DOT engineer recommends bid approval for Janesville area segment of I-39/90 expansion

February 27, 2019

Department of Transportation Secretary-designee Craig Thompson will soon need to decide whether to approve a $127 million expansion of a segment of I-39/90 after new internal estimates show the project’s cost is less inflated than originally thought.

A top DOT engineer Monday urged Thompson to approve the project given a new bidding process is unlikely to save the state money.

The engineer’s recommendation on the project, which Thompson has not yet approved, comes as the secretary-designee faces increased scrutiny from Republican senators who hold the keys to his confirmation. Thompson’s eventual decision on the project could provide fresh ammunition for those who want to derail his nomination.

Republicans during Thompson’s Senate confirmation hearing earlier this month asked him how he’d responsibly allocate taxpayer dollars and whether he’d approve the single bid on a multimillion-dollar expansion of a segment of I-39/90 near Janesville that had come in roughly 20 percent over the state’s estimate.

But that bid is really closer to 7 percent above what the state was expecting to pay, according to a memo to Thompson sent by DOT chief engineer and administrator Joseph Nestler and obtained by the Wisconsin State Journal. The project is a later-stage segment of a $1.2 billion expansion of I-39/90 from the Illinois state line to Madison scheduled for completion in 2021.

Nestler wrote that the DOT changed its original cost estimate for the I-39/90 segment after receiving detailed cost information, specifically inflationary trends, from the bidding process for a similar project that suggested they underestimated the Janesville project’s true cost. The DOT noted it used the best cost data available for the original estimate, conducted last summer.

The DOT’s internal rules prevented staff from updating the estimate in its financial system.

Bids from contractors higher than the DOT’s estimates are not new. According to the memo, 14 percent of bids awarded in fiscal year 2017 and 18 percent in 2018 were more than 10 percent over the state’s estimate. In fiscal year 2019, the lowest bids have come in about 10 percent higher than DOT estimates.

If approved by Thompson and Gov. Tony Evers in coming weeks, the contractor, I-39 Constructors LLC, could begin work on the project this spring.

But the project’s completion could be delayed by as much as a year, until 2022, if the state rebids the project. If the state sought additional bids on the project, it could cost anywhere from $19 million to $37 million on top of the project’s current bid.

“Rejecting this bid and re-letting the proposal is not in the public’s best interest,” Nestler wrote.

He added re-bidding would likely not lead to lower prices on the project.

Thompson told the Senate committee Feb. 20 he was told the DOT’s estimate was probably underestimated, and said he’d have to consider whether canceling the current bid and seeking additional bidders would derive significant savings. Thompson had noted the DOT’s engineers were skeptical a re-bidding would produce a significantly different estimate.

“If we do re-bid it what we do know is it will delay the project on I-39-90,” Thompson told the committee.

Thompson is still reviewing the matter, according to a DOT spokeswoman.

Thompson’s pending decision comes more than two years after a 2017 audit found the DOT had dramatically underestimated the cost of major highway projects by failing to account for inflation and other factors, with costs on 16 projects ballooning more than $3 billion since lawmakers approved them.