Open Competition

Open competition provides everyone who is qualified an equal opportunity to compete & offer their products or services. Allowing open competition results in a wider range of choices and a lack of monopolies.

The federal government’s programs for highway transportation are financed, for the most part, by various taxes on users and by revenues from the Treasury’s general fund that flow through the Highway Trust Fund—an accounting mechanism in the federal budget, recording specific cash inflows and outflows. Under the current system, receipts from various excise taxes, most notably those on the sale of gasoline, diesel, and other motor fuels, are collected and credited to the trust fund

Congress then determines how much federal spending each state receives for highways, primarily through the use of formulas and, to a lesser extent, through appropriations directed to special-purpose programs and specific projects. Of the funds appropriated to the Department of Transportation (DOT) for highways under SAFETEA-LU from 2005 to 2009, about 80 percent was distributed using formulas, as directed by that law. Those formulas allocated spending to states through programs designed for a variety of purposes: the construction, improvement, and maintenance of highways and bridges; safety; pollution reduction; planning; and alternate forms of transportation. The formulas use different criteria (such as each state’s share of highway lane-miles, vehicle-miles traveled, fuel use, population, or contributions to the Highway Trust Fund) to determine the share of funds available to each state under a particular program. Once the Congress determines the formulas and the grants are allocated, the states determine which specific projects to undertake with those funds on the basis of their own criteria.

Our nation’s highways play a vital role in the U.S. economy. In 2007, the public sector spent $146 billion to build, operate and maintain highways in the United States. Quality and performance is of utmost importance, and so is the need to protect the taxpayers’ investment into our federal highway system. Barrier free competitive bidding that meets established standards is the best way to ensure taxpayer dollars are protected in the government procurement process.

The state autonomy language was inserted with the support of concrete pipe manufacturers to protect the market dominant product in culvert pipe – concrete. While technology advances have provided contractors and project owners with a variety of quality material choices for culvert and storm sewer components of highway projects, procurement processes have not kept pace, which drives up the cost of infrastructure projects, while ignoring more economical and environmentally friendly alternatives. State autonomy protects older technology from competing with proven alternatives. This lack of competition drives up costs to the tax-payer and further drains the Highway Trust Fund. PIPE believes that it is possible to promote competition, respect state autonomy, and ensure efficient use of federal dollars.

Additionally, current law, as established in MAP-21, exempts pipe from Federal Competition Requirement 23 CFR 635.411, which is a long standing federal policy in highway construction for selection of products and materials. For all other materials, it requires competitive bidding when suitable alternative products exist as determined by engineering judgment. Pipe is the only product material that has been designated with this exemption. Modifying this policy with “state autonomy” for pipe alone begs the question…”Why not allow ‘state autonomy’ for every other product such as guardrails, light posts, pavements, markings, safety equipment, etc.?” The answer is simple. This was a legislated earmark to serve a specific industry. We believe that it is fair and appropriate that federal investments should include some basic federal guidelines which apply across all materials.

Competition reduces costs: Studies demonstrate when there is competitive bidding, costs are reduced regardless of which product is chosen. Conversely, when there is no competition (i.e. total state autonomy) costs will go up as quasi-monopolies emerge.