A Maryland appeals court questioned Monday if it was too late for judges to decide whether a losing bidder properly filed a bid protest on a state contract to develop toll lanes for Interstate 270 and the Capital Beltway.
“How does the Board of Public Works’s approval of the first [contract] impact whether or not what we’re talking about here is moot?” said Judge Terrence M.R. Zic. “ … They’ve approved it. Where do we go from here?”
The protest, filed by Spanish firm Cintra, alleges the Maryland Department of Transportation violated its own procurement rules by selecting another team that lacked a lead construction contractor at the time. The Cintra team also argued that the winning proposal, by Australian toll road operator Transurban, was based on unrealistically low construction costs that could lead to delays and cost overruns.
The one-hour hearing in Annapolis was the latest public airing of Maryland Gov. Larry Hogan’s largest infrastructure proposal, which the state has valued at $6 billion.
Lawyers for MDOT and Transurban have argued the contract was awarded properly and that Cintra filed its objections too late under the project’s procurement rules. The appellate court asked lawyers for Cintra, MDOT and Transurban to submit briefs over the next seven weeks on whether the timeliness of the bid protest’s filing remains relevant.
Hogan (R) has proposed expanding I-270 and the western part of the Beltway with two toll lanes in each direction to allow motorists to buy their way out of congestion. Opponents have said additional lanes would cause too much environmental damage and promote vehicle-dependent sprawl. The project also would replace and widen the 60-year-old American Legion Bridge.
The predevelopment agreement allowed the Transurban team to plan the lanes at up to $54 million of its own expense. However, the agreement’s real value came in granting Transurban the right of first refusal on the 50-year contract to finance, build and operate the lanes in exchange for keeping most of the toll revenue. That long-term contract is still being negotiated.
It’s unclear whether the state’s Board of Public Works — composed of the governor, comptroller and state treasurer — would approve a 50-year contract while a bid protest is pending, which would increase the state’s financial risk. The board approved the predevelopment agreement in August 2021 by a 2-1 vote without discussing the bid protest.
Douglas Gansler, a lawyer for the Cintra team, told the judges the bid protest remained relevant because his client wants a court to require MDOT to reopen the bid process. He said MDOT also could resolve the case by granting the predevelopment contract to the Cintra team or by paying it “damages” for improperly denying it the deal.
Gansler, a former state attorney general and previous Democratic candidate for governor, said the Board of Public Works also could consider the merits of the protest when deciding whether to grant the Transurban team a 50-year construction and operations contract.
When the board approved the predevelopment agreement, Gansler said, it didn’t know how “egregious” MDOT’s selection of the Transurban proposal was.
“Once they have that information when [a project contract] comes up again, one might think they would view the selection differently,” Gansler said.
The appeals court was considering the narrow question of whether a Montgomery County Circuit Court judge erred in ruling that Cintra had waited too long to protest Transurban’s lack of a construction partner. Cintra has asked the appeals court to reverse that ruling and that MDOT reconsider the claim on its merits.
MDOT has asked the appeals court to reverse another part of the circuit court ruling — that other aspects of Cintra’s protest concerning the Transurban team’s construction cost assumptions had been filed in time.
Lydia B. Hoover, an assistant state attorney general, told the appeals court Monday that the Board of Public Works is the “ultimate body awarding contracts in the state.” She said the board could take a court ruling “under advisement,” but she didn’t know of any state procedures that would require it to reverse a previous contract award.
MDOT has said the Cintra team wrongly waited until after it lost out on the contract to protest the winning proposal’s lack of a lead construction firm. The Transurban team announced in September it has since selected Los Angeles-based Tutor Perini as its lead construction contractor.
Cintra said MDOT had assured it that the makeup of the teams would “continue to be reviewed in compliance” with the bid rules. Cintra couldn’t know until after the contract was awarded, Gansler argued in a court filing, that MDOT would “erroneously” select a team without highway construction experience.
Under Hogan’s proposal, the first segment of high-occupancy toll (HOT) lanes would include the Beltway between the Virginia side of the American Legion Bridge and the exit for Old Georgetown Road in Bethesda, as well as I-270 south of I-370. One of the I-270 HOT lanes would come from a converted carpool lane. The regular lanes would be rebuilt but remain free.
Project supporters hope to get a 50-year deal to the Board of Public Works before term-limited Hogan leaves office in January. Democratic gubernatorial nominee Wes Moore and Republican nominee Dan Cox have said they would consider major changes to the plan.