Panel throws out state’s choice for supplying natural gas to state offices

By Matthew Stone, BDN Staff
Posted Sept. 12, 2012, at 6:28 p.m.

AUGUSTA, Maine — Citing a flawed request for proposals and review process, a state appeals panel has reversed a June decision by the state’s Bureau of General Services to award Maine Natural Gas the rights to build a Windsor-to-Augusta pipeline that supplies natural gas to state offices.

The decision is a victory for Summit Natural Gas of Maine, which submitted a rival bid to build the pipeline and use the Augusta-area infrastructure as the basis for a $150 million project to expand the pipeline beyond state offices in the Augusta area to business and residential properties throughout the Kennebec Valley.

In a decision issued Wednesday, the appeals panel said the Bureau of General Services wrote a request for proposals that didn’t “include a clear definition of the scope of work” and inconsistently scored the three bids it received.

The panel’s ruling followed an appeal Summit Natural Gas filed over the summer in response to the Bureau of General Services’ decision to choose Maine Natural Gas’ proposal.

In response to the ruling, the commissioner who oversees the Bureau of General Services, Sawin Millett, promised a “top-to-bottom” review of the state’s process for putting requests out to bid, but didn’t immediately promise a new request for bids to supply natural gas.

The state in May put out a request for proposals to supply natural gas to state properties and other customers in the Augusta and Gardiner areas. The request also asked energy companies to show they could expand their pipeline projects to serve the rest of the Kennebec Valley.

Colorado-based Summit proposed the $150 million project for a pipeline serving state, business and residential properties in Augusta and Gardiner and throughout the Kennebec Valley.

Summit is in the process of purchasing Portland-based Kennebec Valley Gas, which had secured tax increment financing agreements from a number of towns along its proposed 80-mile pipeline route from Richmond to Madison.

Maine Natural Gas, based in Brunswick and owned by Spanish energy giant Iberdrola, which also owns Central Maine Power Co., proposed a $19.3 million project to build a natural gas pipeline serving Augusta. The company’s proposal didn’t include an extension to Gardiner or the rest of the Kennebec Valley, though the company said last month that the expansion was part of its ultimate plan.

The appeals panel found the Bureau of General Services’ original request for bids led to confusion over whether the state was seeking proposals only to serve Augusta or whether it also sought a pipeline connection to Gardiner.

The appeals panel also found the Bureau of General Services calculated cost savings for each proposal using a different method from what it said it planned to use in the request for proposals. And in rating the proposals for their economic impact and the number of jobs they would create, the appeals panel wrote, “[f]or reasons that remain unclear, BGS scored Job Creation/Economic Impact on the basis of jobs to be created by [Maine Natural Gas] in year one, by Summit in year two and on the basis of an adjusted number for [third bidder] Self-Gen.”

Officials from Summit welcomed the news from the state appeals panel.

“We look forward to getting about the business of investing in a natural gas system to serve the region,” Tim Johnston, Summit’s executive vice president, said in a statement, “and we encourage the state to move forward with a new process that will result in a clear commitment to provide natural gas service within the Kennebec Valley.”

Dan Hucko, a spokesman for Maine Natural Gas, said the company was “disappointed” by the appeal panel’s decision.

“At this point, we will continue to evaluate all of our options and decide on a course of action in the near future,” he said.

In an emailed statement Wednesday, Millett, the state’s Administrative and Financial Services commissioner, acknowledged the problems the appeal panel found in the natural gas bid process.

“The bureau acknowledges that several flaws were identified by the appeal panel, in both the drafting and review process of this natural gas RFP,” he said. “The Department of Administrative and Financial Services takes this matter very seriously, acknowledging the time and effort many have made to this process already. Additionally we want to ensure a professional procurement process that is fair to bidders while securing the best possible value for the taxpayer.”

http://bangordailynews.com/2012/09/12/business/maine-invalidates-companys-bid-to-supply-natural-gas-to-state-properties/ printed on July 23, 2014