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High Bids Cloud Dredging Plan by Brent Hunsberger & Alex Pulaski The Oregonian, April 22, 2005

Project managers weigh options after bids for initial work
on the Columbia River come in at least $12.5 million over budget

The federal government's attempt to deepen the Columbia River shipping channel hit a snag this month when the lowest bid for initial work came in 69 percent above government estimates.

The U.S. Army Corps of Engineers had hoped to save money by hiring a firm to deepen by 3 feet the first 25 miles of a 103-mile stretch of the shipping channel between Astoria and Portland. At the same time, the firm would perform maintenance dredging -- work done every summer to keep the shipping channel 40 feet deep.

But the bids, submitted April 12, came in at least $12.5 million over the project's $18.2 million budget, documents show. Great Lakes Dredge & Dock of Oak Brook, Ill., submitted the lowest bid at $30.7 million. Manson Construction of Seattle bid $39.8 million.

The higher-than-expected bids are the latest development threatening to delay the long-awaited $150.5 million project. The plan is scheduled for completion in 2007 but has yet to be fully funded.

Congress appropriated only $9 million of its $95 million obligation to the project in fiscal 2005. President Bush has proposed an additional $15 million for 2006. But proponents say the project needs $40 million next year to stay on schedule.

Some environmental restoration work linked to the project was completed last year. The bids represented the corps' first efforts to deepen the channel by dredging.

The high bids are significant because federal rules prevent the corps from launching a project when bids are more than 25 percent above its estimates, corps spokesman Matt Rabe said.

Corps project managers and lawyers have been meeting all week to review options, including whether to seek additional bids now or try "sometime in the future," Rabe said. The corps could announce a decision as soon as today, Rabe said.

A spokeswoman for the Columbia River Deepening Coalition, which favors the project, said she was confident the delay would not keep the project from going forward this summer. Deepening the channel would allow ships to load more fully and cut operating costs, proponents say.

"I can tell you after 16 years of getting the project approved, the project will not be scrapped," said Theeme Holznagel, the coalition's assistant director. "The project is moving forward."

But Nina Bell, executive director of Northwest Environmental Advocates, a Portland nonprofit that has filed suit against the corps to try to stop the project, said the new bids cast a shadow over the corps' assumptions.

"Within the lawsuit, we've raised serious questions about the economic viability of the deepening project," she said. "This information seems to indicate that not only are our concerns warranted, but things are even worse than we thought."

Rabe said the corps had hoped to save money by packaging the routine maintenance work throughout the length of the channel with about one-third of the deepening project. He said corps officials were shocked by the cost discrepancies.

"We've worked with these companies before," Rabe said. "These are the highest bids we've ever seen from them."

A breakdown of the bids shows the dredging companies expect to spend millions more in three areas: removing some of the denser material in the river, disposing of dredged material in the Pacific Ocean and getting equipment to and from the Columbia River.

Leonard Juhnke, dredging manager for high-bidder Manson Construction, said the timing and immense size of the project drove up cost estimates.

Because of demand for dredging equipment in Gulf states to perform hurricane restoration, Juhnke said, his company would have to modify its equipment -- at significant expense -- to perform the Columbia work.

"This was such a huge contract that very few contractors are capable of doing the entire job," he said. "If it could have been tailored to smaller contracts, they would achieved more competition."

Bob Applegate, a spokesman for the Port of Portland, said it remained unclear how the higher bids would affect the project. He said the Port, which has preliminarily budgeted $7.3 million for channel deepening in its next fiscal year, would support the corps in trying to resolve cost issues.