Feds wild about late NTTA intervention in SH121 - Texas in breach of federal procurement law

The Federal Highway Administration (FHWA) is warning that Texas may be in breach of federal laws requiring fair and open competition if the North Texas Tollway Authority (NTTA) is allowed to belatedly intervene in the procurement for a toll concession on SH121. This may result in withholding of federal funds and the end of expedited permitting, the letter says.

NTTA's bid was announced today.

A 3-page FHWA letter under the signature of the administration's Texas chief representative Janice Weingart Brown and addressed to TxDOT executive director Michael Behrens dated Apr 24 says that any TxDOT consideration of an NTTA bid for SH121 "could lead to violation of federal law and regulations regarding competition in the procurement process."

The Brown letter was a followup on FHWA conversations with TxDOT's #2 Amadeo Saenz.

Access to the federal TIFIA funds could be jeopardized, the letter says.

Federal law cited is 23 USC 112, 23 CFR part 635 Construction and Maintenance and 23 CFR part 636 Design Build Contracting. These seek to ensure that federal funds flow only to projects where contracts are awarded in fair and open competition.

These requirements were followed by TxDOT in selecting Cintra as the preferred concessionaire on Feb 27 2007. But the Brown letter says on March 29 TxDOT agreed to consider NTTA's proposal:

"We are concerned that TxDOT's consideration and 'acceptance' of any such proposal, well after the procurement process has been closed, would violate federal requirements."

The feds say they "need to understand" how the belated NTTA proposal could be considered under Texas law and procedures, then express federal concerns.

TxDOT may cancel the current procurement under which Cintra was selected, and has the right to do that, says Brown. The feds would regard any agreement with NTTA as a government to government agreement and the project as a publicly owned and operated toll facility, not a concession.

If TxDOT should recompete the concession and seek federal loan assistance "we would be forced to closely examine the circumstances of the new (words jumbled) competition to ensure that it met federal requirements for fair and open competition."

The letter continues: "In this regard, your recent actions regarding NTTA do not seem to support such a (judgment of a fair) procurement."

The feds say they are concerned that TxDOT insisted on confidentiality during the bidding by the private sector groups, yet is now ready to consider a new proposal - from NTTA - after key elements of the Cintra bid have been revealed.

A recompete bidding against Cintra's revealed proposal "would not be acceptable to us", the Brown letter says flatly.

If TxDOT cancels the current procurement with Cintra then TxDOT will have to restart its process of getting federal TIFIA loan support and this "would have to be evaluated on is own merits as a totally new TIFIA application."

Cintra's application for $700m of TIFIA loan approvals was due to be formally considered by USDOT's credit council May 8 (tomorrow).

The Brown letter says the feds would "see little benefit in continuing" to process the SH121 applications under their SEP-15 or special exceptions program for expedited federal approvals.

"The fundamental focus of this SEP-15 experiment was to look at ways of enhancing the typical TIFIA process to be more accomodating of competition. A decision to reprocure the (concession) to allow NTTA to submit a proposal is wholly outside of the approved SEP-15 experiment."

They would have to start again the TIFIA application and without an expedited procedure.

The letter ends by encouraging TxDOT to work with FHWA to avoid actions "that would jeopardize the continued eligibillity of SH121 to receive federal funds."

It says SH121 will provide users "a valuable transportation alternative" and the feds want to "assist in completing the current procurement process."

The FHWA letter on NTTA's illegal bid for SH121 is linked here.

TOLLROADSnews 2007-05-07