It's a no-brainer, right? Public-private partnerships for the construction of public infrastructure ought to be subject to the same competitive bidding rules as every other government contract.
We have laws designed to make sure that Oklahoma taxpayers get the most value for money when state, county, or municipal governments pay private companies to build roads and bridges. Why should there be any loopholes or exceptions?
The idea is so self-evidently right that in 2006 the Oklahoma House of Representatives voted 94 to 3 in favor of the same language, under the number HB 2470. The Oklahoma Senate passed it by a vote of 43 to 2. It would have become law if it hadn't been for a parliamentary maneuver by Sand Springs Sen. Nancy Riley, which killed the bill.
The bill was brought back for another try this session. The House General Government and Transportation Committee approved it earlier this month with only four dissenting votes, and it seemed to be on its way to the floor of the House for easy approval there and in the Senate.
It was scheduled for a vote, but then was pulled by the House Republican leadership on the improbable grounds that a bill that passed 94 to 3 last year and passed committee with flying colors this year didn't have enough Republican support.
The legislation wasn't different, but what was different this year was a tremendous surge of pressure brought by the road-building industry, in the guise of a public-interest group called TRUST (Transportation Revenues Used Strictly for Transportation).
TRUST's board is a who's who of interests that stand to profit handsomely from massive public spending on roads: the Oklahoma Asphalt Pavement Association, the American Concrete Pavement Association, the Oklahoma Aggregates Association, the Oklahoma chapter of the American Council of Engineering Companies, Bob Poe of Poe Engineering (the firm that made its fortune as the exclusive engineering firm for Oklahoma's turnpike system).
Tulsans will remember Mr. Poe's farewell speech as Tulsa Metro Chamber president, a red-faced rant attacking reformers on the City Council as jack-booted Nazis. In Mr. Poe's world, anything that stands between him and making a pile of money at public expense is fascism in action.
The odd thing is that TRUST's main complaint is not against the substance or effect of the bill, but that the existence of the bill implies that sleazy, insider deals have been done in the past. (Their real complaint is another matter. More about that below.)
Well, sleazy, insider deals have been done -- right here in Tulsa County. County Commissioner Randi Miller and her two former colleagues approved a very sweet deal for Infrastructure Ventures, Inc. IVI had never built a bridge before. IVI's main qualifications for building a bridge across the Arkansas River: the firm's principals (Bill Bacon, Bob Parmele, Howard Kelsey) were pals of then-Commissioner Bob Dick.
For the moment let's set aside the question of the need for a bridge in south Tulsa County, and focus on how such a facility should be financed. The sensible thing would have been for the county to issue a request for proposals and solicit competitive bids from several companies, accepting the proposal that offered the best value to the taxpayers.
A competitive acquisition might have resulted in a higher percentage of tolls to the county, a more reasonable franchise period (say, shorter than the expected lifespan of the bridge), and more favorable terms on bridge maintenance and repair.
Opponents of HB 1648 argued that this bill was only about the IVI bridge, and state legislation shouldn't be used to address such a parochial concern. (But if it is only about the IVI bridge, why the disproportionately fierce reaction from the road-building industry?)
But the existing IVI bridge contract wouldn't be affected by new legislation. The deal (no longer with Tulsa County, but now with a trust formed by the cities of Jenks and Bixby) has run afoul of several laws already on the books. A district court ruling on the legality of IVI's arrangement with Jenks and Bixby is expected in the near future.
The IVI bridge deal did expose a significant loophole in Oklahoma's competitive bidding law. Because a public body isn't paying money up front for a road or bridge, it could be argued that the contract is for less than $50,000 and therefore exempt from the law.
Such a reading ignores the future liability that a public-private deal imposes on the government entity, not to mention the likely revenues to the private firm. IVI's deal with Tulsa County was projected to bring the company more than $600 million. It's a pretty big loophole that can accommodate a number like that.
HB 1648 is a very simple piece of legislation. It adds 88 words to the existing law, to expand the definition of "public construction contract" in 61 O. S. 2001, section 102 to include contracts in which "other forms of consideration" -- such as the right to collect tolls that would be due to a public agency -- are used instead of money to pay for a bridge or road.
The competitive bidding rules themselves, which have been around for more than 30 years, would not be changed. They would simply apply to all major public works contracts.
It's such a straightforward and sensible idea, it would have been difficult for any state legislator to vote against it. And that's why the bill's opponents worked so hard to keep it from coming to a vote.
The road-building industry's motives are easy to understand. What's harder to understand is why Republican House leadership, committed to fiscal responsibility and cleaning up state government, wouldn't exert some pressure of its own in support of a bill that advances those ideals.
Speaker Lance Cargill is promoting his HYPERLINK "http://www.100ideasok.org/"; 100 Ideas initiative for improving Oklahoma government. It seems like competitive bidding on all major public projects ought to be one of them.
So what's the real reason Big Construction put on a full court press to kill the bill? There's a hint in TRUST's flyer attacking HB 1648:
"HB 1648 creates two problems for future P3 [public-private partnership] legislation. First, if it passes, a future P3 authorizing bill that contains its own transportation specific safeguards to ensure competitive selection, it will have to repeal the conflicting language in HB 1648. Voting for P3 will be tough enough for some legislators, but voting for repeal of HB 1648 might be even more difficult for many."
Allow me to translate: "We don't want you to approve this bill because we're going to come forward with 'competitive bidding lite' next year."
If HB 1648 had been enacted, it would be more apparent that the "safeguards" in Big Construction's bill are really a weakening of Oklahoma's policies, a special deal that would allow their industry to win billions of dollars in business not through offering the best deal to the taxpayers but by working their political connections.
What else could be in this future P3 legislation? There's reason to think that the road-building industry wants Oklahoma to adopt Texas's Comprehensive Development Agreement (CDA) legislation. The Texas Department of Transportation (TxDOT) has granted CDAs to a consortium led by Cintra, a company based in Spain, to build Toll Road 121 to connect US 75 and I-35 north of Dallas, and Toll Road 130 to bypass Austin on the east.
Cintra would build the roads and operate them for 50 years, collecting all the tolls, and paying some of the money to TxDOT. State government's power of eminent domain would be used to acquire right-of-way for these private, for-profit roads. There's a non-compete clause -- if state or local government uses tax dollars to build a road that might draw traffic away from the toll road, Cintra is entitled to compensation for lost revenue.
These deals have been highly controversial in Texas, and they deserve a closer look in a future column.
We also need to watch closely to see which legislators are pushing P3 legislation and where their campaign money is coming from. As a Republican, I'd like to think that a Republican-controlled State House will be looking out for the taxpayers' interests, standing firm against greedy special interest groups.
Given the apparent lack of Republican House leadership support for a common-sense piece of legislation like HB 1648, it seems I can't take that for granted.
Share this article: