In traditional public procurement, competitive bidding is the accepted process.[449] Contractors are selected after project design is completed, based on the lowest-priced qualified bid.[450] Title 23 provisions (23 U.S.C. 112) generally required competitive bidding on construction contracts using Federal aid, with award to the lowest responsive bidder.[451] Noncompetitive construction contracting or other innovative contracting may be used if the FHWA determines that the alternative contracting method is more cost effective or if an emergency exists and time is a critical factor. The purpose of the competitive bidding procurement process is to maximize public benefits, efficiently use available resources, and avoid the waste, fraud, and abuse of Federal funds.[452]
On the other hand, the private sector seeks to maximize profit and to expand markets by providing services to customers, outpacing competitors, and taking risks for commensurate rewards.[453] Selection of the low-cost proposal using the competitive bidding process often overlooks the bidder's solvency and work quality, shifting risk elements to the public sector.[454] Competitive bidding on public-private partnership projects eliminates the ability to achieve several desirable features: equity investment by the contractor, deferment of fees at a negotiated rate of return, turnkey supply of materials based on performance specifications (in lieu of completed design), and minority business participation at target levels.[455]
Another limitation of competitive bidding is that is stifles innovation. In developing a request for proposal (RFP) for a project, the State must be very prescriptive in its description of the project. Detail is needed to compare objectively the bids received. Although value engineering may be allowed after a bid is selected, there is still little opportunity for innovation early in the project development process.
In addition to protecting the public interest, the Federal procurement process also provides a standardized, objective process to evaluate bids. Each year, the FHWA administers approximately 147,000 contracts. A standardized, prescriptive process is needed to deal with this large volume of contracts systematically and efficiently. However, such a process does not allow for the flexibility needed to administer a public-private partnership. By definition, each public-private partnership presents a unique and innovative approach to highway construction. A process is needed that provides the flexibility for public-private partnerships and addresses the need for a standardized process.