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How is 45/46 Bypass Contract Millions Lower Than Nearest Bidder?

Milestone Contractors, which moved into a Bloomington office about a year and a half ago, submitted a bid for about $22 million.

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    Photo: Bill Shaw/ WTIU

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    Photo: Bill Shaw/ WTIU

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    Photo: Bill Shaw/ WTIU

Milestone Contractors, which moved into a Bloomington office about a year and a half ago, submitted a bid for about $22 million—about one and a half million under the state engineers’ estimate and about $7 million under that of Dave O’Mara Contractors, the firm which submitted the most expensive bid.

Since Milestone was the lowest bidder, that left Indiana Department of Transportation officials with no choice but to award Milestone the contract. INDOT spokesman Will Wingfield said as long as the lowest bidder meets all state and federal regulations, there is no reason to consider other aspects of the project—such as what materials the contractor will be using — because all of that is already decided and heavily regulated by INDOT officials.

“That’s why it’s very important for INDOT to specify those materials in the standards and specifications and pay items that we bid the project. We do quality assurance reviews at aggregate quarries, at asphalt plants to make sure that what’s being used on state highways is of a certain quality,” Wingfield said.

It’s a practice Wingfield said ensures roads are built to a uniform standard, but that doesn’t help to explain the $7 million disparity between the highest and lowest bidder.

A.J. Chandler, an estimator for O’Mara, said if he had to guess, he’d wager Milestone won’t be making a profit.

“The low bidder is a new contractor to this area so I think maybe there is something to be said as far as, you know, they needed an anchor job in the area to kind of let their presence be known I guess,” Chandler said. “I can’t say that but obviously according to my bid I would have to think so because there is not that much profit in these jobs.”

And in fact, Associated General Contractors of America spokesman Brian Turmail said the practice of bidding at cost or even below is becoming more common among the unionized shops his group represents.

“We surveyed our members in late December, early January and 10 percent of them told us that they were actually bidding projects below cost,” Turmail said.  “In other words we call that buying work where they’re willing to take a loss on the work simply to keep their teams together and busy.”

It’s a trend Turmail said could stem from a hesitation from contractors to lay off employees during down time, a hope that materials prices might decrease and an attempt to keep skilled workers, who Turmail said are also often friends, nearby.

“If you have good construction workers that you can rely on you absolutely want to do everything you can to keep them on staff because ultimately the success of the contractors is based on being able to get the job done right the first time. Especially with tight, competitive bidding the last thing you want to do is pour a mile of asphalt and then have to go back and fix it, Turmail said. “If you’ve got people you trust in order to get the job done right the first time, that’s an invaluable commodity.”

The idea of bidding at or below cost is a theory Milestone Senior Estimator Cory Baugh said he’s heard of but that Milestone doesn’t use. Baugh said he’s confident Milestone will make a profit on the bypass project. Baugh said his company’s bid is as low as it is because he’s simply following state trends.

“If you look at overall the industry right now, costs on bids have been coming in 25 to 30 percent, I believe, below the engineers estimate and that’s across the board on all projects so really when you look at this project engineers estimates are, in theory, for the most part, supposed to be real, but a little bit conservative,” Baugh said.

Baugh said Milestone workers from the Bloomington office and other offices around the state will start pre-construction meetings in the next few weeks as they wait for a ‘notice to proceed’ from the state.

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