Legal question could delay Mo. project to repair 800 bridges

Friday, June 15, 2007 | 1:24 p.m. CDT; updated 9:00 p.m. CDT, Saturday, July 19, 2008

KANSAS CITY — A legal question concerning the bidding process is threatening to derail the state’s efforts to repair and maintain 800 of its worst bridges.

Concern over the size of performance bonds required from potential contractors may cost the state one of its two bidders on the massive project, under which the state would fix or replace nearly 80 percent of its substandard bridges by 2012.

Because state law requires two bidders, the initiative could be threatened if one of the bidders pulls out.

“We’re scrambling, trying to find a solution,” said Pete Rahn, director of the Missouri Department of Transportation,

The state had planned to award the bridge contract in July but now may have to wait until October so the issue can be resolved.

One of the teams bidding on the project is led by United Contractors of Great Falls, S.C. The other is led by Zachry American Infrastructure of San Antonio.

The project, announced last year, includes 800 bridges in one contract that would cover design, construction and 25 years of maintenance. It’s intended to get the bridges fixed faster and cheaper than bidding each of the 800 structures separately.

The problem concerns performance bonds, which protect taxpayers if a contractor abandons a project after it has started. The question is how much of a performance bond will contractors need for a project that could cost $400 million to $600 million?

The answer could determine whether a prospective contractor would bid on the project.

“We don’t want a team to withdraw,” Rahn said. “If we force this issue today, I think, we lose a team.”

Rahn said any delays could threaten the project, especially because the contracting teams have spent millions to prepare their bids.

“The longer you drag this out, the more cost they have invested,” he said. “The risk is one of them says, ‘You know what? We’re going to cut our losses here and stop.”’

The question is how to interpret a state law governing performance bonds.

Highway department lawyers believe the Transportation Department can set the bond, Rahn said, which in this case would equal the amount of construction in any single year. But one bidding team believes state law imposes a 30-year bond for the total project cost.

The difference could add millions of dollars to the project. Under the costlier scenario, Rahn said, contractors would be pledging so many of their assets to back the bond that it would be hard to secure other construction work.

Rahn said bonding requirements in state law did not consider the kind of large, long-term project that the Transportation Department has proposed with the 800 bridges.

United Contractors President Jim Triplett said the state needs to adopt legislation clarifying the legal problem. A bill attempting to do that died in the legislature this year.

A spokesman for Gov. Matt Blunt said he is considering requests for a special session this year, including one that would rectify the bond question.

“We are exploring every other option besides changing the law, but we’re not finding easy solutions,” Rahn said. “Without some legal epiphany, I think we’re going to end up needing a law change.”

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