A Montgomery County judge ruled Thursday that a losing bidder on the Maryland toll lanes initiative filed most of its bid protest in time, allowing a legal challenge to proceed on one of the state’s largest infrastructure projects.
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The ruling by Circuit Court Judge John M. Maloney means the protest will return to the Maryland Department of Transportation for reconsideration, unless either side appeals the decision. MDOT has twice rejected the protest, saying it was incorrect and filed too late, but the judge’s ruling against the agency means it must reconsider the merits.
An appeal of the judge’s ruling or an additional MDOT review could add months to the legal challenge on a project potentially worth an estimated $9 billion. The challenge from a bid team led by Spanish firm Cintra poses possibly significant delays in the state’s plan to add two toll lanes in each direction to Interstate 270 and part of the Capital Beltway.
Montgomery judge weighs in on feasibility of toll lanes contract
The winning team led by Australian toll road operator Transurban and Australian investment bank Macquarie started work shortly after being awarded a “predevelopment agreement” in August to design the lanes. The Cintra protest filing asks that MDOT disqualify the Transurban team or reopen the bid competition.
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MDOT spokeswoman Erin Henson declined to comment on the judge’s ruling or whether the agency plans to appeal it.
Transurban, whose lawyers had defended the MDOT selection process, said in a statement that Maryland “conducted a fair and competitive procurement.” The Transurban team’s selection, the company said, was “based on the merits of our track record and innovative, dedicated approach.”
The Transurban consortium plans to select a construction partner this summer, said company spokeswoman Tanya Sheres. Asked whether it will appeal the judge’s decision, the company said it is “assessing next steps.”
Maloney said three of the bid challenger’s four arguments had been filed in time, including allegations that the winning proposal assumed unrealistically low construction costs that could result in massive delays and cost overruns. The judge said he agreed with the Cintra team that it could not have known about the winning bid’s cost assumptions until after it had been selected.
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However, Maloney rejected the part of Cintra’s protest that alleges the winning team was less qualified because it had lost a lead contractor with significant construction expertise. He agreed with MDOT that the Cintra consortium should have protested changes in another team’s makeup in January 2021, after the members of the bid teams were listed in a news release, rather than waiting until after it lost out on the contract a month later.
Losing bidder on toll lanes project cites unrealistic construction costs
The Cintra protest alleges that the Transurban team “gamed” the selection process by basing its bid on unrealistically low markups for construction companies’ profit and overhead costs, which Cintra said had to reflect future “real market conditions.”
MDOT has said the Transurban team properly followed the solicitation rules, which gave the bidders “flexibility” in the financial risks they would assume, including construction costs. The agency also said Cintra hadn’t objected to the state’s scoring formula, including for the cost assumptions, used to evaluate the financial proposals.
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The ruling focused only on whether Cintra had filed the bid protest in time under the solicitation rules. But in a Wednesday hearing, the judge expressed disbelief that MDOT had not addressed the Cintra team’s claim that the winning proposal is not financially viable. MDOT instead argued that the winning bid abided by the solicitation rules, which did not require any minimum amounts for cost markups.
“Financial feasibility isn’t something to be considered?” Maloney asked. “That’s kind of hard to hear from our state government.”
It was unclear whether the Cintra consortium would try to prevent Transurban from continuing its work on the toll lanes as the legal case proceeds. Douglas Gansler, a lawyer for the Cintra team and former state attorney general who is running in the Democratic primary for Maryland governor, declined to comment.
Maryland board approves first contract to design new toll lanes
In addition to the design work, the predevelopment agreement gave the Transurban team the exclusive right to negotiate with the state for a broader contract worth billions of dollars to build the lanes, finance their construction and operate them for 50 years, while keeping most of the toll revenue. The companies are designing the lanes for up to $54 million at their own expense.
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A lawyer for MDOT told the judge the state plans to have a public-private partnership agreement in place this fall. That timing would allow Maryland Gov. Larry Hogan (R), who is term-limited, to clinch a deal on his signature “traffic relief” project before leaving office.
Gansler told the judge he expected Cintra would bring the case back to court because he presumed MDOT would again reject the protest. “They’re going to reaffirm themselves anyway,” Gansler said in the 30-minute virtual hearing. “It’s like asking the elephant to pass the peanuts, reviewing their own decision.”
Maryland plans to add the two toll lanes in each direction to 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 carpool lane would be converted into a toll lane, while MDOT says the lane configuration north of Interstate 370 is still being studied. The regular lanes would be rebuilt and remain free.
Transurban operates over 50 miles of toll lanes in Northern Virginia. Cintra is part of a consortium that is building, and will then operate, 22 miles of toll lanes on I-66 outside the Beltway.