(The Philadelphia Inquirer posted the following story by Jere Downs on its website on October 10.)
PHILADELPHIA — SEPTA yesterday defended its decision to spend $1 million for 17 sticks of rusty, 20-year-old U.S.-produced steel, while a federal judge considered whether the financially troubled agency had engaged in unfair bidding practices in the $140 million project to rebuild part of the Market-Frankford El line.
Last month, SEPTA awarded the contract to demolish and build four El stations between 46th and 60th Streets and construct a sleek overhead railway as part of the $567 million El makeover in West Philadelphia to Market Street Constructors Inc. The contested 17 bars of steel, each 39 feet long, will be used as the “third rail” to power El trains at those new stations.
The $140 million bid of the winning firm was higher by $1 million than that of the low bidder, Conti Enterprises of South Plainfield, N.J.
Amid SEPTA’s threats to slash service and raise fares, the case has excited interest in Harrisburg, where Gov. Rendell last Friday personally inquired whether the choice of a higher bid had been proper.
Market Street, a partnership of Neshaminy Constructors Inc. of Bucks County and Granite Construction Inc. of Watsonville, Calif., won – SEPTA contended – because unlike all other bidders, it agreed to use domestically produced steel. That would be in accordance with “Buy America” federal and state regulations.
SEPTA records showed that the stockpile of steel, found at a Bethlehem Steel plant, was discovered to be old, rusty and, at one inspection, infested with bees. Yesterday, however, the agency sought to show that the steel, valued at $8,000, is still sound and preferred by both Federal Transit Administration and state regulations.
“SEPTA had no choice but to comply with state and federal product laws,” Penny Ellison, an attorney for the agency, told U.S. District Judge Thomas N. O’Neill Jr.
In proceedings that began Monday, attorneys for Conti concluded their arguments yesterday by asking O’Neill to stop SEPTA from proceeding with construction and order the contract to be put out to bid again.
Conti’s lower bid proposed using new, foreign-manufactured steel.
Given its dire financial straits, SEPTA could have sought a federal waiver of “Buy America” requirements, Conti lawyer Howard Cyr said. Steel contact rail has not been domestically manufactured since the mid-1990s, Cyr noted. The state law requiring purchase of U.S. steel where possible could be overcome because SEPTA’s purchase of the unused steel saves no U.S. jobs, he added.
Perhaps most compelling, Cyr said, agency engineers had questioned the steel’s quality, because Market Street Constructors could not produce production certificates from Bethlehem Steel required by SEPTA’s own contract specifications.
“It is apparent that the contact rail is not in full compliance with contract specifications and does not constitute domestic steel,” Cyr said, quoting from SEPTA’s own internal documents in the matter.
However, a metallurgist hired by SEPTA testified that while lacking original steel mill documentation, the steel was fit.
Submitting the steel to special tests, engaging in extensive post-bid communication with Market Street Constructors, and ultimately waiving the requirement for the original mill certificates amounts to “a corruption of the administrative process,” Cyr asserted.
Market Street Constructors lawyer Peter Marvin argued that the agency was simply diligent and that “Conti will never be able to prove SEPTA abused their discretion.”
In addition, SEPTA construction manager Dominic Sabatini testified, rebidding the contract would delay the completion of the entire El project by six months or more, until mid-2008.
While SEPTA awaits O’Neill’s decision, it has also readied its defenses in response to growing political interest in the case.
“Wondering if the best deal possible” had been made, the governor called SEPTA last Friday, Rendell spokeswoman Kate Philips said yesterday. “He asked if all contract bids had been fully considered,” she added.
In response to Rendell’s call, SEPTA prepared a memo Monday defending its decision for distribution to state legislators who have failed to remedy its fiscal woes since the agency threatened in April to slash service.