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Feds Join in Investigation of Tennessee Road Projects

Thu August 19, 2004 - Southeast Edition
CEG



NASHVILLE, TN (AP) The federal Department of Transportation (U.S. DOT) has joined an investigation of Tennessee road contracts headed by the state Attorney General’s office.

WTVF-TV in Nashville reported that the U.S. DOT and the FBI both have joined in the investigation. Tennessee Department of Transportation spokeswoman Kim Keelor confirmed the U.S. DOT involvement, but declined to comment on whether the FBI has joined in.

Attorney General spokeswoman Sharon Curtis-Flair said she could not comment on whether the FBI has gotten involved. The Tennessee Bureau of Investigation also is part of the investigation.

State Transportation Commissioner Jerry Nicely earlier confirmed the investigation of possible price-fixing by highway contractors.

It apparently centers on whether contractors are colluding on how to sell pavement to the state, what Attorney General Paul Summers has called “possible anticompetitive behavior.”

In an Aug. 2 report, WTVF cited one possible instance of that sort of behavior, in Gibson County, where one company has a virtual monopoly on paving projects even though there are paving plants owned by other companies that are closer to the jobs in some cases.

“We’ve contacted other asphalt plants –– people that lay asphalt –– and they said no way that they’d bid in Gibson County,” Gibson County highway commissioner George Pounds told the television station.

The controlling company in the county is Dement Construction, which bought out its only competitor three years ago. According to the television report, the company promptly raised its prices by more than a third after the acquisition.

“When you don’t have competition, you expect a price increase because you’re kind of at the mercy of the competition,” Pounds said.

Tennessee’s road builders maintain that competition is limited by the location of asphalt plants in the state. Dement’s asphalt plant is located in the southern end of Gibson county, which is surrounded by five counties where another road-builder, Ford Construction, has asphalt plants. The television report said Ford will not come across the county line to compete.

“Every year, when we send out bid contracts, we always send one to Ford,” the highway commissioner said, adding they have “never” responded.

It has been much the same with state road projects. Out of $69 million in TDOT highway contracts awarded in Gibson County over five years, WTVF said, Dement got approximately $61 million.

A Ford plant is closer to one stretch of Highway 45W in the northern part of the county than the Dement plant, but Ford didn’t bid on an $8-million paving job there.

“If you have a plant located in the general area of a large contract, why would you not bid on it?” asked Rodney Carmical, executive director of the Tennessee County Highway Officials Association. He said the patterns in Gibson County are an example of what’s wrong with the system.

“It’s a situation where we can’t get competitive pricing, where there’s ample suppliers in that area,” he said.

“It just stands to reason that a large conglomerate could bid lower than a small supplier.”