Utah Legislature preparing to stop secret big money settlements

Published: Sunday, Nov. 14 2010 10:00 p.m. MST

Copy of the $13 million check UDOT paid to a losing I-15 contract bidder.

Utah Department Of Transportation

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SALT LAKE CITY — Fueled by the controversy over the $13 million the Utah Department of Transportation paid out to a losing bidder without telling state officials, GOP lawmakers are already gearing up to put a stop to any more similar settlements.

At least two bills are being drafted for the 2011 Legislature that would end UDOT's long-standing exemption from a state law requiring the governor and lawmakers to sign off on settlement payouts.

UDOT quietly negotiated the $13 million settlement at the beginning of the year with one of the losing bidders in the $1.7 billion CORE project to reconstruct I-15 through Utah County.

The settlement came as a surprise to legislative leaders as well as to Gov. Gary Herbert, already being questioned about accepting tens of thousands of dollars in campaign contributions from members of the winning bid team.

Sen. John Valentine, R-Orem, said UDOT needs limits on how much money can be paid out to settle contract disputes without the approval of state officials.

"I think it's a matter of trust in our government. We want to make certain our government is doing things openly and transparently, and that elected officials are having to take responsibility for the decisions that are made," Valentine said.

He said while UDOT did nothing wrong, "it just has the appearance of something wrong when it's not shared to the governor and to the Legislature, to elected officials."

State law requires other government agencies to get the governor's OK for settlements of $500,000 or more, and lawmakers get involved when the amount is at least $1 million.

Valentine said he's not sure at what point UDOT should have to come to state officials before cutting settlement checks, but it will be "significantly lower than $13 million."

Rep. Julie Fisher, R-Fruit Heights, will talk about a similar bill proposal in next Wednesday's interim transportation committee meeting. She said lawmakers were frustrated by the size of the settlement.

"It's a lot of money and I think it was disturbing that we didn't have an opportunity as a legislature to weigh in on it," Fisher said. "Any public citizen is going to say the $13 million was a lot to award."

Herbert responded quickly to the news of the settlement, ordering a state audit of UDOT and, by executive order, requiring the agency to bring any settlement of more than $100,000 to him for approval. So far, two settlements of "well under $750,000" each in eminent domain cases have come to the governor, his spokeswoman, Angie Welling, said.

His office, too, is trying to determine what limit should be placed on UDOT permanently. "We'll look at what the right figure is," Welling said. "His concern is primarily with transparency and accountability in the process."

Herbert and others have pointed out that UDOT made the decision to settle to avoid a lawsuit that would have delayed the state's most costly road project.

"It was a business decision to clear the air and enable us to move forward," UDOT Executive Director John Njord said. He said the I-15 project was bid out differently than most of UDOT's contracts.

Unlike the traditional low-bidder competition, the "design-build" contract required companies to tell UDOT how much worth they could accomplish for a set price.

"We were trying to accomplish, in an innovative fashion, the best value for the citizens of our state," Njord said. "Frankly there is nothing like this. This is a very unique project."

But the Colorado Department of Transportation recently spent $1.7 billion on a similar design-build project, the so-called "T-Rex" rebuild of Denver's interstates — without paying out any settlements.

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