Easing congestion in Miami-Dade by letting computers decide when lights turn green may get delayed again over the tricky question of when it’s okay for the county not to accept the lowest bid.
Siemens, a global manufacturer out of Germany, won a bidding contest last fall to install computerized traffic-management systems at 2,900 intersections, a project that would complete one of the original goals outlined in the 2002 referendum that passed a half-percent sales tax for transportation projects.
The Siemens $152 million offer came in about $86 million less than its closest competitor. Despite offering the lowest price, the cheaper bid has emerged as a significant problem for Siemens, with commissioners warning Miami-Dade should probably be paying more for the work. On Tuesday, the 13-member board is scheduled to vote on legislation to scrap all the bids and require the county to start fresh with another request for proposals.
That would be a big win for the second-place finisher, Horsepower Electric, a Hialeah company with a string of local contracts in its portfolio. Last year, Horsepower filed a protest to try and stop the county from approving the Siemens bid that’s been recommended by Mayor Carlos Gimenez.
While the mayor oversees the bidding process for projects and negotiating contracts, he must win approval from commissioners to actually award the work and spend tax dollars to get it done. That’s the final step needed for a process that began in the fall of 2018 with an invitation for bids. Gimenez sent the Siemens contract to commissioners for approval in March, with a final vote possible in April.
Instead, commissioners objected to considering the Siemens contract, citing alleged risks in the lower price and issues with the negotiating process. Now they’re set to vote Tuesday on legislation to start a new 45-day bidding contest that doesn’t allow future price changes.
Is a low bid bad?
Commissioners opposed to awarding the contract to Siemens have used the lowest price as evidence against the company. They accused the company of bidding low to win the work with a plan to come back with demands for higher costs through modifications, or “change orders” to the contract.
“We’ve seen this before,” Commission Chairwoman Audrey Edmonson said in a committee meeting last week. “I just think it’s too good to be true. … I think we need to reject all of the bids.”
On Tuesday, commissioners will consider legislation to scrap all the bids and start again, giving Horsepower a second shot to beat Siemens after knowing how much the company was willing to charge for the “smart light” effort. It also would give Siemens a chance to demand more money, knowing how much higher the other sealed bids were during the first round, which ended in October.
Starting over won’t insulate Miami-Dade from future bid challenges, and that has some commissioners warning a messy fight could get messier the longer it goes on.
“We can’t just continue to go through this merry-go-round year after year,” said Commissioner Dennis Moss.
At stake is a long-delayed goal by Miami-Dade to make traffic lights more responsive to actual conditions at intersections. Most currently change on an automatic schedule programmed by traffic engineers that reflect their best guesses at what will ease congestion during different times of the day.
With software, cameras and sensors that make up an “Advanced Traffic Management System,” the lights can change automatically based on speed of traffic, the number of vehicles waiting to turn left or backed up into other intersections. The equipment can also sense when bikes and pedestrians are waiting to cross, according to a county summary of the project.
Smart Signals designed to let traffic move faster
Miami-Dade has already done some of the work. Two no-bid contracts in 2016 and 2017 allowed a California company, Econolite, to install the equipment at about 300 intersections across Miami-Dade as a way to test the technology. Horsepower was a subcontractor on the $12 million project. Miami-Dade claimed the effort reduced travel times on the busiest corridors by as much as 10 percent.
When Miami-Dade launched the competition in 2018 to modernize signal controls at the remaining 2,900 intersections across the county, Horsepower took the lead in the bid, proposing to continue using Econolite equipment. Siemens proposed using its own traffic-management equipment and software.
Siemens said using its own equipment allowed it to keep costs more competitive. Horsepower claims it could have come in cheaper if it had known the county would allow the kind of wireless equipment that Siemens proposed.
Horsepower bid $239 million for the five-year project, and third-place finisher Transcore bid $260 million. That made the Siemens bid about 40 percent lower than the average of the two other proposals. The Siemens price is now $160 million, including contingency fees and other add-ons agreed to by county negotiators after Siemens was selected as the proposed contractor.
Of the three prices forwarded to the commission, the $152 million bid from Siemens landed closest to the $172 million internal estimate of what Miami-Dade thought the work should cost, according to a summary by the hearing examiner assigned to Horsepower’s November bid protest.
The Horsepower protest focused on the contract negotiations that followed a county panel picking Siemens as the winner. The examiner, Marc Anthony Douthit, sided with the Gimenez administration on most of Horsepower’s allegations. Douthit did rule the administration erred in granting Siemens a shorter review period for individual plans for each intersection.
While the county demanded 21 days for what could be thousands of reviews in bidding documents, Siemens got the administration to agree to a 10-day review period after winning the bid.
Douthit said the concession would clearly mean payroll savings for Siemens, since its installation crews wouldn’t have to wait as long for the go-ahead from county engineers to start work and then await approval for the next intersection.
Modifying the review window “provided Siemens with an unfair competitive advantage not enjoyed by any other proposer,” Douthit wrote in November.
After the ruling, the Gimenez administration scrapped the concession and returned to the mandated 21-day review window.
In a March 11 report, the county’s inspector general noted Horsepower proposed a similar deviation from the county’s review schedule, asking for between seven and 12 days before getting approval to start work at each intersection. “Both respondents relied on a shorter timeframe,” the inspector general wrote.
The report also tried to knock down an allegation from Horsepower that a member of the county selection panel warned of a “low ball” price from Siemens. The inspector general found the recorded remark from a May 2019 meeting between negotiations was part of a discussion about how to deal with the gaps in proposed prices.
The panel member “laid out two choices — bring the lower-priced proposal up to the level of effort desired or get the other extremely, high-priced offers “back down to earth, out of orbit from where they were,” the report stated.
In reviewing the process, the inspector general said the flaw flagged by the hearing examiner should not scuttle the proposed awarding of the Siemens contract. The Gimenez recommendation is a “best effort” by the county “to obtain a fair, reasonable, workable and affordable agreement,” the report said.
With the inspector general siding with the administration, the Siemens lobbying team is pushing commissioners to move on with the contract vote. “Siemens won fair and square,” said Miguel Diaz de la Portilla, a lawyer and lobbyist representing the company. “Why should Horsepower get another bite at the apple?”
On Tuesday, commissioners can vote to start fresh with a new bidding process, this one with a 45-day deadline. If the effort fails, they could wait for a contract recommendation from Gimenez to start the project. When the Siemens bid hit trouble with commissioners earlier in the year, Gimenez agreed to a short-term negotiation with the three bidders for final prices based on the terms of their proposals.
For Horsepower, the traffic-management contract would be the latest project for a company with a track record of getting hired by local and state agencies in Miami-Dade. It became a leading provider of red-light cameras when those devices were gaining in popularity, and has been a frequent winner of contracts from Miami-Dade.
The company has also been active in Miami-Dade politics, contributing to multiple sitting commissioners. In the 2020 mayoral race, Horsepower entities and partners gave to each of the commissioners who filed to run. That includes $4,000 to Esteban “Steve” Bovo, $1,000 to Daniella Levine Cava, $1,000 to Jean Monestime and $11,000 to Xavier Suarez. (Monestime is no longer running for mayor.) The Miami Herald was not able to find donations from Siemens executives, and a company representative said Siemens is not active in Miami-Dade races.
A contracting fight between Horsepower and Siemens
Horsepower had to sit out of county contracting for 18 months over 2005 and 2006 after Miami-Dade briefly “debarred” Horsepower as a potential vendor over alleged kickbacks tied to a Miami International Airport contract.
“Horsepower has been deemed responsible many times by the county, including most recently to perform the pilot project for 300 intersections that was the precursor to this procurement,” Horsepower lobbyist and lawyer Miguel de Grandy said in a statement. “Certainly, the county would not have continued to contract with Horsepower if they had any concerns about its responsibility and integrity.”
At last week’s meeting of the commission’s Policy Council, the MIA contract didn’t come up but past violations by Siemens did. Commissioner Rebeca Sosa, who backed tossing out the procurement, cited Siemens settlements over charges it violated the federal Foreign Corrupt Practices Act.
That included a $450 million federal fine from 2008 related to Siemens overseas subsidiaries providing alleged kickbacks to the Iraqi government in the 1990s over oil deals.
“I don’t know if that’s true,” Sosa said. “I don’t care who wins. … Yes, we’re talking about money. It’s a savings. But come on. Let’s go and [look] at everything.”
The prospect of starting over has Gimenez warning of not just lost time, but lost dollars. Funding for the light-management project comes from the county’s half-percent sales tax for transportation and from fees developers pay for new projects that are earmarked for roadwork. Both sources are expected to face strain in the coming months as the coronavirus pandemic continues to slam the economy.
“This is not some fly-by-night company we’re dealing with. This is Siemens,” he told commissioners last week. “If we pay $86 million more, there’s $86 million less roadwork that’s going to happen in Miami-Dade County. I’m a little ticked.”