Contractors Fear Slow Awards Will Jam Louisiana Deadlines
With 25 months left to bring New Orleans’ Hurricane and Storm Damage Risk Reduction System to 100-year protection levels by a promised June 1, 2011, deadline, the U.S. Army Corps of Engineers has awarded 180 contracts worth $2.5 billion of the roughly 350 contracts required for the $14.3-billion program.
The Corps says it is on track, but industry representatives fear the work window is closing fast and if remaining awards aren’t made soon, it will be impossible for contractors to deliver by deadline.
“It would be easier to hook a cable to the moon and stop it from spinning,” says one contractor, who spoke on condition of anonymity because he fears getting on the bad side of the Corps, which makes awards based on a preferred contractor bid formula. “You know how [Lt. Gen. Robert] Van Antwerp [chief of engineers] says we’ll get this done or break our backs trying? The Corps said they would put $10 billion to $14 billion on the street in the next two years. Well, they have been talking about that for three to four years and contractors have been buying equipment and stockpiling people, only to not use them.”
Freddie Rush, executive vice president of Mississippi Valley Associated General Contractors, says many MVAGC members whose work is focused on civil works construction for the Corps and a few natural resources conservation services have similar concerns. “The Corps asks us about our ability to get it done...but we keep reminding them that they cannot get to a year and a half out and expect us to execute $10 billion to $12 billion worth of work in that time,” Rush says. “The window is getting narrower and narrower, and it is getting to a point that it will be impossible.”
Of the $14.3 billion, about $10.5 billion is for construction, says Karen Durham-Aguilera, director of Task Force Hope, which oversees completion of HSDRRS. The rest is for design, real estate, environmental mitigation, management and quality assurance.
Still, $8 billion awarded in two years is larger than the Corps’ typical national civil-works budget. Contractors worry that as time gets compressed, competition will stiffen for materials, delivery and manpower, and safety risks will rise, Rush says. “The Corps has been telling us for the last two to two and a half years they will be putting this work out, but things keep changing with the schedule,” he says. “At first they reported they were going to award 113 contracts worth $4.1 billion in 2009, and now it’s 100 contracts at $3.2 billion.”
If industry gets jammed, costs will rise, says Scott Kirkpatrick, president and executive director of Coast Builders Coalition, formed last year to guard industry interests in Louisiana’s hurricane rebuilding and coastal restoration drive. Kirkpatrick says with so many large projects involving state and federal parties, it’s important for industry, as opposed to individual contractors, to have a unified voice on common issues, challenges and opportunities. “Everyone wants to finish by 2011 and be a part of a program that was very successful, but everybody is concerned about the implications of the schedule creeping back more and more,” he says.
Materials suppliers say they worry about delivering if contracts are compressed. “Our plant is very large compared to trucking capacity, so please don’t release all the work at one time,” says Joey Ditta, third-generation owner of Carlo Ditta Inc., a local ready-mix supplier.
“As far as rebuilding levees in New Orleans, this is the perfect time for it because the economy is bad and resources are available,” says Gary Wheeler, general manager for Foster Piling, a division of L.B. Foster Co., Pittsburgh. He says he urged the Corps to place orders before late summer, when federal American Recovery and Reinvestment Act money is expected to increase steel orders. In mid-April the Corps’ New Orleans District issued a pre-solicitation notice to purchase sheet pile, but at ENR press time the amount to be stockpiled had not yet been determined.
Cajun Constructors has about 30 cranes on a $132-million job building 8,000 ft of T-walls. The stagnant economy elsewhere leaves a lot of resources available, says Scottie Melancon, project manager for Cajun, a subsidiary of Cajun Industries LLC, Baton Rouge. However, with other big Corps projects set for award this year, getting heavy equipment will be increasingly challenging, he predicts. “The Corps is about to award 21 miles of T-walls in Saint Bernard Parish that will make this 8,000 ft look like nothing,” he says. “The equipment issue is about to get a whole lot hairier.”
According to the Corps, the number of contracts and award dates involve changes driven by the design and packaging of projects. But the changes don’t mean the Corps won’t meet its June 1, 2011, deadline, Durham-Aguilera says. “The features of work you need in place to close the system—to deliver 100-year levels of protection—will be in place, but construction projects will be ongoing past that date.”
For example, the central barrier wall, sector gate and barge gate of the Inner Harbor Navigation Canal Storm Surge Barrier will be complete, but the hydraulics for the sector gate may not. “That would mean the protection is in place, but the gate would have to be manually operated,” Durham-Aguilera says. Currently, the Corps plans to award nearly 50 contracts at more than $3 billion in 2010 to “close the system,” and other contracts will be ongoing in 2011, 2012 and 2013, Durham-Aguilera says.
The Corps was criticized in February 2007, when Durham-Aguilera first came on board to set the program and cost schedule and the completion deadline was moved from September 2010 to June 2011. “We knew that September 2010 deadline was unrealistic because we didn’t even have the design criteria then,” Durham-Aguilera says. However, she says the Corps is committed to the current deadline, a pledge Van Antwerp renewed before Congress in February.
The Corps conducts frequent industry days to listen to the construction community as well as apprise it of new contracting methods and schedule changes. HSDRRS performance is reviewed monthly by headquarters, but by press time ENR’s request to see those reviews remained unanswered. Task Force Hope also conducts weekly assessments of progress using Primavera P5, which is “project-loaded, resource-loaded and milestone-loaded,” Durham-Aguilera says. “We also use earned value, which is pretty standard in industry for larger firms, to make sure we have ongoing resource activity to do the work and stay on track.”
Rush says his members understand the Corps is juggling many issues, including borrow material sources, environmental assessments, project cooperative agreements with local sponsors, new contracting methods and evaluating contracts and proposals. “We all know how enormous and complex the job is, but the biggest issue is the time element,” Rush says. “I don’t think they can afford to wait much longer. Once we get inside that two-year window, we will all get anxious about whether we can get that work done by June 2011.”
Kirkpatrick says a long-term concern is that rebuilding and coastal-restoration contractors who flocked to the area after Hurricane Katrina will be discouraged by an uneven flow of work and leave. Several MVAGC members say they’ve suffered financially by gearing up equipment and manpower to be ready for 2011 work that has yet to be awarded, Rush says.
Kirkpatrick says another long-range concern is work fall-off after 2011 or later. The state also has a comprehensive plan for a sustainable coast that will cost an estimated $50 billion to $75 billion, Kirkpatrick says, but there will be no dedicated funding source until Louisiana begins to reap oil and gas tax revenue from drilling on the outer continental shelf.
“It’s very important that we bridge that gap between 2011 and 2017 to maintain our efforts toward a sustainable coast so companies aren’t forced to go into other lines of work or move elsewhere,” Kirkpatrick says. Opportunities exist at the local, state and federal levels to secure additional funding, by bonding against outer-continental-shelf revenue, or targeting Water Resources Development Act funds.
“We don’t want the big lesson from Katrina to be forgotten: that south Louisiana is vulnerable, and it [will] take a focused effort over a number of years to get to where wetlands are restored and the population protected,” Kirkpatrick says. “After [Hurricane] Betsy, 40 years later, you still had projects that weren’t completed. They lost focus. We don’t want to wind up in the same boat.”