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Single Bay Bridge bid offered

May 27, 2004 Reposted from the Contra Costa Times
  By Lisa Vorderbrueggen

SACRAMENTO -A lone bidder submitted a $1.4 billion plan to build the steel-laden suspension segment of the Bay Bridge, at a cost nearly double state engineers' estimates.

After a five-minute bid opening in a basement conference room, state officials refused to publicly wear long faces, but the lack of multiple bidders and a cost that well exceeds their budget can only be described as a body blow.

"We'll be taking the bid under advisement with our partners at the Metropolitan Transportation Commission and the Federal Highway Administration while we consider our options," said Sunne Wright McPeak, secretary of Business, Transportation and Housing.

Caltrans estimated last year that the suspension span with its 525-foot steel tower and steel decks would cost $740 million.

A joint venture of American Bridge Co. of Pennsylvania, Nippon Steel Bridge of Japan and Fluor Enterprise bid $1.8 billion if it uses U.S.-made steel or $1.4 billion with foreign steel.

The foreign bid will prevail in this case because the price is low enough to lift federal rules requiring the use of domestic steel.

With state transportation coffers depleted, it's uncertain where the money would come from to pay for the soaring bridge costs. The Metropolitan Transportation Commission hopes to avoid a toll hike.

Caltrans expected at least two bidders, possibly three. It's unclear why the other bids failed to materialize, although several bidders had requested delays because they needed more time to obtain steel prices.

Steel industry experts and others have been predicting a massive cost increase on this span for months. The bid opening has been delayed four times in 15 months as Caltrans responded to contractors' concerns.

Steel prices have spiked. Construction insurance costs have skyrocketed. The unique design of what will be the largest self-anchored suspension span in the world poses significant financial risk and engineering challenges.

The bidding climate has been further complicated under a federal mandate to use domestic steel. The U.S. lacks adequate steel fabrication facilities to build the bridge, although that may no longer matter if Caltrans accepts the foreign-steel bid.

It's too soon to know why only one consortium bid came in, and at such a dramatically high price, said Caltrans Acting Director Tony Harris.

He said the agency will spend the next 60 days studying the bid documents and talking with contractors that did not submit bids.

"We need to understand the components of this bid before we can make a decision about where to go next," Harris said. "We need to debrief with the contractors."

Caltrans can reject the bid, accept it or ask the contractor for an extension.

The state has rejected a single bid on this project in the past, for foundation work, after it came in substantially higher than estimates.

Caltrans successfully rebid the work. In another example, officials recently rejected a single bid to build the Woodrow Wilson Bridge on the East Coast and rebid the project for a better price.

It cannot, as some have suggested, abandon the self-anchored suspension design and replace it with a less costly utilitarian concrete skyway. The suspension design is specified in state law, and any change would require legislative approval.

But if Caltrans moves ahead with the bid, state lawmakers would likely have to help find a way to pay for it. Caltrans has burned through its financial reserves. The Metropolitan Transportation Commission, the Bay Area planning agency that selected the design and oversees a share of bridge toll proceeds, will also play a key role.

The commission has suggested it take over the bridge construction finances and use aggressive investment tools it has successfully employed in the past to cover cost overruns on the Benicia bridge.

"Unfortunately, we can't absorb the size of this bid," said commission spokesman Randy Rentschler. "But we will be working closely with Caltrans to help in any way we can."

The state had intended to open the new span in 2010. If the state must rebid the suspension segment, it may be forced to extend that date.


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