SEATTLE — In hopes the Legislature can cover a $562 million overshoot of its estimated price for a new 520 bridge over Seattle’s Portage Bay, state officials are delaying until March a decision on who will win the contract.
Two bids for the work between Montlake and I-5 were submitted to the Washington State Department of Transportation over the summer. Each was well above the engineer’s estimate of around $800 million: Skanska USA’s for $1.37 billion and Kiewit/Stacy and Witbeck’s for just under $1.7 billion. Both bids are set to expire Monday.
WSDOT determined Skanska’s bid to be the apparent best value but stopped short of awarding the company the contract because it was 70% higher than anticipated. Rather than letting the bid expire, however, WSDOT is negotiating with Skanska to extend its expiration date to March 7, after the legislative session concludes.
“Taking this step provides additional time for collaboration to determine a path forward; however, it does come with the risk of some added costs and the potential for Skanska to pursue other opportunities,” Omar Jepperson, WSDOT’s 520 project manager, said in an email to lawmakers last week.
Kicking the can down the road would also guarantee at least a six-month delay for the project. A representative for Skanska declined to comment.
The state has concluded the 520 viaduct over Portage Bay, built in the 1960s, has reached the end of its useful life. Hollow columns supporting the structure could fail in an earthquake, and the whole structure needs to be replaced. The project also includes completion of the Roanoke lid project over 520, all part of a $2 billion overhaul of the highway and its surrounding areas between Lake Washington and I-5 in Seattle.
The entire 520 project out to Redmond is estimated to cost nearly $5 billion.
Funding for the Seattle portion comes from the 2015 Connecting Washington and 2022 Move Ahead Washington transportation packages.
News of the high 520 bids came as a surprise to legislators, who expected cost escalation in line with inflation and supply chain pressures but not to the levels seen in the two proposals.
“That it would be over, that wouldn’t have surprised me,” chair of the House Transportation Committee, Rep. Jake Fey, D-Tacoma, said in September. “But the level? That it would be over $500 million? That’s a miss.”
State officials pointed to a decreasing appetite on the part of contractors to take on large, government design-build contracts, in which the bidder is expected to both design and construct the project. With plentiful other work opportunities and thin staffing, the risk of such an arrangement tends to drive up the price.
Fey said Wednesday that legislators would look at other approaches to 520, including rebidding with a different kind of contract that put less risk on the contractors or only moving forward with part of the project.
WSDOT officials considered similar questions but ultimately concluded it would be best to stay on course.
“We considered the pros and cons of canceling procurement, dividing the project into two contracts and phasing construction,” Jepperson told lawmakers. “All options that involve canceling procurement and repackaging the project add significant time [approximately 7 years], cost [ranging from an additional $1 billion — $1.5 billion] and risk [safety and legal].”
How the Legislature responds is unclear. Gas taxes are the largest source of transportation funding, but lawmakers in recent sessions have sought to avoid hikes beyond the 49 cents a gallon residents already pay. Move Ahead relied heavily on money from the federal government, carbon auction revenue and a one-time transfer of $2 billion from the operating fund.
“I’m not making any promises to anybody about their projects at this point,” Fey said Wednesday.
Republicans have pushed to divert taxes on vehicle sales from the general fund into transportation projects for several years, but the proposal has found little traction among majority Democrats. Ranking member of the Senate Transportation Committee, Sen. Curtis King, R-Yakima, said Wednesday the Legislature should consider the pitch again in light of 520 and other cost overruns.
“It does need to be done,” he said of 520. “But we’ve got to make sure we can find the funding to do it and do it in a reasonable manner and a timely manner.”
The 520 project is part of a broader trend of increasing costs threatening to undermine the ambitions of the Legislature’s most recent transportation funding bill — a 16-year, $17 billion package meant to complete the state’s megaprojects, expand access to transit and nonvehicle forms of mobility, reduce carbon emissions and begin the overhaul of the state’s ferry fleet, among other things.
In addition to 520, the project to extend the express lanes on I-405 came in more than $200 million over state estimates, ferry costs are higher and contractor interest is down. All combined, state officials are raising alarms about the state’s agenda, which is about to fill up.
Planning for the 520 project began as far back as 1997, with construction beginning in 2011. The current plan is to finish work by 2030.