Construction Law

ALASKA WAY VIADUCT TUNNEL TWO REMAINING BIDDERS ARE OFFERED INCENTIVES

By John P. Ahlers

The bid deadline for the Highway 99 tunnel on the Seattle waterfront is 1:00 p.m. on October 28, 2010. WSDOT has offered the two remaining bidders Seattle Tunnel Partners (led by HNTP) and Seattle Tunneling Group (led by Parson Transportation Group) $230,000,000 in concessions/incentives. WSDOT is shifting money out of its contingency fund and will pay the winning tunneling team $100,000,000 to cover inflation, reimburse the team an additional $110,000,000 for bonds and insurance (indicative of the risky nature of boring a 55 foot diameter tunnel beneath downtown Seattle) and $20,000,000 in "deformation allowances" (allowances to repair buildings and other structures that are damaged if the tunnel causes soil to settle). The concessions are designed to reduce the bidders' risk and reduce the bid amounts to eventually hit the target price of $1.1 billion published by WSDOT many months ago. WSDOT has hinted that it may offer further incentives and enticements such as a reimbursement because WSDOT moved the South tunnel entry by 600 feet, an allowance if the tunnel boring machine does not require costly repairs in the ground, and an incentive payment to finish the job before November 6, 2016.

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Full post as published by Construction Law Blog on October 26, 2010 (boomark / email).