COUNTY ROAD ASSOCIATION OF MICHIGAN

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1 COUNTY ROAD ASSOCIATION OF MICHIGAN 417 SEYMOUR SUITE ONE - LANSING, MI TELEPHONE FAX Talking Points- HB 5305 Mandatory Competitive Bidding Summary: House Bill 5305, introduced by Rep. Matt Lori (R-St. Joseph), would amend PA 51 of 1951 to make the following changes in consideration of open bidding: Expands MDOT s ability to enter into contracts for routine maintenance with private companies. This is currently limited to local road agencies. Grants MDOT permission to borrow money from a local road agency to match federal-aid. Requires local road agencies to competitively bid all construction or preservation projects, without regard to size, scope or dollar amount. If a method other than competitive bidding is found to be in the public interest, the local agency must inform the State Transportation Commission 90 days before award of contract, and the House and Senate Appropriations Committees 60 days before award of the contract. If an emergency exists, the reports can be filed following the award of a contract. Beginning in FY 2014, without regard to savings, local road agencies receiving at least $20 million in MTF funds in calendar year 2010 (Kent, Macomb, Oakland and Wayne Counties) would be required to competitively bid and award a contract for the full performance of maintenance services for a minimum of 20% of roads and bridges under their jurisdiction. Beginning in FY 2013, without regard to savings, MDOT would also be required to bid out all maintenance services in one transportation service center, and all administrative and management activities in one service center. In both of the mandated privatizations mentioned above, the urban road agencies and MDOT will be required to report to the House and Senate Appropriation Committees the results and findings during the contracting process and contract performance on an annual basis. CRAM position: CRAM has taken a position of strong opposition to this legislation CRAM Legislative Priorities: Non-competitive Bidding When Using Federal Funds- Act 51 of 1951 requires all federal-aid construction projects whose cost exceeds $100,000 for construction shall be performed by a contract awarded by competitive bidding unless the department shall affirmatively find that under the circumstances relating to those projects, some other method is in the public interest. Currently, the Michigan Department of Transportation (MDOT) policy allows local road agencies, when using federal-aid, to do road projects using their labor and equipment, however; their policy limits projects to $100,000 or less. Historically, the maximum amount of a project has been $300,000. Federal regulations allow local road agencies, when using federal-aid to do road projects using their labor and equipment, with appropriate justification, without regard to amount or type of work. CRAM opposes any effort to reduce this threshold.

2 State Maintenance Contracts- Currently 64 county road agencies have a State Maintenance Contract with the Michigan Department of Transportation to provide a variety of maintenance activities on state roads. County road agencies provide a cost effective solution for providing maintenance on state roads. The Michigan Department of Transportation could realize even greater savings if all 83 county road agencies were under contract. This concept would be consistent with other states. In the state of Wisconsin, the Wisconsin Department of Transportation (WISDOT) contracts out 100% of their maintenance to their county road agencies. Definitions- What Does It All Mean: Preservation is an activity undertaken to preserve the integrity of the existing roadway system. Preservation does not include new construction of highways, roads, streets, or bridges, a project that increases the capacity of a highway facility to accommodate that part of traffic having neither an origin nor destination within the local area, widening of a lane width or more, or adding turn lanes of more than 1/2 mile in length. Preservation includes, but is not limited to, 1 or more of the following: Maintenance; Capital preventive treatments; Safety projects; Reconstruction; Resurfacing; Restoration; Rehabilitation; Widening of less than the width of 1 lane; Adding auxiliary weaving, climbing, or speed change lanes; Modernizing intersections; Adding auxiliary turning lanes of 1/2 mile or less; and Installing traffic signs in new locations, installing signal devices in new locations, and replacing existing signal devices. Maintenance which is part of Preservation is defined as: routine maintenance or preventive maintenance, or both. Maintenance does not include capital preventive treatments, resurfacing, reconstruction, restoration, rehabilitation, safety projects, widening of less than 1 lane width, adding auxiliary turn lanes of 1/2 mile or less, adding auxiliary weaving, climbing, or speed-change lanes, modernizing intersections, or the upgrading of aggregate surface roads to hard surface roads. Maintenance of state trunk line highways does not include street lighting except for freeway lighting for traffic safety purposes. Routine maintenance which is part of Maintenance is defined as: actions performed on a regular or controllable basis or in response to uncontrollable events upon a highway, road, street, or bridge. Routine maintenance includes, but is not limited to, 1 or more of the following: Snow and ice; removal; Pothole patching; Unplugging drain facilities; Replacing damaged sign and pavement markings; Replacing damaged guardrails; Repairing storm damage; Repair or operation of traffic signs and signal systems; Emergency environmental cleanup; Emergency repairs; Emergency management of road closures that result from uncontrollable events; Cleaning streets and associated drainage; Mowing roadside; Control of roadside brush and vegetation; Cleaning roadside; Repairing lighting; and Grading. Preventative maintenance which is part of Maintenance is defined as: a planned strategy of costeffective treatments to an existing roadway system and its appurtenances that preserve assets by retarding deterioration and maintaining functional condition without significantly increasing structural capacity. Preventive maintenance includes, but is not limited to, 1 or more of the following: Pavement crack sealing; Micro surfacing; Chip sealing; Concrete joint resealing; Concrete joint repair; Filling shallow pavement cracks; Patching concrete; Shoulder resurfacing; Concrete diamond grinding; Dowel bar retrofit; Bituminous overlays of 1-1/2 inches or less in thickness; Restoration of drainage; Bridge crack sealing; Bridge joint repair; Bridge seismic retrofit; Bridge scour countermeasures; Bridge painting; Pollution prevention; and New treatments as they may be developed. The definitions found in section 10c were last revised in The following charts prepared by the House Fiscal Agency provide an overview of how the definitions interact.

3 From the House Fiscal Agency analysis of House Bill 5383 of the Legislative Session (Public Act 498 of 2002) -

4 From the House Fiscal Agency analysis of House Bill 5383 of the Legislative Session (Public Act 498 of 2002) -

5 Potential Impact to Road Commissions: The bill states that all construction projects of the department or a local road agency concerning highways, streets, roads and bridges, for construction and preservation as defined in section 10c shall be performed by contract awarded by competitive bidding. The definitions in section 10c include maintenance in the definition of preservation, and both routine maintenance and preventive maintenance in the definition of maintenance. Although the bill appears to be aimed at construction projects, the cyclical nature of the definitions does not make this clear. If a local road agency had to bid out all routine maintenance and preventive maintenance duties, it would have a catastrophic fiscal and operational impact on the agency. Talking Points: CRAM opposes any effort to reduce the $100,000 federal-aid competitive bidding threshold, or to expand competitive bidding requirements to maintenance activities. Several county road agencies report only being able to utilize federal funding because they use force account work. Since they do not have financial resources to match federal-aid, using force account work allows them to use their labor and equipment as a match to federal funding. Enacting this legislation will put local road agencies in the position MDOT is in today with regard to inability to match federal-aid. Although the overwhelming majority of all road commissions bid out construction and heavy preservation activities, the definition of preservation includes: installing traffic signs in new locations, installing signal devices in new locations, and replacing existing signal devices; as well as maintenance, which includes all functions of the road agency including snow removal, pothole patching and grading gravel roads. The definitions used in Act 51 should be narrowed to fit the scope of legislative intent which appears to be aimed at heavy construction activities. For the purposes of this bill, maintenance and traffic signal installation and replacement should be removed from the discussion of preservation. The passage of this legislation would make it virtually impossible to efficiently operate high-tech Intelligent Transportation System (ITS) technologies such as the FAST-TRAC adaptive traffic signal system run by the Road Commission for Oakland County (RCOC). This is the secondlargest adaptive signal system in North America, and has been demonstrated to significantly reduce traffic congestion and serious injury accidents. This bill would take away the flexibility needed to decide when and if private contractors are employed to install, maintain or upgrade elements of the FAST-TRAC system and other ITS deployments. It should be noted RCOC already has privatized a number of elements of the FAST-TRAC system operation, maintenance and installations, based on where it makes business sense to do so. Being forced to bid all elements of ITS projects such as FAST-TRAC could significantly slow the installation, maintenance and repair of such systems, which could reduce their ability to enhance motorist safety and reduce congestion. Additionally, the force account items for ITS-related projects include such activities as Traffic Operations Center (TOC) operations, phone bills (for communications between signals and controllers), TOC building leases, consultant support, software maintenance and specialized engineering staff. In other words, these are not items that are being taken away from privatesector road contractors. Requiring local road agencies to bid for the state maintenance contract on an annual basis would have a devastating impact on local road agencies, causing many to drop the contract. If the road agency does not know they will receive the contract for this work from year to year, they would not be able to maintain the necessary staff, equipment and garages, or to order supplies in time for pre-season delivery. This legislation will do nothing more than shift who is on the

6 unemployment line; while compromising the level of service motorists deserve and having potential catastrophic impact on commerce traveling through our state. County road agency employees- your local road professionals- provide a highly specialized service that is necessary to the strength of Michigan s economy but often goes unnoticed. In many areas of the state, county road agencies have purchased necessary equipment and provided specialized training to their crews because services either were not available in their area or were cost-prohibitive due to their distance from vendors. Just like a private enterprise, county road agencies weigh each purchase and decision against what is best for their customers and what makes the most fiscal sense. Only three counties (Branch, Cass and Lenawee) are still operating their own asphalt plants. A few other counties have paving machines, but purchase the asphalt from private contractors. These counties have made investments over the years that allow them to operate with their own equipment at a cost savings to taxpayers. The high cost of this equipment makes it unlikely that a local road agency would replace the equipment when it reaches the end of its life cycle.