Feds threaten to pull future SH 121 funding

August 23, 2007

By Danny Gallagher, Staff Writer / McKinney Courier-Gazette

Sen. Kay Bailey Hutchison said the day before the August Regional Transportation Council meeting in Arlington, U.S. Department of Transportation Secretary Mary Peters personally assured her they would not ask the state to return any federal highway funding for State Highway 121.

More than a week after her statement, the Federal Highway Administration sent a letter to the Texas Department of Transportation threatening to withhold future federal highway funds unless TxDOT fixed what the FWHA called federal law violations in regards to the procurement process for SH 121’s comprehensive development agreement.

“If TxDOT does not remedy the violations, FHWA will enforce the compliance measures outlined in this letter such as those relating to future federal-aid funding and credit assistance,” the letter read. “While the North Texas Tollway Authority (NTTA) may not have any current plans to utilize federal funding for the development of the 121 project, it should be noted that the project will no longer be eligible to receive such funds unless TxDOT takes immediate action to comply with federal law.”

According to documents obtained by the McKinney Courier-Gazette, the FHWA claims the SH 121 procurement process implemented by Texas Senate Bill 792 violates federal laws that require a fair, open and competitive process, and prohibit bidding between public and private entities.

The letter written by FHWA Administrator J. Richard Capka dated Aug. 16 and sent to TxDOT Executive Director Michael Behrens claims TxDOT failed to provide a fair and competitive process by allowing the NTTA to submit a bid after Cintra Concesiones de Infraestructuras SA's bid went public.

“Our procurement regulations also prohibit disclosure of information to one bidder that would create an unfair competitive advantage,” the letter read. “TxDOT’s procurement process works against the very foundation of these provisions. Allowing a bid submission after closure of a project’s selection is an egregious violation of the basic requirements of a fair and competitive process.” Capka also said federal regulations prohibit public entities from bidding against private companies.

“Since NTTA is a quasi-public entity under Texas state law, NTTA is subject to this general prohibition,” Capka said in the letter. “TxDOT’s evaluation of both NTTA’s and Cintra’s submissions against each other clearly violated this provision in FHWA regulations.”

Capka claims if TxDOT continues following the provisions implemented by SB 792, he will “take any action I deem ‘appropriate,’” according to the letter.

Possible actions could include withdrawing the approval of TxDOT’s Transportation Infrastructure Finance and Innovation Act of 1998 (TIFIA) loans and subsequent SEP-15 waiver that grants them the loans, and impose additional oversight and approval requirements before granting them any future federal loans, according to the letter.

FHWA spokesman Ian Grossman, of Washington, D.C., said, “In large part, the letter speaks for itself.”

“I think the letter makes it clear there’s a chance to cure or fix these violations,” Grossman said. “If those steps are not taken, the letter outlines what steps we will take, which is essentially the project will no longer be eligible for any future federal funds. The letter outlines FHWA’s stance on the issue.”

TxDOT spokesman Mark Ball released a statement that said both sides are trying to find options that will prevent any further delays on the project.

“We have read the letter from the Federal Highway Administration and are reviewing all of our options to keep the SH 121 procurement moving ahead and within the boundaries prescribed for us by the Texas Legislature and preferred by local leaders,” Ball said by e-mail.

Matt Mackowiak, a spokesman for Hutchison, released a statement that reiterated Hutchison’s claim that Peters promised her no funding would be recalled and urged TxDOT and FHWA to come up with a solution that wouldn’t endanger future federal funding.

"Sen. Hutchison has spoken directly with Transportation Secretary Mary Peters on three occasions recently and has received the personal assurance that no spent funds are in jeopardy,” Mackowiak said by e-mail. “Sen. Hutchison encourages FHWA and TxDOT to reach a compliance agreement where they can work together in the future, ensuring that eligibility for future funding is not at risk."

Sam Lopez, NTTA spokesman, declined the opportunity to comment and referred all questions to TxDOT officials.