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Published in the Albequerque Journal, October 28, 2010
DOT Botched Award, Kept Records Secret
By Colleen Heild
Copyright © 2010 Albuquerque Journal
Journal Investigative Reporter
The state Department of Transportation violated the law in its rejection of the lowest bid on a major road project in 2009 and improperly withheld “highly relevant” documents the losing company wanted for a bid protest.
District Judge Sarah Singleton of Santa Fe ruled the DOT ran afoul of both the state procurement code and the state Inspection of Public Records Act.
The judge found that Fisher Sand & Gravel-New Mexico Inc. should have been awarded the contract for a $40 million widening of Interstate 10 south of Las Cruces.
Fisher had the lowest bid. Before a contract could be awarded, however, DOT officials had secret conversations with the second-lowest bidder and Fisher’s rival, FNF Construction.
“NMDOT’s actions in entertaining FNF’s improper communications … undermine the integrity and transparency of the bid protest process,” Singleton wrote in an 18-page opinion.
FNF Construction sent correspondence to the DOT that contained disparaging allegations about Fisher and discouraged the DOT from continuing to do business with Fisher, the judge found.
Fisher wasn’t made aware of such communications or given a chance to respond at the time.
The DOT then opted to award the contract to FNF. When federal officials objected, all bids were tossed and the procurement process started over. Ultimately both Fisher and FNF lost out on the job.
DOT officials later claimed they didn’t consider their conversations with FNF in rejecting Fisher. Therefore, the DOT argued, the ex-parte communications were permissible.
But Singleton said in her ruling that DOT’s position on that issue “is contrary to law and contract to the policy of integrity and transparency in the bidding process.”
“Indeed, to allow such behind-closed door meetings would … encourage favoritism and corruption, which could completely erode the trust of bidders and the public in the procurement process.”
Singleton wrote that the state bid protest process requires the basis for rejecting a bid to be disclosed and transparent. The DOT “cannot insulate itself from bid protests by secretly rejecting bids,” she added.
The DOT rebid the project on the grounds that new safety features would be added to job. But Singleton found “substantial evidence” that the decision to rebid for safety reasons was “pretextual.”
A third company was awarded the contract for the 18-mile reconstruction, which is being funded in part with federal stimulus dollars.
A DOT spokeswoman said the agency “disagrees with and was disappointed in the judge’s ruling.” No decision has been made on an appeal.
Public records fight
Fisher attempted to stop the project from going forward last summer by appealing to a DOT hearing officer and requesting records from the DOT under the public records act.
But Singleton found the state withheld certain documents that should have been furnished. That prevented Fisher from using those documents in its internal DOT bid protest, which it lost.
Singleton found that some of the withheld records would have provided “compelling evidence” of FNF’s improper communications with the DOT.
The failure to produce the documents, which included e-mails with voluminous attachments, resulted in an “incomplete and inaccurate record,” the judge found.
That, in and of itself, was enough to overturn the hearing officer’s ruling against Fisher’s appeal, she said.
Those documents included a letter from the DOT to the Federal Highway Administration in which the state agency initially recommended awarding the contract to Fisher.
Fisher realized the DOT hadn’t turned over all the documents after making a similar records request of the Federal Highway Administration in New Mexico.
The federal government gave Fisher about 300 responsive documents that the DOT didn’t produce, plus about 80 additional pieces of responsive correspondence, according to Singleton’s ruling.
The DOT has said the documents weren’t material and contended the rebid saved taxpayers $2.5 million because the winning contractor, Mountain States Constructors of Albuquerque, had a lower bid than Fisher’s.
Project under way
Before construction could commence, Fisher received a temporary injunction from another district judge in August 2009.
But the state contended a delay beyond Dec. 1 would jeopardize the $10 million dedicated to the construction from the American Recovery and Reinvestment Act.
Then-District Judge James Hall lifted the legal hold after the DOT threatened to cancel the project.
Singleton’s ruling said she has the authority to terminate the contract with Mountain States and award the job to Fisher.
But she added, “The Court finds to do so at this late date would not be practical nor prudent.”
How to remedy the wrong is still up in the air, she wrote, so the case is expected to continue.
One of the issues FNF Construction was pushing in private communications with DOT focused on Fisher’s parent company and several former company officials who had been charged with tax fraud related to charging personal expenses as business expenses.
Singleton’s ruling noted that the federal government deferred that prosecution and allowed the company to continue to do business under a new management structure.
A call to FNF in Albuquerque was referred to the company’s Arizona office. No one there was immediately available to comment late Wednesday. Fisher’s lawyer, William Quinlan of Chicago, couldn’t be reached for comment.
Fisher has filed a separate federal lawsuit against FNF and state DOT Secretary Gary Girón and DOT Deputy Secretary Max Valerio, among others.