Public entities conduct open public bidding to solicit the best price for goods purchased by states and municipalities. Most states already give priority to accomplish social goals, for example:
Veteran preference in state hiring.
Women- and minority-owned business preference in state contracting.
Rail Use a Social Priority Let’s give those who use rail a priority in:
Bids to provide materials to the state.
Construction bidders who bring in material by rail.
Vermont: Sort of an Example A Vermont statute requires the state, when procuring goods, to consider ‘(11) the use of railroads and the increased revenues returning to the state from its railroad leasing program.’ This consideration comes into play in procurement of road salt, as that does travel by state-owned railroad to salt piles.
However, the amount the state receives in revenue by use of state-owned lines is relatively small, amounting to about 25 cents a ton in 2001. It has not played a role in the award of salt contracts for at least five years.
Why a Priority All states pay something to maintain the health of their residents. Similarly, they pay to maintain their roads. By reducing air pollution through use of rail, and by removing trucks from the roads, any state government can save money.
I am recommending that each state calculate what savings it can realize by shifting loads to rail, and give bidders using rail that savings in its bid. Conversely, the social costs of using trucks should be added in. In other words, the social cost of transportation should be added to each bid.
An Example As a hypothetical, let’s say Massachusetts buys propane in bulk to heat its buildings in Springfield. It seeks bids from propane providers. Company X bids $2.70 a gallon, and plans to truck the propane from an Albany NY facility to Springfield. Company Y bids $2.75 a gallon, and plans to deliver the propane from a rail terminal in Westfield, Massachusetts.
The state calculates that each gallon of propane moved by rail one mile costs .0002 dollars in healthcare costs. The state calculates moving it by truck for one mile costs .0005 dollars in health care costs, and .0004 cents in highway maintenance.
Company X trucks the propane the entire distance of say 100 miles. Company Y moves the propane by rail 90 miles, and truck 10 miles. [See table below for example.]
So Company X’s bid has $0.09 added to it, to make a total of $2.79/gallon. Company Y has $0.027 added to its bid, to make a total of $2.777, and therefore Company Y would win the bid.
Propane
move
distance
moved
in state
cost per mile
to health in
dollars*
cost per mile
to highways*
Company
X costs
per gallon
Company
Y costs
per gallon
Truck Albany to
Springfield
100 miles
.0005
.0004
.09
–
Rail
Albany to
Westfield
90 miles
.0002
–
–
.018
Truck Westfield
to Springfield
10 miles
.0005
.0004
–
.009
TOTAL
.09
.027
*These are totally fictional, and employed here for illustration only.
About the Author
Chop (Chalmers) Hardenbergh is Editor of Atlantic Northeast Rails & Ports, a weekly trade newsletter covering New England, New Brunswick, Nova Scotia, and the eastern townships of Quebec. He can be reached at Atlantaic Northeast Rails & Ports, 162 Main Street, Yarmouth Maine 04096, vox 207-846-3549, fax 866-484-4490, http://www.atlanticnortheast.com, or e-mailL [email protected].
