Contractors Vying For Silver Line Phase II Have History Of Busting Budgets
Saturday, April 13, 2013 - 11:08 AM
The construction of Phase II of the Silver Line Metrorail to Dulles International Airport, one of the largest public transportation projects in the U.S., will lie in the hands of the contractor team that makes the winning bid to the project’s owner, the Metropolitan Washington Airports Authority (MWAA).
But sixty-two percent (38) of Virginia Department of Transportation contracts were finished over budget, according to VDOT records reviewed by WAMU 88.5. More than one-third (37 percent) of the over budget contracts involved contractors or subsidiaries preparing bids for Phase II of the Silver Line. Of the 38 over budget contracts, 23 exceeded original costs by at least five percent.
MWAA will award the contract to the lowest bidder, a procurement process that minimizes a contractor’s incentive to produce a superior design. After the airports authority pre-qualified each contractor team and established that their individual design proposals at least met the standards in MWAA's design schematics, lowest price became the only factor in deciding who will win the contract.
The five construction consortiums competing for the Phase II contract represent some of the biggest names in the construction industry: 1) Fluor Enterprises, Tutor Perini, and Stacy and Witbeck, 2) Clark Construction and Kiewit Infrastructure, 3) Archer Western Contractors, PCL Civil Constructors, and Corman Construction, 4) Skanska USA, Granite Construction, G.A. & F.C. Wagman, Trumbull, and Facchina Construction, and 5) Bechtel Infrastructure, which built Phase I of the Silver Line from D.C. to Reston, Va.
Of the 38 aforementioned VDOT contracts that were over budget, seven involved Skanska USA, four involved Archer Western, and one involved Corman Construction, a member of Archer Western’s Phase II bid team. Shirley Contracting Co., a subsidiary of Clark Construction, was involved in two of the over budget contracts, according to VDOT records reviewed by WAMU 88.5.
Phase II-bidder Facchina Construction is a subcontractor on the Silver Spring Transit Center, a project $80 million over budget and two years behind schedule, that will need extensive remediation work to fix structural problems involving poured concrete.
MWAA officials say only contractors with a record of building large projects were pre-qualified to compete for Phase II, but records show that some of the contractors executed other major regional projects that were completed significantly over budget and behind schedule.
Phase II bids are due April 19. The winner will be announced in May.
Past performance in Virginia
Should taxpayers and Dulles Toll Road users (whose tolls will cover 64 percent of Phase II’s costs under MWAA’s current financing plan) be worried? Choosing the right contractor may be the most important decision made between now and the Silver Line’s targeted completion date in 2018.
MWAA officials say not only will two years of preliminary engineering work help ensure the project will be guided by a strong design, but past performance on large projects was considered when pre-qualifying the general contractor teams for this procurement.
“You are very much looking at the lead contractor and their ability to run a project of this magnitude,” said Patrick Nowakowski, the Dulles rail project’s executive director. “We ask them to identify the most significant contractors that are part of their team. On Phase I there are hundreds of subcontractors out here. We don’t ask the [general contractor] during the evaluation process to show us all one hundred, but we do ask them to identify who are the key players.”
Some of those “key players” now preparing bids for Phase II were involved in VDOT projects that saw their budgets busted.
Who’s to blame?
Representatives of the construction industry say drawing conclusions about a contractor’s competence from the above figures is risky.
“A newspaper or a radio show or anybody can spout off and say there was a problem on a job and they name the contractor or the subcontractor. Typically they don’t get into the details because that news is old by the time anything is figured out about why something negative occurred,” said Patrick Dean, the president of the Associated Builders and Contractors of Virginia.
Regardless of who may be at fault for late, bloated projects like the Silver Spring Transit Center, the Wilson Bridge (Skanska USA built the project’s Route 1 interchange 28 percent over budget), or the Springfield Interchange (12 percent over budget by Archer Western), the problems associated with megaprojects serve as a cautionary tale for Phase II of the Silver Line.
Despite the best efforts of designers, builders, and government agencies, sometimes things go wrong.
“Things will go wrong on all kinds of projects, some major, some minor. Most we will never hear about. What we tend to hear about is cost overruns,” said Dean, who said some cost overages are unavoidable and others may improve the durability of a project by investing more upfront.
MWAA and its Phase II contractor have an advantage in one respect: following the model of Phase I of the Silver Line.
“We’ve learned a lot from Phase I and made adjustments from Phase I to be able to reduce prices. We’ve also approached the financing in a very aggressive manner,” Nowakowski said.
Still, Virginia officials say MWAA must closely oversee the completion of the 23-mile rail extension.
MWAA must “ensure the [the contractors] stay within the contract, stay within the design and… not driving up additional costs that not only delay the project but obviously cause it to spiral out of control with price,” said Virginia Secretary of Transportation Sean Connaughton.
Phase II workforce: union or non-union?
The contractor that wins the Phase II contract will have the option of entering into a project labor agreement (PLA) with a unionized workforce.
MWAA initially included a mandatory PLA stipulation in the Phase II procurement process but, bowing to intense political pressure in right-to-work Virginia, removed the mandatory PLA last summer. Whether the Phase II builder chooses a union workforce will be a voluntary decision after the contract is awarded.
In the view of labor union officials, the “success” of the Phase I PLA, voluntarily agreed to by the contractor Bechtel, is reason to have a PLA on Phase II.
“The primary reason a PLA should be entered is because of the quality of the workforce,” said Brian Petruska, an attorney for the Laborers International Union of North America (LiUNA), a union that supplied workers for Phase I.
“If there’s not a PLA it’s going to be a different workforce. The Phase I workforce is the number one workforce in the area to put together Phase II. They’ve already been building this train line for several years. They are the most experienced at it. The PLA essentially would ensure the same workforce,” Petruska said.
Although MWAA officials and Bechtel have publicly credited the PLA for keeping Phase I on time and on budget, representatives of the construction industry say there is no evidence a PLA is necessary for Phase II to succeed.
“I unequivocally would not like to see the winning bidder enter into any form of a PLA,” said Patrick Dean, the president of the Associated Builders and Contractors of Virginia. “A project labor agreement that LiUNA would push is just to put money into their coffers for their pension, health, and welfare plan.”