Partners is based on the merits of the team’s track record and innovative, dedicated approach to delivering on behalf of governments and their communities.”

Project critic Ben Ross, head of the Maryland Transit Opportunities Coalition, called the ruling “very important,” in part because the MDOT must get its construction contract in place by mid-autumn.

“It validates the concerns we’ve been raising about the procurement,” Ross said. “They’re already in a tight spot.”