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Municipality announces it's suing feds over failed work at Port of Anchorage

Sean Doogan
The Municipality of Anchorage announced Monday it has filed a lawsuit against a branch of the U.S. Department of Transportation related to mismanagement of the city's beleaguered port project. Loren Holmes photo

The Municipality of Anchorage announced Monday it has filed a lawsuit against the Maritime Administration, a branch of the U.S. Department of Transportation, over work performed on the beleaguered Anchorage port project. The lawsuit, filed in the Court of Federal Claims, in Washington, D.C., on Feb. 28, alleges that MARAD failed to properly oversee Port of Anchorage improvement work over seven years ending in 2010.

Much of the work -- including new, larger docks on the port's west and north ends -- has to be redone. Open-cell sheet pilings installed to create more dock space have failed, and the city claimed that MARAD's failure to properly manage the project contributed to construction problems. The city asked the court to decide how much money to give in damages, but noted hundreds of millions in federal money were essentially wasted -- including $302 million the city already transferred to MARAD for work done at the expansion project. Another $139 million was put into the project by the federal government.

The city took over the project from MARAD shortly after construction stopped in 2010. It is suing several subcontractors involved with the north and west dock work -- including the company that it has just hired to oversee the project's future. The port handles most of the goods that come into Alaska, and still needs much of the originally planned expansion work to continue operating. Currently, silt can force the barges that land at the Port of Anchorage twice a week to leave the dock when the tide goes down. That significantly slows the unloading process, according to Anchorage Assembly member Jennifer Johnston.

At the Monday press conference, Anchorage Mayor Dan Sullivan said the port work will not stop while the lawsuit goes through the court system. "The project is too important to the economy of the state to stop it,"  Sullivan said.

Because the port is bordered by the city of Anchorage and Joint Base Elmendorf-Richardson -- a sprawling Army and Air Force base -- there is little room to expand. So a project began to create land by driving sheets of metal into the Cook Inlet silt and backfilling with rock and dirt. But almost since its inception, the project has been plagued by construction problems, delays and cost overruns as the estimated price tag ballooned from $271 million to almost $1 billion. MARAD was tasked with the job because the port was declared a national security interest, and because much of the funding was came from federal coffers.

But a 2013 DOT Inspector General's report found that MARAD failed in its management of the project by not properly supervising the subcontractors doing the work. That report was consistently cited in the city's court filing against MARAD last week.

The report found that the agency did not establish itself as the lead agency, erred in handing off technical and management responsibility to the city, and mismanaged information about the project to the extent that it could not say, for certain, how federal funds were used and where the money went. But the federal agency isn’t the only group to blame for the project's failures, according to the city.

"It is our goal to hold everyone accountable for either their role or the direct construction itself," Sullivan said. In 2013, Sullivan released the results of a third-party engineering study that found that both the design and construction was fatally flawed. The city is suing Integrated Concepts and Research Corp. (ICRC), PND Engineers Inc., and CH2M Hill, which bought out former oilfield services and construction company VECO and with that purchase, inherited the company's liability in the early work done at the port. Metal sheets put into the silt to create more land were damaged and crushed during installation.

Even as lawsuits against MARAD and the subcontractors proceed, the city is looking to restart the project. It has hired CH2M Hill to manage the work, and is hoping to create a new port design and begin work on getting environmental permits over the next year. As for how much money the city should get in damages, the mayor said that would be up to the courts.

"We won't throw a number out just yet. During the course of the legal action, there will be a great deal of analysis of what was spent, and what, of the work already done, is still usable," Sullivan said.

The city said it will work with its new port project manager, CH2M Hill to come up with a complete port project design and will be asking the Alaska Legislature for funding in 2015.

"It is likely to be the single biggest funding request we make (to the Alaska Legislature) next year," Sullivan said.

Since the project has been designated a strategic project by the Department of Defense, some federal funding may still be available, but after years of problems on the project, it won't be an easy source of money. "We are going to keep working all of those sources because this is a strategic port for the Department of Defense," the mayor said. "It is important that it be upgraded to a 45-foot depth. But it won't be quite as easy as it was in the past to secure federal funding."

Contact Sean Doogan at sean(at)alaskadispatch.com