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Stalled on the bridge

May 29, 2004 Reposted from the Oregonian
  By Allan Brettman

Patrick Leonard crowded into a construction shack Wednesday with about 20 California Department of Transportation workers for "an interesting, surreal experience."

Leonard, vice president of Oregon Iron Works, and the others watched Caltrans' Web cast of a bid opening for a major contract to build the new east span of the San Francisco-Oakland Bay Bridge.

Many people, Leonard said, expected any bid would surpass Caltrans' $740 million estimate.

No one, however, predicted a lone bid roughly $1 billion higher than the original estimate, according to Leonard and others familiar with the bidding process.

The lone construction bid leaves cash-strapped Caltrans in a quandary about its next step. Oregon Iron Works and three Portland-Vancouver partners are keenly interested in the process as they hope to secure an estimated $300 million subcontract that could create as many as 300 new jobs.

"We are guardedly optimistic," said Tom Hickman, marketing manager for Oregon Iron Works. "Who knows what Caltrans is going to do. Everybody was telling them all along that their budget was unrealistic."

Oregon Iron Works and three other companies announced in March that they had formed Bay Bridge Fabricators with the goal of obtaining the Bay Bridge decking contract.

The partners said they would lease a 25-acre site at the Port of Vancouver and spend up to $30 million improving the site.

The job will require the construction of 28 steel boxes -- called girders in bridge parlance -- that would support the bridge deck. Each box would be 95 feet wide by 18 feet deep and up to 235 feet long, weighing 1,200 to 1,500 tons. The finished products would be shipped by barge to the bridge construction site.

The new jobs would include hiring from the Iron Workers and Sheet Metal Workers union with an annual payroll of $13.5 million.

The consortium gambled, however, by not even submitting a bid for Wednesday's Web cast event.

Consortium partners believed before the bid opening that no acceptable proposal would emerge because Caltrans' estimate was too low.

The consortium did not want to commit to a price for the decking because the partners did not think the contract would be awarded on the first bid, Hickman said Friday.

He also said the partners now think Caltrans will reject the sole bid and readvertise for new bids. Hickman pointed to lesser contracts associated with the project that were sent out for rebidding after an initial bid was rejected.

Hickman and others said it was possible Bay Bridge Fabricators would be a subcontractor to the successful bidder for the overall bridge contract.

A joint venture of American Bridge, Nippon Steel Bridge and Fluor Corp. made the sole bid Wednesday. One bid, of $1.8 billion, would use American steel. The other, of $1.4 billion, would use foreign steel.

Under "Buy America" rules, Caltrans can use foreign steel on the bridge only if the cost is 25 percent less. The "Buy America" provision is being enforced because federal money is helping to pay for the project.

Any hope for the Bay Bridge Fabricators rests on "Buy America." Consortium partners say American steel costs more because of higher wages and more stringent environmental and worker safety regulations here than overseas.

Leonard, the Oregon Iron Works vice president, was at the bridge construction site Wednesday checking on a smaller steel fabrication project. His company, Thompson Metal Fab of Vancouver, and Universal Structural of Vancouver are sharing in a $30 million contract to build other substructure components.

When Leonard walked into the construction trailer he saw that Caltrans workers were holding a playful betting pool for the worst-case estimate of the bid price.

When a Caltrans employee read the bid amounts on the Web cast, about half the people in the trailer were stunned, Leonard said.

And the winning estimate in the betting pool, he said, wasn't even close to the actual bid price.


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