UPDATE: Dec. 20, 2019: In a Dec. 13 8-K filing with the U.S. Securities and Exchange Commission, general contractor Tutor Perini said it would take a $119 million after-tax charge in the fourth quarter after a state court jury awarded the Washington State DOT $57.2 million for breach of contract on the SR 99 Alaskan Way Viaduct Replacement project.
On the form, Tutor Perini said that as a 45% partner in the Seattle Tunnel Partners joint venture with Dragados USA, the charge represents a potential $25.7 million cash payout to WSDOT plus “non-cash write-downs primarily related to the costs and estimated earnings in excess of billings and receivables that the company previously recorded to reflect its expected recovery in this case.”
Tutor Perini said that STP still plans to appeal the verdict.
- General contractor Tutor Perini announced Friday that it plans to appeal a state court jury verdict that awards the Washington State Department of Transportation (WSDOT) $57.2 million for claims related to the $3.3 billion SR 99 Alaskan Way Viaduct Replacement project in Seattle. Tutor Perini has a 45% interest in Seattle Tunnel Partners (STP), which is the entity that performed the $2 billion tunneling work. Dragados USA is the other partner in STP.
- STP started tunneling for the project in July 2013 but in December of that same year, the tunnel boring machine (TBM) broke down and needed extensive repairs that included building an 80-foot-wide by 120-foot-deep shaft through which STP could lift large pieces of machinery to the surface above.
- Tutor Perini claims that the TBM was damaged and was forced to stop work after it hit an unexpected steel pipe casing, an incident that an independent dispute review board classified as "differing site conditions," according to the company. WSDOT claims that STP was aware of the pipe. The Thurston County Superior Court jury in Olympia, Washington, also rejected STP's counterclaim for the costs associated with the TBM's repair, according to the Associated Press.
The repairs to the TBM took two years, and the WSDOT sued STP for liquidated damages, claiming breach of contract for failure to meet the project deadline. The tunnel opened on Feb. 4, 2019, approximately three years later than the original projected date.
STP also has outstanding claims filed in a King County, Washington, court against insurance policies related to the SR99 project and expects those to be resolved in 2020 or 2021.
Before Tutor Perini issued its statement about appealing the verdict, Roger Millar, secretary of the WSDOT, said, "We have remained steadfast in our belief that Seattle Tunnel Partners was responsible for the costs of fixing the broken tunneling machine and paying damages for completing the tunnel three years late. We believe the jury got it right and we are grateful for their patience and dedication to ensuring a fair outcome to this case. Since an appeal is possible, we cannot yet say what will become of the damages awarded by the jury."
"Some wanted to abandon this project," said Washington Gov. Jay Inslee, "but we should be thankful Washington persisted in the face of difficulties. We never wavered from our position that it was always the contractor’s responsibility to fix the tunneling machine and that taxpayers should not pay the repair bill."
After the tunnel opened, work began in March on the demolition of the double-decker Alaskan Way Viaduct under a $97 million contract with Kiewit Infrastructure West. When Kiewit is complete with demolition and associated work such as removing two ramp structures; decommissioning, sealing and filling Seattle's Battery Street Tunnel; rebuilding and raising to grade select streets and restoring some existing waterfront infrastructure, it will allow for additional construction on a new waterfront district.
Meanwhile, STP partner Dragados is a member of one of two groups competing for the $2.1 billion, 3.5-mile extension of the Vancouver SkyTrain light-rail system in Vancouver, Canada. Tunneling will feature prominently in the project, and that operation should begin sometime next year after the winner is announced. The new line is expected to open in 2025.
Dragados is also leading design and construction of the $3.3 billion Hampton Roads Bridge-Tunnel (HRBT) expansion project. Dragados, along with its partners Flatiron Construction, the Vinci subsidiaries of Vinci Construction Grands Projets and Dodin Campenon Bernard, HDR Engineering and Mott MacDonald, will build a four-lane tunnel and widen four lanes of Interstate 64 to eight lanes between Hampton, Virginia, and Norfolk, Virginia.