Kiewit Corp., the big contractor leading one of four teams seeking the prime contract for the planned $2-billion AirTrain monorail replacement at Newark Liberty International Airport in Newark, N.J., has dropped out of the competition, according to a source familiar with the matter.
The Port Authority of New York & New Jersey, the project's owner, has not separately confirmed the withdrawal. Nor is it clear whether other members of Kiewit’s team, called Liberty Mobility Express, played a role in the contractor's decision to exit.
Kiewit’s AirTrain project team consists of its unit Kiewit Infrastructure Co., with Tully Construction Co., Alstom Bombardier, AECOM, HOK and Mueser Rutledge Consulting Engineers.
The Newark airport project involves a design, build, operate and maintain contract for a new AirTrain system envisioned as a replacement for the increasingly troublesome 25-year-old monorail transport system. The new 2.5-mile elevated guideway system will link three terminals, including the 1-million-sq-ft flagship Terminal One set to open next year, and other parts of the airport complex.
Three other teams shortlisted for the project are led by Skanska USA Civil Northeast, Dragados USA and a joint venture of Tutor-Perini and Parsons Construction Corp.
Kiewit NYC Bridge Dispute
The reported withdrawal comes as a separate Kiewit-led team completes the third month of federal court litigation with the port authority over disputed costs on another project—the $1.5-billion replacement Goethals Bridge between New Jersey and Staten Island, N.Y., completed in 2018. Kiewit has made an estimated $100-million claim tied to its costs on that project that the agency refuses to pay.
Neither the port authority nor Kiewit would comment on the litigation, which promises to be long and costly, if not settled.
The Goethals dispute is the second major infrastructure design-build project in the New York City area to land in court recently. A prior lawsuit in federal court between a Fluor Corp.-led consortium and the New York State Thruway Authority involves the team’s $900-million claim for added costs on the new Mario M. Cuomo Bridge spanning the Hudson River north of New York City that was completed in 2018.
The port authority’s Goethals Bridge project was the first it awarded as a design-build public-private partnership. Led by Macquarie Group and Kiewit Development Co., the P3 team won the concessionaire contract in 2014.
It also included Parsons and the construction joint venture of Kiewit Infrastructure, Weeks Marine and Massman Construction.
Three months into the Goethals Bridge federal lawsuit, the port authority and the Kiewit team appear deeply dug in to their respective legal positions. The litigation bears some resemblance to Fluor’s claims and the dispute over the Cuomo bridge project, particularly related to differing conceptions of what the design-build process was supposed to entail.
The Kiewit-led bridge team, called NYNJ Link Developer, says in its complaint that the port authority had switched away from traditional design-bid-build to design-build.
The fundamental shift, according to the complaint, should have transformed the port authority’s role from one where it had substantial control over the project to “very limited” control, especially on design, submittal and quality control issues.
Instead, the complaint alleges, the agency and its consulting engineer “systematically injected themselves into every one of these processes—breaching its express duties under the contract. Disruptions, lost efficiency and acceleration requirements resulted, the complaint states.
Board Upheld Claims
The claims against the port authority were upheld by a three-member dispute review board which reviewed the issues in 2019 and 2020. The board awarded the team $90 million, but the agency refused to pay, the Kiewit team lawsuit claims.
In a counter-lawsuit seeking to invalidate the Kiewit team’s complaint, the port authority argues that the team failed to comply with its contract requirements for notification of delay and “compensation events” that would merit additional pay.
All such delay and compensation events had to be made within 10 to 20 days of their occurrence, the port authority argues. But the Kiewit team did not make them until August 2018.
The Kiewit team “was years late in providing notice of each of the events enumerated in the 2018 claims,” the port authority argues. “This is because each of the events enumerated in the 2018 claims allegedly occurred in 2014, 2015, or 2016.” Some took place as early as May 2014, the port authority adds, near the start of project work.
In the port authority’s understanding, the dispute review board and process described by the Kiewit team lacked authority. The agency argued that the dispute review board was a technical review panel, not one for a binding arbitration.
When the port authority told the board of the missed notification deadlines by the Kiewit team, “the technical board chose to proceed anyway” and adjudicate the pay issues.