Failed bidders to get stipend in Interstate 15 paving project

Las Vegas Paving was victorious Wednesday in the bidding for road projects on and around Interstate 15 on the south end of town, but the losing applicants on the approximately $250 million job did not walk away empty-handed.

The Nevada Department of Transportation Board of Directors agreed Wednesday to deliver each of the three unsuccessful bidders $300,000 stipends through a program approved by the Legislature about six years ago. The applicants knew when they submitted their bids that they would get the stipends if they didn't get the bid.

The idea behind the stipends is to encourage more companies to submit a bid and increase competition.

"These are only used on design-build projects," said Susan Martinovich, the department's director. "It isn't setting a precedent on any other project."

In a design-build project, one company does both the engineering work and construction.

Such stipends are awarded far less frequently to transportation project bidders than to companies that bid on building construction projects. In fact, Wednesday marked only the second time the Department of Transportation has offered to reimburse companies for a portion of the cost to assemble an unsuccessful bid.

The first time was on the far less complicated I-15 north widening project, when unsuccessful applicants were given about $100,000.

Based on the requirements requested by Transportation Department officials, estimates are that each company spent about $1 million to put the I-15 south bid together.

When the economy is sluggish, more companies may gamble on spending money to submit a bid if the owners know they will be compensated for a portion of the cost, said Kent Cooper, assistant director of engineering for the Department of Transportation.

The entire job includes extending Sunset Road across I-15, widening the two-lane Warm Springs Road overpass to four lanes, and constructing frontage roads that offer a direct route between Tropicana Avenue and Blue Diamond Road.

Those roadways will be located on both sides of the freeway, each squeezed between the interstate and Frank Sinatra Drive and Dean Martin Road.

The I-15 project is scheduled to be finished by December 2011.

Because the government does not have to put the engineering and construction phases out to bid separately, build-design projects are more efficient. They shave about 18 months off the time it takes to complete the job, according to Cooper.

The stipends also allow the Transportation Department to buy the designs submitted by each company, which in this case were Granite Construction, Kiewitt-Frehner and Skanska-Flat Iron.

Awarding the bid to Las Vegas Paving was not without controversy.

Board members argued over disclosure laws relating to each company's bid, and financial figures were not made known to the board. Instead, the contract was awarded based largely upon descriptions by companies about how the work would be completed.

Transportation Department staff members, who know what the bids were, explained that the winning applicant wasn't recommended based solely on the lowest bid; other factors such as the scope of work were also included. For example, Las Vegas Paving threw in an extra onramp at no additional cost.

Board member Frank Martin, who is in the construction business, questioned how he was expected to approve a contract without reviewing the figures included in each bid.

"You are asking me to put my reputation on the line," Martin told Transportation Department staff. "I'm going to take the heat, not you."

Attorney Dan Wong, who represents the Transportation Department, said it was not appropriate to release each applicants' detailed offers because the negotiations are not formally over until a contract is signed.

"I feel more comfortable having the contract signed before letting those numbers be known," Wong said.

The board unanimously approved the contract with Las Vegas Paving to allow the project to proceed but insisted on seeing the confidential figures.

"What I'm concerned about is openness," said Gov. Jim Gibbons, chairman of the board. "I am concerned about the state of Nevada and being able to negotiate the best deal for taxpayers. At some point, we have to have the information."

The department's administrators agreed to draw up a new policy that would provide board members with additional information about the bidding and the selection process before it pitches another contract.

Contact reporter Adrienne Packer at apacker or 702-384-8710.