With steel fabricators and contractors bruised by jumps in steel prices, Transportation Secretary Norman Mineta says he plans to explore ways to ease the pain. They may include seeking legislative changes from Congress.
The Federal Highway Administration said on April 9 that it cannot provide price adjustments to existing contracts. That led construction officials to look into a legislative fix for the steel problem. If Mineta decides to back such a change, it would give that option a major push.
The rise in prices has sparked widespread worry in construction, including major bridge projects. The steel-price impact "is a real issue thats facing us right now," says Mineta. "Ive been told that we cant do anything retroactively for contracts that are already in place, but that we can provide provisions in future contracts for escalator clauses for things like increased steel prices."
Mineta wants fabricators to survive. "The problem I see...is that if the fabricators go bankrupt right now, theyre not going to be around for jobs coming up," he says. Mineta says he plans to meet with DOTs general counsel on whether "we have to go back to Congress and get a legislative solution rather than a change in contractual law. [Currently,] we dont have any wiggle room on what to do on giving relief to contractors."
One of the major bridge projects that could be affected by the steel price escalation is the new Woodrow Wilson Bridge now being built across the Potomac River at Alexandria, Va. The $720-million bridge will have two parallel bascule spans totaling 12 lanes. It is the main element in a $2.4-billion project that includes upgraded interchanges.
U.S. DOT, Maryland, Virginia and the District of Columbia share the project cost. "Were concerned about the increase in cost of steel, specifically on this bridge," says Maryland DOT Secretary Robert L. Flanagan. "It poses some very serious challenges to our making the kind of progress that we want to make and will be making" on the project.
Maryland Highway Administrator Neil J. Pedersen wrote FHWA on April 2 that steel price trends "present a real threat to the three [Wilson] superstructure contracts," which involve more than 40,000 tons of structural steel. Pedersen said about half is "at risk of delay due to disputes regarding the price increases."
Officials plan to finish a new, six-lane bridge, about one mile long, in early 2006. The existing, six-lane bridge, which was completed in 1961, will be demolished and a second, six-lane bridge will be built there. Completion is expected in 2008.
"The fact that the secretary is focused on the issue and is looking for remedies is indeed encouraging," says Marianne Pastor, a vice president with Williams Industries Inc., a steel fabricator on the Wilson project. "He is possibly in the best position to influence a solution that will be broad-based and equitable."
Manassas, Va.-based Williams has the steel contract for the bridge section from Virginia to its drawspan. Pastor says the firms share of the contract initially was estimated at $30 million. All of the steel for Williams part of the six-lane outer span has been purchased, she says. But Pastor adds, "We are not willing to say that it was not without some difficulty." That steel now is in fabrication.
The California Dept. of Transportation is watching steel prices as it plans the $740-million suspension span of its San Francisco-Oakland Bay Bridge project. The 1,860-ft-long, single-suspension span will need 67,000 tons of steel (ENR 11/3/03
p. 10). Caltrans planned a bid opening last Oct. 21, but postponed it to Jan. 21 and then to May 26.
"We were just beginning to hear about...changes in the steel market" in December, says Dan McElhinney, chief deputy director in Caltrans Oakland district. He says rescheduling bid dates "gave both the department as well as the contractors the opportunity to assess how [steel prices] might affect their ability to bid."