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Open Competition

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Competition saves money

 This is a self-evident truth of our capitalistic democracy.

When open competition is allowed on construction projects the material costs for public projects can drop dramatically. With the savings not coming from the use of lesser performing materials, but instead resulting from lower bid costs. Make no mistake the performance requirements of the materials must continue to be maintained. And justifications can be made through engineering evaluations or economic analysis requiring the use of a particular material.  However, when multiple materials meet the criteria, as is the case in the majority of projects, they all should be bid.

NC Closed Competition Comparison
OH Closed Competition Comparison
TX Closed Competition Comparison

Open Competition Among Federally-Funded Public Works Projects – What does that mean?

A Brief History Of Anti-Competition Regulations:

Remaining unchanged since 1976, 23 CFR 635.411 provided the regulations that governed the type of culvert and storm sewer materials selected for federal construction projects.  In 2005, SAFETEA-LU (Section 5514) introduced legislative language that removed the old requirements from 1976.  This created an environment of fair and open competition at the state level for all culvert manufacturers.

In 2012 the Moving Ahead for Progress in the 21st Century Act (MAP-21) bill was signed into law.  Contained within the new law was an outdated provision that created an unfair void in the contracting terms on federally funded transportation projects.  The provision, quietly added by a special interest group, restricted the choices in materials for culvert and storm sewer projects.  This restriction has resulted in hundreds of millions of dollars of unnecessary overspending by  federal, state and local governments.

How does open competition effect infrastructure projects?

The archaic provision within the MAP-21 allows states  to select the materials used in theirculvert and storm sewer systems without federal oversight of federal funds  This addition to the law has cost the taxpayers hundreds millions of dollars in unnecessary overspending on federal and state transportation projects simply because they are unable to price any alternatives.  Allowing for all types of materials to be quoted and used would save tens of millions of dollars a year.  Just think of how far those additional funds could go in fixing our countries aging infrastructure!

The NCSPA, along with P.I.P.E. (Partnership for Infrastructure Project Excellence), is committed to fighting this anticompetition policy to ensure that each taxpayer gets the most value out of their dollar.  We believe that achieving the best project outcome depends on open and fair competition, and we are working hard to restore needed fairness to our infrastructure contracting process.

FAQs

What is 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.

What is the federal role in highway projects?

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.

Why should I care about federal policy regarding competition in infrastructure projects?

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.

Why is the promise of “State Autonomy” bad federal policy?

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.

Why is competition good for the American taxpayer?

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.

What Can You Do To Help?

-What can the general public do to help?

-Would an online petition help at all?  Like from petitions.whitehouse.gov or change.org?

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