For Immediate Release: Wednesday, February 8, 2023

Contact: Jim Waters @ (270) 320-4376

(FRANKFORT, Ky.) — The Kentucky Transportation Cabinet (KYTC) awarded 294 asphalt-related single-bid contracts totaling more than $485 million in 2022, according to calculations from the Bluegrass Institute for Public Policy Solutions (BIPPS). BIPPS has published single-bid data from KYTC since July 2020 and recommended an audit of KYTC’s bidding practices.

“The Transportation Cabinet continues to fail Kentucky’s taxpayers,” stated Andrew McNeill, a Visiting Policy Fellow at BIPPS and former Deputy State Budget and Policy Director during Gov. Matt Bevin’s administration. “This has been going on for decades. It’s time for a thorough investigation of the tainted relationship between the Cabinet and Kentucky’s asphalt industry.”

Last year, the Kentucky Center for Investigative Reporting (KyCIR) published a wide-ranging examination of KYTC’s single-bid awards from 2018 to 2021. KyCIR reported, “The transportation cabinet is exempt by law from following the state’s procurement code, instead following a bidding system experts say allows a handful of large companies to avoid serious competition for jobs.”  

 According to a peer-reviewed article[1] in the Journal of Industrial Economics, from 2005 to 2007,

“Kentucky spent $473 million on asphalt paving projects in monopoly counties and in allocated (uncontested) counties…(The) threat of even a second potential bidder (would have lowered) the winning bid by over ten per cent. If the state were to take steps to make tacit collusion by refraining from bidding more difficult, the potential gains to taxpayers are sizable.”

Last July, KYTC Secretary Jim Gray testified in front of an interim legislative committee, “To get through (this inflationary period) the Transportation Cabinet will do what Kentucky families…are doing all over the Commonwealth. We will adjust and adapt…When I talk about efficiency, I’m talking about we are working to ensure more than a single bid.”

Since Gray’s testimony, the Cabinet has awarded over $250 million in single-bid asphalt-related awards. KYTC rejected another 128 asphalt-related single-bids from Kentucky’s asphalt industry in 2022.

“The Bluegrass Institute is committed to advancing policies that best serve taxpayers while exposing costly practices which only benefit a few special interests,” said BIPPS president and CEO Jim Waters. “As Frankfort’s watchdog, we aim to make state government more responsive to its constituents. Such transparency involves not only knowing the cost of final bids, but the process by which they were obtained.”  

The Bluegrass Institute calculated that six companies – Hinkle Contracting, L-M Asphalt Partners, Mountain Enterprises, Rogers Group, Scotty’s Contracting and The Allen Company – accounted for over 83% of KYTC’s single-bid contracts in 2022 (based on the monetary value of the awards).

Kentucky’s road contractors have been one of the leading advocates for raising the gas tax. The Bluegrass Institute has successfully led the fight against higher motor fuels taxes on Kentuckians. Legislation to raise the gas tax hasn’t received a committee vote or vote on the floor of either chamber of the General Assembly since it was first introduced in 2018.

NOTE ON DATA COLLECTION:  The Bluegrass Institute collected data from the Transportation Cabinet’s construction procurement results. The 2022 compiled spreadsheets are available at www.bipps.org/blog.

[1] Barrus, David & Scott, Frank. “Single Bidders and Tacit Collusion in Highway Procurement Auctions.” The Journal of Industrial Economics, September 2020.

For interview information, please contact Jim Waters at (270) 320-4376 or jwaters@freedomkentucky.com.