BY ANNE MICHAUD
The Cincinnati Enquirer
Throwing another obstacle in front of the Fort Washington Way project, the Hamilton County auditor charged Tuesday that Cincinnati's bid plan violates state law.
The city has waived bid bond requirements with the intent of encouraging smaller contractors to participate in the $146.9 million project.
Auditor Dusty Rhodes said the idea places the project in jeopardy, and he will not approve "a nickel" of the county's pledged $10 million until he knows whether it is legal. He requested an opinion Tuesday from the county prosecutor.
The city is already being sued in federal court by the Ohio Contractors Association, which says the 20 percent set-aside for minorities, women and the disadvantaged is unconstitutional.
Waiving bid requirements is supposed to aid those very groups, said Francis Wagner, city finance director and author of the emergency ordinance passed July 1 that concerned bids.
"For this project, we can increase the minority participation if we don't require 100 percent coverage for every contract," Mr. Wagner said.
Bid bonds require contractors to guarantee their bid price and their qualifications if they are awarded the project.
An adviser, Johson & Higgins - Marsh & McLennan, told Mr. Wagner that 30 percent coverage should be enough. He said the insurance protects the city should individuals sue over the project.
However, Michael Gilroy, another insurance professional, argues that the waiver could lead to bid-rigging and will ultimately delay the project. He is the regional vice president of the National Association of Surety Bond Producers.
Without the bid price guarantee, a company could collude to underbid a project, then bow out and split the profits with the next-lowest bidder, Mr. Gilroy said. He added that laws protecting against this date to 1869.
Also, delays can occur because bidders are not pre-qualified by insurance companies on their ability to perform the work.
Mr. Rhodes is persuaded by Mr. Gilroy's arguments.
"I am reluctant to send any checks over there (to the city) unless I get some kind of assurance they are able to thumb their nose at state law," he said.
County Commissioner Bob Bedinghaus said he would not have supported eliminating bid bonds for the county's stadium projects, even though the county was also trying to encourage female and minority bidders.
"The concerns expressed by these insurance guys are somewhat self-serving but very real," he said. "I'm interested to see what the prosecutor's office has to say."
City officials argue that home rule exempts them from state law in this case.
Mr. Wagner said the insurance critics are being overprotective of their interests.
"They'd like to sell insurance to everybody at 100 percent coverage," he said.
Preliminary work on Fort Washington Way has begun.
