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Losing bidder on Md. toll-lane plan alleges winner used ‘unrealistic’ construction costs

The contract, which still could be challenged in court, would have companies design the toll lanes

Traffic on the Capital Beltway in Bethesda, Md., seen here in mid-April, is creeping up to pre-pandemic levels. (Katherine Frey/The Washington Post)

A losing bidder on a proposal to develop toll lanes for the Capital Beltway and Interstate 270 said Maryland improperly awarded the contract to companies with no construction expertise and an “unrealistic” financial pitch, according to state documents released Monday.

The protest, filed March 1 by a team led by the Spanish firm Cintra, alleged that the state erred in selecting Australian toll-road operator Transurban and Australian investment bank Macquarie for a “predevelopment agreement” to design the lanes. The winning bid, the protest alleged, was based on unreasonably low assumptions for construction costs.

The Cintra-led team said it was “mind-boggling” that the Maryland Department of Transportation awarded the project’s initial contract to a team that lacked a lead construction contractor. Without a construction firm, Cintra argued, the winning companies “have no ability to identify and mitigate construction risks until it is too late.”

The bid protest was obtained by The Washington Post via a public-records request.

Losing bidder protests Maryland's choice for Beltway, I-270 toll lanes developer

Jeffrey T. Folden, MDOT’s contracting officer on the project, rejected the protest April 15, writing that the claims were late and unjustified. Transurban’s proposal, he wrote, provided the best overall value.

The state required only that bid teams have “construction and/or management” experience, Folden wrote, noting that the contract in dispute is to design the lanes, not build them.

MDOT determined that Transurban and Macquarie, “based on their experience with similar projects, their financial integrity and other relevant factors … [would] ensure good faith performance of the work,” Folden wrote. Bidders were permitted to base their proposals on below-market assumptions, Folden wrote, because they would take the risk for them.

Transurban developed and operates toll lanes on the Beltway and I-95 in Northern Virginia, but another company built them.

Transurban North America President Pierce Coffee said the company’s team “acted in strict compliance” with the Maryland bid requirements in what was a “fair and competitive procurement.”

The team, Coffee said in an email, is “confident that our selection was based on the merits of our track record and innovative, dedicated approach to delivering on behalf of governments and their communities — all demonstrated within our proposal.”

Maryland postpones first vote on contract to develop Beltway, I-270 toll lanes

The Cintra-led team has appealed the contracting officer’s decision to the MDOT leadership, but the agency has not ruled on that appeal, a project spokesman said.

Under project bid rules, the companies could appeal a final MDOT decision in court. That could include seeking an injunction to prevent the state’s Board of Public Works from approving the contract until the case is resolved, which could take months.

Doug Gansler, a lawyer for the Cintra team and a former Maryland attorney general, did not respond to a request for comment. The protest filing asked that MDOT disqualify the Transurban team or reopen the bid competition.

Experts say bid protests on large infrastructure projects are not unusual, especially on a highway expansion expected to be worth billions. The Cintra protest could upend MDOT’s schedule to reach a 50-year contract that state officials say is critical to reducing traffic congestion in the Washington suburbs, including by rebuilding and expanding the American Legion Bridge.

Opponents, including environmental groups and local officials in Montgomery and Prince George’s counties, say MDOT’s plan would be too environmentally damaging and promote auto-dependent sprawl.

Maryland selects Transurban, Macquarie to develop toll lanes

MDOT officials have said the new lanes would come at “no net cost” to taxpayers because the private team would finance them. However, the construction costs would be passed on to motorists via the tolls charged. Critics also say MDOT could end up responsible for the project if there are significant delays or cost overruns, as occurred on the state’s Purple Line project. MDOT agreed to pay an additional $250 million to salvage the light-rail project’s public-private partnership after the original construction contractor, which is now being replaced, quit over cost disputes.

MDOT also could end up having to pay if court action stalls the toll-lane plan. As part of a predevelopment agreement, the state has said it would commit to reimbursing Transurban and Macquarie up to $50 million of their predevelopment costs if the project is canceled.

The predevelopment agreement, which would last about a year, would give Transurban and Macquarie the right of first refusal on the decades-long contract to build the lanes and finance their construction in exchange for keeping most of the toll revenue via a public-private partnership.

Maryland reveals potential toll rates for I-270, Beltway HOT lanes

The state plans to add four toll lanes to both highways — two in each direction. The predevelopment agreement in dispute would cover the Beltway between the Virginia side of the American Legion Bridge and the I-270 spur, as well as on I-270 to Frederick.

On lower I-270, one of the carpool lanes would be converted into a toll lane, while MDOT officials say the lane configuration north of I-370 is still being studied. The regular lanes would be rebuilt and remain free.