Anchorage settles with port contractors, MARAD suit ongoing

The Municipality of Anchorage has settled its lawsuit against all the private contractors involved in the bungled and scrapped Port of Anchorage Intermodal Expansion Project, clearing the way for a renewed court showdown with the federal government.

In less than a week starting Jan. 26, municipal attorneys filed documents in U.S. District Court of Alaska announcing settlements with four defendants — CH2M, GeoEngineers Inc., Integrated Concepts and Research Corp., and PND Engineers Inc. — stemming from the lawsuit filed in early 2013 seeking damages for the failed construction project.

The municipality started resolving the case last June when it settled with MKB Constructors, a construction company that partnered with Quality Asphalt Pavement to install the PND’s proprietary Open Cell Sheet Pile dock design, which was at the heart of the court dispute.

Work on the project — started way back in 2003 — was halted in 2010 and never resumed after extensive damage to installed sheet pile was discovered.

Following an August 2016 settlement with QAP, Anchorage reached an agreement with Terracon Consultants Inc last October. A national engineering firm, Terracon reviewed a 2008 evaluation report of the Open Cell Sheet Pile that the municipality claimed was faulty.

In total, the Municipality of Anchorage settled the port lawsuit against the contractors for $19.35 million. The individual settlement amounts are listed below:

• $5.5 million, MKB Constructors: a third-party defendant of PND Engineers Inc.

• $5.15 million, Quality Asphalt Pavement: a third-party defendant of PND Engineers Inc.

• $3.75 million, Integrated Concepts and Research Corp.: a primary defendant

• $1.95 million, Terracon Consulting Inc.: a third-party defendant of CH2M

• $1.5 million, CH2M: a primary defendant

• $750,000, GeoEngineers Inc.: a primary defendant sued in November 2014 when the municipality filed an amended complaint

• $750,000, PND Engineers Inc.: a primary defendant

GeoEngineers was another of several companies that reviewed dock plans and geotechnical information related to the Open Cell Sheet Pile. CH2M was involved through its purchase of VECO Alaska, another engineering firm with a small consulting role in the effort.

However, the municipality also commissioned CH2M to study the appropriateness of the Open Cell Sheet Pile design for the Anchorage Port after work had stopped on the project.

The international engineering and construction management firm deemed the design an unsuitable match for the layers of compacted glacial till beneath the port. That study was in part the basis for the municipality’s subsequent lawsuit filed shortly after it was finalized in February 2013.

Finally, the municipality turned to CH2M again in January 2014 when the company was selected to manage the ongoing, scaled-back Anchorage Port Modernization Project.

PND has consistently rebutted CH2M’s study conclusions; the Anchorage-based engineering firm contends improper installation of the sheet pile dock facing by QAP and MKB led to it being significantly damaged.

The construction companies have remained quiet throughout the legal process, but PND President Jim Campbell said in a Jan. 31 press release following the agreement that the firm’s relatively small settlement — municipal officials have said they were seeking in excess of $300 million — validates its stance.

“We are happy to settle this meritless suit against us for less than the cost of going to trial, and move on with the business of engineering,” Campbell said.

Trial in the suit was scheduled for April.

He added, “As the lawsuit progressed, testimony and expert studies showed that PND’s design was suitable for the project and the problems with the Port of Anchorage project in 2008-2009 were the result of poor management and construction practices.”

ICRC was hired by the U.S. Maritime Administration, or MARAD, a wing of the federal Department of Transportation, to manage the project. The municipality commissioned MARAD to oversee the expansion project as a way to direct federal funding to the Anchorage port, which is a national strategic defense port.

Assistant Municipal Attorney Robert Owens said in an interview that the $96 million QAP-MKB construction contract was bonded, but those bonds were released by ICRC, which hired the construction team, as part of a September 2012 settlement in which MARAD agreed to pay ICRC $11.3 million — a contract adjustment agreement negotiated without the municipality’s knowledge.

The settlement released MARAD and ICRC from liability and recourse against each other regarding contract work at the Port of Anchorage, municipal attorneys have said.

While Owens said ICRC was “an essential player in the whole thing,” he noted the former Koniag Inc. subsidiary is no longer in business and has few funds available to recoup.

In total, $439 million in local, state and federal money was appropriated to the expansion project. Of that, about $302 million was spent with minimal results. Anchorage is using the roughly $125 million it has left for the second construction project.

Port and city officials have said some of the settlement funds will also be used in the second effort to rebuild the port’s aging dock that withstood the 1964 Good Friday earthquake, with the rest covering legal fees in Anchorage’s other port construction-related lawsuit against MARAD.

The municipality also sued MARAD in March 2014 in federal contract court, a lawsuit that progressed very slowly as the private-party suit was ongoing.

With the first suit resolved, activity in the municipality’s case against MARAD will likely increase although no trial date has been set.

MARAD was also blasted for its alleged inattention to managing the Anchorage project as well as other Pacific port projects in an August 2014 Inspector General report.

The Port of Anchorage Intermodal Expansion Project was the first time the agency had taken a management role in a major construction project.

Elwood Brehmer can be reached at [email protected].