Sullivan proposes spending $2 million for Outside law firm in port expansion

ldemer@adn.comOctober 24, 2012 

— Mayor Dan Sullivan is asking the Anchorage Assembly to approve spending up to $2 million on an Outside law firm for litigation over the troubled Port of Anchorage construction project.

The money would be on top of an existing $500,000 contract the municipality has with Seyfarth Shaw, according to a memorandum from the mayor to the Assembly. The big international firm has 750 lawyers, 10 offices in the United States including three in California, and expertise in construction law, according to its website.

"The Port of Anchorage is unquestionably critical infrastructure for the Municipality and the State of Alaska, and substantial work is needed to correct deficiencies in the work performed to date," the mayor's memorandum said. "The Municipality is the only entity willing and able to lead litigation to recover the additional cost of correcting the work from the parties responsible."

Asked about the new budget item at his regular Wednesday press briefing, Sullivan expressed surprised that the proposed expansion of the legal contract was public.

"I'm trying to figure out where you got the figure of $2 million," Sullivan said.

Actually, the item was posted on the city website with the agenda for the Oct. 30 Assembly meeting. The document from the mayor's office says that "attorney's fees are estimated to be two million dollars ($2 million) for phase one of the litigation, consisting of efforts in advance of trial."

The mayor said the matter came up at Tuesday's Assembly meeting, but in a closed, executive session.

"Bottom line is there was an executive session yesterday that both the Assembly and the mayor and some of my staff attended. And everything discussed in the executive session is not to be discussed," Sullivan said.

He offered just one piece of information: The legal costs will come out of the port's budget.

More than $300 million already has been spent on the flawed project, and the city has little to show for it. As of earlier this year, the estimated price tag for the port rebuild topped $1 billion, but the figure keeps growing. Sullivan has proposed a scaled-down project for less money.

Assembly member Jennifer Johnston, who chairs a committee with oversight over the port, said the city needs to hire the best-equipped and most-experienced lawyers it can to resolve the construction issues.

"I think the key word is 'up to' $2 million," Johnston said. "The port is one of the municipality's largest assets. And if there are legal issues with one of our largest assets, then I want to have the best and the brightest, the top guns, working on it. Because ultimately, we have to finish the port."

Almost everything Alaskans eat, wear or drive comes through the port.

The expansion project, which has been in the works more than a decade, entails a complete rebuild. But the effort stalled in 2009 after crews discovered sheets of steel being hammered into the seafloor were bent, jammed together or otherwise damaged. Unlike a traditional dock on piling, the new port is designed as a series of U-shaped steel cells that would be backfilled with dirt and gravel to create new land. The front of the cells would be the new dock face.

The city has a draft copy of a study by CH2M Hill examining whether the project can be built as designed. The mayor on Wednesday stood by his earlier position that he's not going to discuss the study because he signed a confidentiality agreement with the U.S. Maritime Administration. MARAD was the lead government agency on the project until the city took over the role earlier this year.

The confidentiality agreement does not mention the study, but refers to litigation.

The Assembly and the city's Geotechnical Advisory Commission are scheduled to be briefed on the study Nov. 9, and the mayor said that's when information about it will become public.

But before that, in the Nov. 6 general election, Alaska voters are being asked to consider a $453 million statewide bond proposition that includes $50 million for the port project.

The city is not a direct party to state and federal lawsuits now pending over the project. Nor is it a party to a claim filed against MARAD in the U.S. Civilian Board of Contract Appeals by a port contractor, according to the mayor's memorandum. Even though that claim was recently settled, the city says it still has an interest in recovering the costs of fixing the damaged work.

The city initially contracted with Seyfarth Shaw in July 2012 after putting out a request for proposals. A dozen top construction law firms from Alaska and the Lower 48 responded, the mayor's memorandum said.

Since then, the firm has become immersed in the "complex legal and factual issues involving the Project," the memo said. It has been gathering information and working with the Maritime Administration in defense of claims from contractors.

MARAD had never managed a port construction project before, nor had its lead contractor overseeing the construction, Integrated Concepts and Research Corp., or ICRC. The federal contract with ICRC expired in May. ICRC hired subcontractors to do the actual work.

 

Reach Lisa Demer at ldemer@adn.com or 257-4390.

 

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