World's Biggest Contractors Want in on Brent Spence Replacement Written by Jason Williams Apr 03 Cincinnati.Com
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http://news.cincinnati.com/article/20130403/BIZ01/304040038 ENQUIRER EXCLUSIVE: World's biggest contractors want in on Brent Spence replacement Written by Jason Williams Apr 03 cincinnati.com Some of the largest construction companies in the world are among more than two dozen firms and agencies that want to develop or finance a new Brent Spence Bridge, The Enquirer has learned. They include companies that helped build or renovate the Hoover Dam; New York’s Brooklyn Bridge (modeled after John A. Roebling’s masterpiece suspension bridge in Cincinnati); Boston’s infamous “Big Dig” tunnel; the Ohio Turnpike; and multibillion-dollar bridges, tunnels and other tollways across the U.S., Canada, Europe, Asia and South America. “It’s a who’s who of contractors that build projects like this,” said Tim Faerber, regional president of HNTB, one of the nation’s leading firms on multibillion-dollar infrastructure projects. Twenty three companies, or teams of companies, responded to an Ohio Department of Transportation inquiry designed to gauge private-sector interest in the $2.5 billion Brent Spence Bridge project. • Brent Spence Bridge alternatives • Retro: A look at Brent Spence history The inquiry is not part of the official project bidding process, and a response was not required for a company to pursue a contract later, ODOT spokesman Steve Faulkner said. Rather, ODOT was seeking best ideas for how to develop, finance and deliver a replacement bridge – including using tolls. It asked companies about their experience with massive infrastructure projects and expects responses to help “confirm” or “refine certain assumptions” about how to build a new bridge here. The Enquirer obtained the list of the firms and their responses through an open records request. Transportation officials say the number of companies showing interest is unprecedented for any single project in Ohio. They say it also shows the magnitude of the project and its importance to national commerce. The 49-year-old Brent Spence Bridge on Interstates 71/75 is part of the nation’s busiest freight corridor, carrying an estimated 4 percent of the country’s gross domestic product. But the bridge is outdated and overcrowded and is considered “functionally obsolete” because of its narrow lanes, lack of emergency shoulders and limited visibility on the lower deck. A replacement is currently unfunded, however, and officials are deeply divided on financing, especially on whether to use tolls to pay for construction. Those political and financial hurdles must be cleared before the bidding process even begins. Project interest 'breeds competition' The 23 companies and teams told ODOT they could do all or parts of the bridge project, including financing, building, operating and maintaining the bridge for decades. Most of the companies have experience with projects financed by tolls. And all said tolls offer a viable way of financing this project. If implemented, tolls could be necessary for 30 to 99 years, the companies said. “The critical part of this interest is that it breeds competition,” said Mark Policinski, executive director of the Ohio-Kentucky-Indiana Regional Council of Governments, the region’s top transportation planning agency. “That will drive down the project costs, it will deliver a better product and it’ll deliver it quicker.” Page 1 of 4 04/04/2013 08:18 AM http://news.cincinnati.com/article/20130403/BIZ01/304040038 Ohio Gov. John Kasich and Kentucky Gov. Steve Beshear both have repeatedly said that tolls are the only way to get the project done, because of a lack of sufficient federal funding. They authorized a $4 million study to map out a financing plan. Results of the HNTB-conducted study may not be available until June. Separately, the states also agreed to request responses from development and financing companies to help shape the project. ODOT is taking the lead working with Kentucky. Kentucky, however, must approve any financing plan because the bridge belongs to that state. And Northern Kentucky lawmakers are adamantly opposed to tolls and any legislation that could lead to them. The Kentucky General Assembly adjourned last week without taking any action on bridge financing, in part because the HTNB study is not yet finished. Kentucky’s transportation plan calls for no more money to be made available for the project if a finance plan is not in place by the end of the year. However, Kentucky lawmakers have said the issue of financing the project is not going to go away, and it’s possible the deadline could be pushed into 2014 if progress is made on putting the financial package together. World's largest contractors interested Companies interested in the Brent Spence project include three of the five largest construction contractors in the world, according to Engineering News-Record’s ranking of the top 225 international contractors. They are Spain’s Actividades de Construcción y Servicios (ACS), France’s VINCI and San Francisco-based Bechtel Infrastructure Corp., the largest U.S.-based international contractor. Companies headquartered in Germany, Sweden, Australia and the United Kingdom also have shown interest. Several of the companies bid on part of a $2.6 billion, two-bridge project in Louisville and Southern Indiana. Tolls will help pay for both bridges. VINCI and German investment firm Bilfinger – also on ODOT’s list – are part of the team that will build one bridge through a public-private partnership with Indiana. Most of the companies have extensive experience delivering megaprojects through public-private partnerships. Such a partnership is a contract between the government and private sector designed to help the public agency fill a funding gap in order to move the project forward. In a P3, the private company assumes different levels of financial risk upfront. Such a deal on a massive infrastructure project almost always involves tolling because that typically is the best way to guarantee payments to the private company. Bechtel, for example, completed a seven-year, $3 billion upgrade of the London Underground subway through a public-private partnership in 2010. The company also built the Hoover Dam and the $14.7 billion English Channel rail tunnel connecting England and France. Bechtel’s bridge portfolio includes the $615 million Tacoma Narrows Bridge. The 2,800-foot toll bridge spanning the Puget Sound is the fifth-longest suspension bridge in the U.S., according to the Washington State Department of Transportation. Addtionally, Bechtel has done government contract work on infrastructure in Iraq. The company said it generates more than $32 billion in annual revenue, according to its response to ODOT. Companies embroiled in controversy Bechtel also is among companies that have been embroiled in controversy over megaprojects. It has been heavily criticized and tied up in litigation for cost overruns and mismanaging the $14.8 billion Big Dig, a 15-year project that buried a highway under downtown Boston. The Big Dig is one of the largest infrastructure projects in U.S. history. Page 2 of 4 04/04/2013 08:18 AM http://news.cincinnati.com/article/20130403/BIZ01/304040038 In 2003, a Boston Globe investigation found that $1.1 billion in cost overruns were a result of Bechtel errors, including mistake-laden design plans and construction flaws. In 2006, a motorist died after part of the tunnel’s ceiling collapsed. Bechtel and Big Dig partner Parsons Brinckerhoff – part of another team on the ODOT list – paid $407 million to settle a government lawsuit in 2008 stemming from the woman’s death, cost overruns and other tunnel problems. “That’s just one of hundreds of projects we’ve done around the world,” Bechtel spokeswoman Michelle Michael said. She referred The Enquirer to Bechtel’s 18-page response to the Globe investigation, which says in part: “Virtually every construction project faces unanticipated challenges requiring contract modifications, known as change orders, that are not the result of neglect, mistakes, or abuse.” More recently, Dragados USA – which teamed with ACS to respond to ODOT’s inquiry – has been involved in a legal battle with another partner over work on an $8.25 billion New York City subway project. The partner, Judlau Contracting, has accused Dragados of mismanaging construction work, resulting in a $250 million loss, the New York Times reported in August. Critics skeptical of privatization Toll opponents say the responses are another reminder that privatizing the bridge is a bad idea because Ohio and Kentucky lack experience doing major infrastructure projects through a public-private partnership. The public is often skeptical of public-private partnerships, mainly because of the potential for the private company to lack accountability in operating and managing infrastructure. “My fear is not that P3s are purely evil,” said Covington City Commissioner Steve Frank, one of the most outspoken toll opponents. “I just doubt the competence of the people doing the deal.” Frank added: “Whatever you save on the front end, you’re going to overpay on the back end. It’s not like doing a routine municipal bond deal. It’s like challenging Minnesota Fats to a game of pool.” Port authority not likely to drive Brent Spence project The Port of Greater Cincinnati Development Authority most likely will not be selected to lead the Brent Spence Bridge project. The state has not embraced the port’s idea to lead the project, mainly because the quasi-governmental agency lacks experience working on an infrastructure project as massive as the Brent Spence. The bidding process partly scores a company based on its portfolio. The project is drawing interest from top firms around the world. “It’s not financed yet, so all things are possible,” port president Laura Brunner said. The port is the only locally based entity to respond to the state’s inquiry seeking interest in the project.