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The state paid $13 million to resolve a protest by a company that claimed it was treated unfairly in the competition to land the $1.1 billion contract to rebuild Interstate 15 through Utah County.
Members of the consortium that won the contract, Provo River Constructors, had contributed $82,500 to Gov. Gary Herbert's campaign in the months before and after the contract was awarded.
Herbert's Democratic opponent, Peter Corroon, issued a 57-page memo last week entitled "Gary Herbert: Governor For $ale" questioning whether the contributions and meetings with the governor played a role in the awarding of the contract — the largest in state history.
Herbert said that he had no idea about the $13 million settlement with Flatiron/Skanska/Zachry until he was asked about it Monday afternoon.
"This is the first I've heard of it," Herbert said.
Utah Department of Transportation executive director John Njord said protests on contract bids are not unusual, but the state paid the $13 million to reimburse Flatiron for the time and expense of submitting a bid.
He likened it to a football game, where there is a winner and a loser. "One of those teams was very close and thought they should have got the bid," he said. "We kind of predict that this might occur."
Kent Scott, an attorney for Flatiron, said he could not comment on the settlement, due to a confidentiality agreement.
"I'd love to [talk]. … It's fascinating," Scott said, but he respected Njord's request to stay quiet.
On Monday, Herbert and several of his supporters decried the "smear tactics" from the Corroon campaign and said there was no truth to questions raised by Corroon that donors to the Herbert campaign may have received state contracts, tax breaks or other perks.
In addition to the I-15 contract, Corroon's camp raised questions about $4 million in tax breaks offered to Merit Medical, which gave $50,000 to the governor's re-election bid; and various contributions from energy companies.
"This warrants a response. You turn the other cheek many times as we have done," Herbert said, "but this is one that can't stand without some kind of response. This is not to do with polls on our side at all. This has to do with the fact that [Corroon's campaign is] denigrating people."
Herbert and his backers characterized Corroon's allegations as an attack on his integrity that were patently false.
"We're seeing, I think, something of a new low in Utah's politics," said Lt. Gov. Greg Bell. "There's absolutely no proof in the allegations leveled. This is entirely a smear campaign based on innuendo."
The Herbert campaign has already produced a television ad focused on the governor's integrity, where Bell says that Corroon's "personal attacks on our governor is a disservice to the people of Utah."
Corroon, Salt Lake County's mayor, also has new ads out. They question whether the governor's office is for sale.
Corroon argued Monday that Herbert's relationship with donors is indeed an important issue in the campaign and called on Herbert to release his records and correspondence with companies that have received state contracts.
"This issue is about campaign finance reform, this issue is about Utahns' faith in government and their trust in their elected officials," Corroon said. This issue is about big money influencing politics. It's very relevant."
Corroon said he had not been aware of the state's settlement with the contractor, but that it "raises a big red flag."
"Why did the state feel like they needed to pay $13 million? They obviously think there was something that wasn't right," Corroon said.
Njord stressed that UDOT has a firm set of criteria for awarding road construction contracts and they were followed in the awarding of the I-15 deal.
"I'm here to tell you the process was followed stringently and directly and at no time during that process did the governor try to influence the decisions," Njord said.
But in its protest of the bid, Flatiron/Sanska/Zachry argued that UDOT didn't adhere to its own criteria for scoring the bids. Flatiron alleges UDOT gave extra points to Provo River Constructors for miles of road built beyond Spanish Fork that Flatiron says it was told would be of no value in the final scoring.
And, attorneys argued, UDOT ignored Flatiron's superior plans for interchanges and road upgrades which Flatiron argued would save the state up to $90 million.
UDOT Deputy Director Carlos Braceras said he made the decision to award the bid after the three finalists were graded first by mid-level technical teams and then by a selection recommendation committee of senior staffers who in some cases overruled the technical teams. He said the governor never asked him to favor a bidder.
"We picked the right project for Utah," Braceras said.
The large settlement, he said, was essentially a "business decision" to avert a lawsuit that could have delayed the project.
The interchange upgrades that Flatiron/Skanska/Zachry offered were not included in the five-year environmental study for the project and would have meant more environmental work and delays, Braceras said. He denied the claim that Provo River Constructors got points for work outside of the bid criteria.
Provo Rivers' strength, Braceras said, was traffic management and schedule. Their proposal would keep more lanes open during construction and finish the project by December 2012, a year ahead of FSZ's plan.
Braceras said settling complaints is common and is built into UDOT's budget.
"I know it's a lot of money," he said, "but it was the cost that this contractor spent to prepare this bid."
Both Wadsworth Brothers Construction — which was one of the partners in Provo River Constructors—– and Merit Medical were top-tier sponsors of Herbert's 2009 fundraising gala, meaning they gave $50,000 or more to Herbert's campaign.
Herbert's next gala is scheduled for this coming Saturday.
Fred Lampropoulos, president and CEO of Merit Medical, said his business might have looked to expand outside of Utah had it not been for the $4.4 million in tax incentives the state offered, but the award had nothing to do with the contribution to the governor.
"I know Gary Herbert to be a man who is business-friendly and who is a man of integrity," Lampropoulos said. And he warned that besmirching businesses that are creating jobs might hurt the state in the long run. "I think we are on dangerous, dangerous territory to attack businesses for doing things that are legal and going through the process legally."
Utah Republican Party Chairman Dave Hansen said if he had issued a memo like the one distributed by the Corroon campaign on campaigns he had run, he would have been fired.
"That, to me, is going a little overboard. To basically infer every meeting and every exchange was somehow evil or dirty and the governor was being bought by these contractors, I think that was too much," Hansen said.
Corroon said the issues are legitimate and nobody on his campaign staff will be fired. —
Online Read the protest letters
O Read the full body of the protest letters from Flatiron/Sanska/Zachry here: http://bit.ly/djQn0B