Campaign Urges Changes to State’s Road Construction Procedure

COLUMBUS, Ohio — Road construction bidding policies that allow contractors to increase their final bill based on the current price of oil is costing the state of Ohio millions of dollars with each project.  The Ohio Department of Transportation policy, which is contrary to federal highway recommendations, cost the state nearly $37 million in change orders during 2009-2010.

A new campaign is calling for an end to this outdated, biased procedure.  The Great Lakes Regional Office of the Portland Cement Association (PCA), the voice of America’s cement and concrete industry, is running billboard ads informing the motoring public that the cost of asphalt roads is directly tied to oil prices and keeps increasing as long as Ohio allows “asphalt escalator” clauses in their bidding procedures.

“The Ohio Department of Transportation eliminated its use of asphalt cost escalators in 2010, presumably in recognition of their adverse impact on taxpayers,” said Ray McVeigh, executive director, PCA Great Lakes Regional Office.  “However, since then, a leading lobbyist for the asphalt industry was appointed ODOT director and now asphalt cost escalators have been re-implemented by ODOT, in spite of their proven negative effect on taxpayer value.  That’s slick.”

According to a Federal Highway Administration (FHWA) 2011 report, Ohio paid $36,966,000 in change orders due to adjustments in asphalt prices.  Four projects received more than $1 million in adjustments and the average adjustment was $81,964.

“Imagine you bought a computer on the Internet for $400 and when it shipped the price rose to $500 due to a change in component costs,” said McVeigh. “As consumers we would not tolerate this and as taxpayers we must not.”

Asphalt cost escalator clauses are a price adjustment provision that allow for paving contractors to raise their construction price based on a fluctuation in liquid asphalt cost. In the context of rising oil and asphalt prices, taxpayers generally pay more to a contractor at the time of construction than the price quoted to win the project.  Other materials such as concrete or steel do not have the same bidding clause and this policy is out-of-sync with recommendations from the FHWA. 

“If the price of liquid asphalt goes up during the construction process, the State of Ohio subsidizes the asphalt industry.  This takes away the competitive balance that is necessary to give taxpayers their best value,” said McVeigh.

Concrete roads last an average of three times longer than asphalt and as a result, incur fewer lifecycle costs than asphalt roads, resulting in a savings for the taxpayer and less time spent in traffic due to construction delays.

According to McVeigh, it is time for the Ohio Department of Transportation to use the same common-sense purchasing practices of the taxpayers it serves.  “When consumers are presented with choices, they select the preferred product or service, evaluating their decision based on a number of factors, chiefly quality and price.  It is time our government to do the same when selecting the materials for our roads.”

About PCA
The Portland Cement Association, based in Washington, DC, with offices in Skokie, Ill.,  represents cement companies in the United States. It conducts market development, engineering, research, education, and public affairs programs. For additional information, visit http://www.cement.org.