The Ohio Department of Transportation’s plan to offer $1 million stipends to unsuccessful bidders for its I-90 inner belt bridge project in Cleveland came under scrutiny Friday from Inspector General Thomas Charles, whose office released a report that found ODOT lacks clear authority to pay stipends and failed to show evidence backing its argument that the loss of stipends could hamper bidding.


The department has selected three teams to submit design-build proposals for the $450 million project.  Without the stipends, ODOT argues, firms might be less likely to spend the time and money to develop proposals for such a large, complicated project. Unsuccessful bidders would be entitled to the stipends if their proposals score at least 70 out of 100 points. The department says it is following federal transportation guidelines in offering the stipends, which are subject to Controlling Board approval.


Charles’ report said his office decided to investigate the matter after learning about the intent to pay stipends in a Feb. 1 Columbus Dispatch story.


“ODOT failed to present any concrete data or evidence showing that design-build teams will shy away from competing for the $450 million project without a stipend,” the report states. “Indeed, ODOT officials could not cite a single example of a past project that suffered because a stipend was not offered. Given the economic climate in the nation and the state of Ohio, we believe that firms should be expected to assume both the risk and potential reward of bidding on the Inner Belt Bridge.”


The report also raises doubts about ODOT’s legal authority to pay stipends.


“ODOT believes that it can pay the stipends because the statute does not expressly prohibit it from doing so; however, there is no legal foundation for this belief. While the absence of clear statutory or rule authority to pay the stipends is not necessarily dispositive, we believe that it highlights the need to closely scrutinize ODOT’s actions,” the report states.


Additionally, Charles’ report says, the department hasn’t provided justification for the amount of the stipends, noting that during the investigation, “ODOT conceded that it did not make any effort to determine whether a lesser amount would achieve the same or similar results as a $1 million stipend. Because it did not do so, ODOT cannot convincingly argue that the payment of $1 million stipends to unsuccessful biddings is necessary, or even advisable.”


The report recommends that if ODOT wants to pay stipends, it should lobby for express legal authority to do so; require documentation of unsuccessful bidders’ actual costs; and evaluate the usefulness of the unsuccessful bidders’ designs.


Scott Varner, ODOT’s communications director, responded by saying the department already had a process in place to evaluate the unsuccessful proposals, “but with the recommendations of the inspector general, we will now clarify how those teams will document their actual costs and expenses, and make sure that they provide that information to the department before we authorize any payment.”


But he said the efficacy of design-build and stipend payments is already well known.


“The process that we have in place is based on national standards, federal regulations and the best practices of other states across the country, where this process is typical,” he said. “The concept of payment for preliminary engineering and project approach has been successfully administered in many other states.”


He said Charles’ investigation and the changes made as a result are not expected to delay construction, which is to begin next year and finish in 2014.


Asked about Charles’ suggestions that ODOT seek explicit legal authority to pay stipends and limit them to no more than a bidder’s actual expenses, Varner said the department “continues to review the inspector general’s recommendations.”