Texas Commission lifts bar on NTTA bid for SH121 & more on mystery memo
Posted Tue, 2007-05-15 19:53
The state's policymaking Texas Transportation Commission (TTC) lifted an August 2006 bar on the North Texas Tollway Authority (NTTA) going forward with a bid for SH121, a major new toll project north of Dallas. A press release from TxDOT Dallas office today says commissioners felt the action in allowing the bid to be made was "consistent with their plan to accelerate transportation projects by driving down costs through competition and empowering regional leaders to solve transportation problems."
Ric Williamson chair of the TTC is quoted: "Our goal is to reduce congestion in the Dallas-Fort Worth area by accelerating transportation improvements as determined by the regional transportation council. We don’t care who builds the project, we just want what is best for the citizens of North Texas."
There appears to have been no discussion of strong US Government objections to considering the NTTA bid after the private sector selection had already been made - a clear breach of normal contracting procedures. The Federal Highway Administration also say public authorities are barred by law from competing for contracts put out for private bid. The Feds have said their grant of TIFIA loan support for the project was premised on a regular procurement in which Cintra/JP Morgan were selected. This procurement will have to be canceled and a completely new application made if NTTA is selected.
TxDOT last summer gained an NTTA pledge to stay away from the project in what was called a regional protocol, but after Cintra/JPM were selected NTTA said they could improve on, or "top" it in a letter Mar 12 to Senator Carona, a north Dallas politician. In the intervening period TxDOT ceded much of its control of the details of the selection and final negotiations with Cintra/JPM to the Dallas Regional Transportation Council (RTC).
March 26 the RTC formally asked NTTA if they wanted to propose in competition with the selected private bid. NTTA's board April 11 instructed their staff to prepare a bid and approved the outlines of the bid May 7 (the full bid is not yet complete or public). May 14 yesterday the RTC asked the TTC for a waiver to allow NTTA to make the bid, and that was approved today.
TxDOT/KPMG-GS critical uu2 memo
We published details of an unsigned undated 2-page memo (uu2 memo) critical of the NTTA's bid as initially outlined in the Mar 12 letter to Carona. We wrote it was the work of financial analysts from KPMG and Goldman Sachs (KMPM/GS). The memo said that there was a fundamental flaw in the NTTA scheme in that their calculations made no allowance for risk and underprojected operating costs and that computer model runs showed NTTA would risk bankruptcy.
May 10 TxDOT's James Bass said in an email to us that their Dallas office produced the uu2 memo and that KPMG/GS were only asked to review it. Last night May 14 WFAA TV Channel 8 carried a report that NTTA chairman Paul Wagerman was "steamed" over the memo, especially as it was circulated anonymously with the authors unwilling to put their name to it.
see http://www.wfaa.com/video/wfaageneral-index.html?nvid=143934
WFAA TV's Brett Shipp then had TxDOT Dallas deputy district engineer Robert Brown saying he wrote the uu2 memo. He said he stood by what he wrote but it was only meant to be for his boss, and he wasn't sure how it got out. (Nor are we.)
The report said the uu2 memo was widely circulated in Austin before it got to us.
NTTA's Wagerman was quoted on the TV report as saying Brown must be disqualified by TxDOT from any further involvement in SH121 decisions claiming the memo shows he is not objective. Wagerman said: "I think the public would expect nothing less than the department to utilize people who are objective."
He did not say what was less than objective about the memo.
Link to the March 12 NTTA letter to Sen Carona - a pdf file
Link to the uu2 memo - a MS Word document
TOLLROADSnews 2007-05-15
The state's policymaking Texas Transportation Commission (TTC) lifted an August 2006 bar on the North Texas Tollway Authority (NTTA) going forward with a bid for SH121, a major new toll project north of Dallas. A press release from TxDOT Dallas office today says commissioners felt the action in allowing the bid to be made was "consistent with their plan to accelerate transportation projects by driving down costs through competition and empowering regional leaders to solve transportation problems."Ric Williamson chair of the TTC is quoted: "Our goal is to reduce congestion in the Dallas-Fort Worth area by accelerating transportation improvements as determined by the regional transportation council. We don’t care who builds the project, we just want what is best for the citizens of North Texas."
There appears to have been no discussion of strong US Government objections to considering the NTTA bid after the private sector selection had already been made - a clear breach of normal contracting procedures. The Federal Highway Administration also say public authorities are barred by law from competing for contracts put out for private bid. The Feds have said their grant of TIFIA loan support for the project was premised on a regular procurement in which Cintra/JP Morgan were selected. This procurement will have to be canceled and a completely new application made if NTTA is selected.
TxDOT last summer gained an NTTA pledge to stay away from the project in what was called a regional protocol, but after Cintra/JPM were selected NTTA said they could improve on, or "top" it in a letter Mar 12 to Senator Carona, a north Dallas politician. In the intervening period TxDOT ceded much of its control of the details of the selection and final negotiations with Cintra/JPM to the Dallas Regional Transportation Council (RTC).
March 26 the RTC formally asked NTTA if they wanted to propose in competition with the selected private bid. NTTA's board April 11 instructed their staff to prepare a bid and approved the outlines of the bid May 7 (the full bid is not yet complete or public). May 14 yesterday the RTC asked the TTC for a waiver to allow NTTA to make the bid, and that was approved today.
TxDOT/KPMG-GS critical uu2 memo
We published details of an unsigned undated 2-page memo (uu2 memo) critical of the NTTA's bid as initially outlined in the Mar 12 letter to Carona. We wrote it was the work of financial analysts from KPMG and Goldman Sachs (KMPM/GS). The memo said that there was a fundamental flaw in the NTTA scheme in that their calculations made no allowance for risk and underprojected operating costs and that computer model runs showed NTTA would risk bankruptcy.
May 10 TxDOT's James Bass said in an email to us that their Dallas office produced the uu2 memo and that KPMG/GS were only asked to review it. Last night May 14 WFAA TV Channel 8 carried a report that NTTA chairman Paul Wagerman was "steamed" over the memo, especially as it was circulated anonymously with the authors unwilling to put their name to it. see http://www.wfaa.com/video/wfaageneral-index.html?nvid=143934
WFAA TV's Brett Shipp then had TxDOT Dallas deputy district engineer Robert Brown saying he wrote the uu2 memo. He said he stood by what he wrote but it was only meant to be for his boss, and he wasn't sure how it got out. (Nor are we.)
The report said the uu2 memo was widely circulated in Austin before it got to us.
NTTA's Wagerman was quoted on the TV report as saying Brown must be disqualified by TxDOT from any further involvement in SH121 decisions claiming the memo shows he is not objective. Wagerman said: "I think the public would expect nothing less than the department to utilize people who are objective."
He did not say what was less than objective about the memo.
Link to the March 12 NTTA letter to Sen Carona - a pdf file
Link to the uu2 memo - a MS Word document
TOLLROADSnews 2007-05-15
| Attachment | Size |
|---|---|
| NTTA-Carona070312.pdf | 183.24 KB |
| 121NTTAvsCintra.doc | 65.5 KB |