Company Submits Low Bid of $778 Million for Tollway

A construction firm from Washington state had the low bid of $778 million Friday to design and build the proposed San Joaquin Hills tollway, the key 15-mile corridor that boosters say is vitally needed to ease the crush of traffic in South County.

Tollway officials said the bid from a consortium led by Kiewit Pacific Co. of Vancouver was more than they had hoped to pay for the highway, but they remained confident that the road can be built.

Just two companies offered bids. The first bid opened Friday was for $893 million.

“I’m sure glad this second bid came in, because another $120 million would have been tough,” said Greg Henk, deputy director of design and construction for the Transportation Corridor Agencies.

Several major hurdles will have to be crossed before ground can be broken for the pay-to-use highway, one of the largest public-works endeavors in county history.

Financing must be arranged, and the project has yet to receive environmental approval from the Federal Highway Administration. The tollway agencies also face a lawsuit filed by local environmentalists.

The agencies could award the bid as soon as Sept. 12. Officials for the agencies said an “escape clause” will be built into the contract in case the project does not go forward.

“When we walked in this room today, we had a 50-50 chance of getting this job,” said A.K. Kirkwood, a vice president of Kiewit Pacific Co. “Now we’re sitting here with our fingers crossed that (the tollway) gets its financing and environmental approval.”

Construction of the tollway from the John Wayne Airport area to San Juan Capistrano, cutting through Laguna Canyon and the San Joaquin Hills, is scheduled to begin next year and take four years.

Henk said the contract will be awarded to Kiewit Pacific and its partners unless the proposal contains major engineering flaws, which he said is unlikely.

The contract is an unusual “design-build” approach, which calls for the firm to do 65% of the design work. The tollway agencies have already completed the first 35% of design work needed for the environmental process and other regulatory hurdles.

Wally Kreutzen, the tollway agencies’ deputy director of finance, said adoption of the design-build approach should mean less risk for the agencies, lower costs and a better chance at arranging financing.

If awarded as expected, the contract will be a joint venture between Kiewit Pacific, which has built hundreds of major freeways throughout the United States and Canada, and Granite Construction Co. of Watsonville, which has built more Caltrans projects than any other state company.

The joint venture, which also includes the Tustin engineering firm DeLeuw, Cather & Co., is called California Corridor Constructors.

DeLeuw, Cather & Co. expects to employ 200 people to design the project, while construction would be handled by subcontractor Yeager Construction Co. of Riverside. The design will take 20 months, although parts are expected to be ready for construction as soon as early next year.

At the peak of construction, about 1,000 people would be employed.

Robert Stevens, a vice president with DeLeuw, Cather & Co., said: “This project should be a major boost to Orange County and the entire state of California as far as new jobs in engineering and construction.”

Eighteen months ago, the tollway agencies estimated that the road would cost $667 million in 1990 dollars. The bid, however, was established using 1995 dollars, when the project would be completed.

Five years of inflation would have brought the tollway agencies’ estimate up to about $750 million, Kreutzen said. The bid also includes newly added changes to accommodate environmental concerns, including bridges to protect wildlife migration paths.

“Frankly, it’s higher than I hoped, but it was within the range of feasibility,” he said about the winning bid.

William Woollett Jr, executive director of the tollway agencies, said that $778 million is the bottom line for the project and that the company cannot issue change orders that would increase the county’s cost.

“Now we know what it’s going to cost us, and that’s all it will cost us,” Woollett said.

The only possible increase in that cost is up to $25 million for unforeseen geological problems, such as landslides.

There is also a chance that new environmental regulations will add to the cost, especially if the California gnatcatcher, a rare songbird, is added to the state or federal endangered species lists before construction begins.

Kirkwood said Kiewit Pacific, Granite Construction and the design firm spent more than $1 million preparing their bid.

“I was surprised to see the difference in the two bids,” he said.

He said Kiewit Pacific has never built a tollway before but has built hundreds of freeway and highway projects, including some $1-billion contracts.

The tollway is “a major undertaking,” he said, one of the company’s largest.

In Southern California, past contracts by the company have included widening the Ventura Freeway and renovating the Colorado Street bridge in Pasadena.

The high bid came from Morrison Knudsen Corp. Two other firms that had intended to bid dropped out, one for financial reasons and one because it had a scheduling conflict with another project, Henk said.

“This is a momentous occasion,” said John Cox, board chairman of the agencies. “It has been 20 years in the making.”