Irish firm walks away from highway service plaza contract
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Westborough Rest Stop on the Massachusetts Turnpike
The winning bidder in the controversial procurement for a highway service plaza concession contract is walking away from lease talks with the state.
"After three months of good faith negotiations, Applegreen and MassDOT have not reached agreement on definitive terms for the redevelopment of 18 motorway service areas in Massachusetts," Applegreen said in a statement released late Tuesday. "The open issues have significant implications for the commercial viability of the concession award. These commercial realities have been coupled with costly and continued litigation threats from an opposing bidder that have jeopardized the project’s timeline and financing. In light of these circumstances, Applegreen has terminated ongoing lease discussions."
Rival bidder Global Partners has vehemently contested the MassDOT bid award, claiming its offer was superior. Global on Sept. 15 filed a lawsuit in Suffolk Superior Court seeking to stop MassDOT from executing its lease.
In late August, Applegreen Executive Chair Bob Etchingham said the Waltham-based Global had engaged in a "campaign of misinformation – repeating the same falsehoods and baseless allegations in an attempt to reverse a process that was fair, supported by third party experts and aligned with the Commonwealth’s goals for a world-class service plaza operation."
The announcement by Applegreen arrived the night before the Senate Post Audit and Oversight Committee was scheduled to hold a hearing on the procurement controversy.
But that hearing was called off Tuesday due to "MassDOT and Applegreen’s refusal to participate in this week’s hearing," which chair Sen. Mark Montigny's office said "has forced the committee chairman to insist upon a total rebid and to postpone the hearing until a later date in October where the committee will call upon the Inspector General."
"I am surprised and deeply disappointed that a public agency failed to disclose critical information to a legislative oversight committee and then refused to even appear for basic questioning," Montigny, a New Bedford Democrat, said. "The withholding of critical information and efforts to avoid public scrutiny leaves us no choice but to accept the limited information before us as a true and accurate representation of this matter. The KPMG financial analysis suggests a staggering loss to taxpayers while ex-parte communications and relationships between a MassDOT official and the winning bidder create the appearance of a conflict as well as a potential violation of the department’s own procurement standards. By failing to appear before this committee, MassDOT and Applegreen have effectively denied taxpayers the answers that they are entitled to. I see no reason to continue this process and urge MassDOT to put this project back out to bid."
A source close to Applegreen said the company had already spent close to $10 million to prepare to launch plaza-related construction and operations on Jan. 1.
In a statement, Transportation Secretary and CEO Monica Tibbits-Nutt said MassDOT is "moving forward" but did not offer further specifics.
“This project has always been about delivering the best experience for the drivers and customers who use our service plazas," Tibbits-Nutt said. "After a comprehensive, transparent selection process, additional negotiations were always expected between MassDOT and Applegreen to provide the best possible value for taxpayers. It is now clear that Applegreen is no longer the right partner to deliver on this project. Our focus is on moving forward to deliver the highest quality service plazas as quickly as possible for the people of Massachusetts.”
Asked if MassDOT planned to move forward with Global Partners, a MassDOT spokesman said the agency was not offering any further comment beyond the Tibbit-Nutts statement.
Global Partners President and CEO Eric Slifka issued a statement early Tuesday evening.
"Applegreen’s decision to walk away underscores the very concerns raised for months: their proposal was never financially sound and never in the best interests of the Commonwealth," Slifka said. "Independent reviews by KPMG and MassDOT’s own experts found that Applegreen’s terms failed to satisfy the state’s revenue goals, falling hundreds of millions of dollars short of the guaranteed rent Global Partners committed, leaving the state’s budget short from day one. Their withdrawal confirms those risks were real. And with troubling questions about conflicts of interest and ethics violations still unresolved, it is clear Applegreen was the wrong choice for Massachusetts."
Slifka continued: "Global Partners has been rooted in Massachusetts for four generations. We are prepared to step in with a proven, low-risk transition plan that guarantees $1.5 billion in rent, and delivers on clean energy, diversity, and community commitments from day one. This process has been difficult for all involved, and taxpayers have already lost valuable time. We stand ready to move forward, honestly, transparently, and in the best interests of our Commonwealth."
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