MnDOT said it was proper to seek new bids to save state money, but an independent mediation board found breach of contract.
Lt. Gov. Carol Molnau improperly halted construction of the half- finished Wakota Bridge last year, putting MnDOT in breach of contract with the builder because it refused to explain why, an independent mediation board has found.
The three-person board, formed to address the disputes between MnDOT and the builder, said the agency concealed its reasons for firing the contractor, Lunda Construction Co., midway through the troubled project. The board's report, completed in August, has not been made public but has been reviewed by the Star Tribune.
The Wakota Bridge project's mistakes, delays and cost overruns will be scrutinized today at a hearing in St. Paul called by Rep. Joe Atkins, DFL-South St. Paul, who is chairman of the House Commerce and Labor Committee. Molnau, who is also Department of Transportation commissioner, has agreed to answer questions about the Interstate 494 bridge project.
MnDOT says that Lunda wanted too much money to build the second half of the bridge, and that the agency was acting in the public's best interest when it decided to rebid the project.
"The cost and price demanded was higher than the commissioner was willing to accept," said Bob McFarlin, Molnau's assistant.
The mediation board, whose findings are not legally binding, questioned whether MnDOT was telling the truth about its reasons for revoking Lunda's $120.4 million contract.
Atkins said the review board's criticisms of MnDOT will be central to the hearing, and will include an earlier board finding that MnDOT was to blame for a seven-month delay early on when engineers overlooked a wastewater main that was in a spot designated for a bridge pier.
Atkins wants MnDOT to account for all of the money that had been allocated to the project and pinpoint what happened to the unspent portion. He also wants MnDOT to explain why its engineers didn't catch the bridge design errors until much of the concrete was poured.
Bridge fraught with problems
Construction of the Wakota Bridge on I-494 between South St. Paul and Newport began in 2002 and was halted temporarily in September 2004 when the westbound span was more than half complete. Stress cracks had developed due to faulty engineering by the designer, HNTB Corp., according to MnDOT documents.
Lunda, of Black River Falls, Wis., fixed the problem at an additional cost of $19.7 million.
Once that span was completed, Molnau canceled the contract before Lunda could begin work on the eastbound span. Since then, motorists crossing the Mississippi River there have been forced to share one span, which has been divided into three winding lanes in each direction.
The board found that MnDOT improperly revoked the contract because it refused to explain exactly how the cancellation served the public's interest. MnDOT said its reasoning was confidential.
"It seems odd that a finding in the best interest of the public is kept secret from the public," the board said in its report.
The board said it doubted such a confidential reason existed.
McFarlin said that MnDOT did indeed act in the public's best interest and that Molnau was not willing to write a "blank check" to get the project done. Molnau did not respond to requests for an interview.
McFarlin said Molnau wasn't convinced that there would be a ceiling on the cost of the second span. MnDOT's last offer to Lunda was made in September 2006 for $44 million to complete the bridge, he said. However, a MnDOT e-mail written that same month by the agency's project engineer states that MnDOT was willing to "go to $50 million."
Lunda's correspondence shows that the firm was willing to complete the project for no more than $58.9 million.
'The state blew it'
"The state of Minnesota blew it," said Dennis Behnke, Lunda's vice president. "We would have kept negotiating, but the state, in its arrogance, took the position it could just break a contract even when these costly delays weren't our fault. Now they're going to have to pay us contract termination costs that could run up to $10 million."
With termination costs, possible lawsuits, and rising costs of raw materials, MnDOT could end up spending more money for the second span than Lunda was asking for.
The board found that Lunda is entitled to compensation from MnDOT for costs incurred as a result of the contract suspension unless the agency details how it acted in the public's interest.
McFarlin said the review board was established to "resolve disputes of a fairly minor nature" and that MnDOT participated only to clarify any information and make sure there were no misstatements of fact.
The board said that its jurisdiction was specified at the outset to include hearing all claims, change orders or other controversies that remain unresolved following good-faith negotiations between MnDOT and Lunda.
The board -- mutually selected by MnDOT and Lunda before construction began -- consisted of a former MnDOT chief construction engineer, a lawyer who is a former Wisconsin state transportation chairman and a former Wisconsin state transportation civil engineer.
Atkins said that he has found MnDOT's negotiation efforts to be "inept." He said Molnau didn't make a counter-offer to Lunda before ending the talks by "just saying 'no.' "
Because MnDOT has called for new bids in January 2008, it is likely that the job will not be done until at least 2011, Atkins said. Original plans had called for the bridge to be completed by next month.
"I think it's fair to say it's going to be wildly over budget when it's all said and done," Atkins said.