Jack Parker, president and CEO of Reed & Reed, poses Monday near the Bath viaduct, which his company rebuilt over the winter. Parker says his company can’t begin work on a bridge construction project in Yarmouth because the funds are being held up by a dispute between Gov. Paul LePage and State Treasurer Terry Hayes. If the bonds are not issued, it could endanger transportation projects slated for this summer and threaten potentially thousands of jobs. Staff photo by Gregory Rec

Preparations for dozens of summer highway construction projects have come to a screeching halt as Gov. Paul LePage and Treasurer Terry Hayes square off in a dispute over the state’s bonding agent.

At stake in the disagreement are hundreds of millions in approved roads, bridges, public transportation and other projects, and potentially thousands of jobs as Maine contractors gear up to work during the state’s short construction season.

Jim Hanley, head of Maine government relations for Pike Industries, one of the state’s largest construction firms, said the company has six projects worth $11 million that are being held up because of the dispute. It expected to start work on a stretch of Route 9 in Lisbon in two weeks, but the contract will not be awarded soon enough. At least 15 of the company’s seasonal workers haven’t been called back because of the uncertainty, he said.

“It could easily get into tens of millions of dollars in lost revenue,” he said. “We are still in the heavy midseason, there is a lot of work to come out. This is coming at a really bad time for the industry.”

The nub of the dispute between Hayes and LePage is whether proper procedures were followed in the state’s decision to select a Dallas-based law firm as the state’s bonding agent, the body that shepherds the state’s bonds to market. LePage has said Hayes is not following the recommendation of the state’s procurement division and wants her to resubmit a request for proposals that would allow more Maine law firms to bid for the job before issuing any bonds.

Hayes, for her part, says she has done everything correctly and is waiting for LePage to tell her how much the state is going to put out to the bond market in June. Hayes announced last month she is running for governor in 2018.

In a letter to Hayes, LePage said if bonds are not issued, the Maine Department of Transportation would have to stop advertising projects for the rest of the year and that could put nearly $600 million in transportation projects at risk.

The transportation department has stopped awarding contracts to low-bidding firms, and bidding on further projects has been suspended, according to officials in the construction industry. A DOT spokesman declined to comment and referred questions to Hayes and LePage.

Industry leaders believe the state will move ahead with contracts that already have been awarded, but they worry about pending work.

This bridge that carries Route 1 over Main Street in Yarmouth is scheduled to be repaired by Reed & Reed but the money for the project is being held back because of a dispute between Gov. Paul LePage and State Treasurer Terry Hayes over the choice of which law firm will be the bond agent. Staff photo by Gregory Rec

Matt Marks, head of the Associated General Contractors of Maine, said it is unclear, and irrelevant to him who’s at fault in the dispute. What matters is that it needs to get resolved quickly before a seasonal window closes. Last November, voters authorized $100 million in transportation bonds, which leveraged another $500 million in federal, state and local funds for infrastructure projects.

“You have the potential for losing a whole year on road and bridge projects,” he said.

Some of Maine’s largest construction firms are baffled that an apparently minor policy disagreement is threatening to derail an entire construction season.

Jack Parker, president of Reed and Reed, a contractor in Woolwich, said he is nervously waiting for the state to award the contract to replace the Route 1 bridge over Main Street in Yarmouth.

“If the contract was awarded in a timely manner, we would have done prep and mobilization work, we have a lot of vendor commitments we need to make, resources to allocate,” Parker said. “Right now, we are just stuck in the mud, can’t do a thing.”

“We are just one of dozens of contractors in the same position,” he added. “It is hard to believe they would hold up these contracts and projects across the state for what seems like no reason.”

The DOT awarded its most recent contract on April 26. Bids on more than 40 other projects have been opened but not awarded, and approximately two dozen are advertised for bid on the department’s website.

Lane Construction, in Bangor, has about $13.7 million in work from the state it can’t start on, said Rod Lane, vice president of the Maine Better Transportation Association. Lane Construction already has invested in materials and equipment, brought workers back for the season and hired employees early to get the work done in a tight schedule.

“I don’t know all the details, it sounds like this can be solved with the stroke of a pen by the governor,” Lane said. “It would be in his best interest to say ‘I don’t agree with the way it was done, but we can’t hold up Maine workers.’ I think he would capitalize on that.”

If the freeze continues much longer, it could cause serious scheduling problems in Maine’s already compressed construction season and headaches for commuters, tourists and residents as projects go further into the season.

“Every day that we can’t work on a contract because it hasn’t been awarded, we can’t get that back. It’s a loss we can’t recover,” said Hanley of Pike Industries.

The company also expected to bid on $14 million worth of additional projects this season, but doesn’t know when bidding will restart.

He said companies have been inundating Hayes and LePage with calls and letters to try and get them over the impasse. He hopes that works.

“If it doesn’t, we are not going to sit idly by,” Hanley said. “It won’t be too many days before you start seeing a lot of hard hats and neon vests in the State House.”

LINING UP THE LAWYERS

The disagreement between LePage and Hayes is centered on the award of a contract to be the state’s bond counsel to Locke Lord LLP, a Dallas law firm. The firm has won the contract in the last four bidding periods, the Office of the Treasurer said.

But LePage has taken exception to the way the request for proposals for counsel was designed. In his letter to Hayes, LePage said the RFP “appears designed to preclude” qualified Maine law firms from the bidding process because selection is based in part on experience with other state treasuries and state agencies.

“When expending taxpayer dollars for a public purpose, I believe the state should seek to use Maine companies when those companies have the ability to provide the needed services at a competitive price,” LePage wrote, adding he was concerned a delay in reissuing the RFP “will result in jeopardizing the issuance of authorized bonds in the coming months.”

The State Procurement Committee, which reviewed the bid, did not approve Treasury’s conditional award to Locke Lord and instead recommended Hayes issue a new request for proposals that was not “overly restrictive” and allowed more Maine law firms to submit bids, LePage said.

In a letter to LePage, Hayes said that she never agreed to submit the contract to the procurement committee, and made the award in good faith to Locke Lord. She said in a follow-up letter that they should put aside their disagreements over her authority and resolve them at a later time so the construction projects could go forward.

In an interview Saturday, Hayes said she doesn’t understand why the routine bonding process is being held up. The Treasury arranges the bond, but the governor decides how much money to issue.

“The odd thing about this is the decisions by the DOT commissioner and the governor are entirely their decisions, I have done nothing to slow this down,” Hayes said.

Maine firms were allowed to submit bids to be the bonding agent, but only Portland-based Preti Flaherty did, Hayes said. Locke Lord was the only other bidder. Preti Flaherty was allowed to appeal the award, but did notd. A call to Preti Flaherty for comment was not returned.

Peter Steele, LePage’s communications director, would not say if Preti Flaherty specifically contacted the governor about the RFP. “Several Maine firms reached out to the governor expressing dismay that Maine firms were not allowed to bid on the contract because of the way the RFP was designed,” Steele said.

The governor is not trying to pick winners, but wants a new system that would allow more Maine firms to compete based on their qualifications, Steele said.

“He believes too many state agencies have a predisposition to out-of-state vendors, which is a disservice to Maine businesses, employers and taxpayers,” Steele said.

“There is a very easy fix to the treasurer’s mistake,” Steele said. “A new RFP, which offers Maine firms the chance to compete, could be sent in an expedited fashion so there is minimal hold up for the construction projects.”

Peter McGuire can be contacted at 791-6325 or at:

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