State shutdown claims are still rolling in

  • Article by: PAT DOYLE , Star Tribune
  • Updated: December 17, 2011 - 12:06 AM

Highway contractors say the three-week outage cost them millions of dollars.

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Signs were posted on the doors of the downtown St. Paul Minnesota Driver and Vehicle Services offices, announcing the Minnesota government shutdown on Friday, July 1st, 2011.

Photo: Bruce Bisping, Star Tribune

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The bills still are arriving for last summer's state government shutdown.

The state last month said the three-week hiatus didn't affect its budget. But that assessment ignored claims rolling in from highway contractors who say that idled equipment and delayed supplies cost them millions of dollars.

The Minnesota Department of Transportation said Friday it already has paid out $1.2 million in 11 settlements with contractors.

But the final cost could climb much higher and erase whatever savings the state gained from the shutdown. That's because the settled claims were the smallest and easiest to resolve. More complicated and potentially more costly disputes remain over another 54 claims.

In addition, MnDOT has agreed to extend time to complete another 28 jobs, and some of those contractors have reserved rights to file claims later.

Total claims will likely be "in the tens of millions," predicted Tim Worke, director of the highway division of the Associated General Contractors of Minnesota.

One contractor still trying to negotiate a deal described how a three-week pause can produce a chain of events that results in a much longer delay.

"It's much more costly than people would imagine," said LouAnne Berg, president and CEO of J&L Steel and Electrical Services, which is working on two of the state's biggest projects: the Lafayette and Hastings bridges.

Berg said structural steel couldn't be delivered as scheduled in September or October because the shutdown laid off state employees needed to inspect it. That set the delivery behind orders for other projects.

"It's not going to come until April, May or June," she said.

"So instead of being able to work over the winter on those projects, we're very limited to what work is available to us," Berg said. "Typically, I'd be working 25 or 30 iron workers, and now I'm going to work six."

Berg, whose firm is a subcontractor on the bridges, said her claims could reach $1 million.

Lunda Construction, the lead contractor on the projects, also has been working to resolve claims, she said. Dennis Behnke, vice president of Lunda, did not respond Friday to questions about their status. In November he said, "Maybe we'll just work out a negotiated agreement."

Lingering impact

Large future settlements could alter last month's report by the Minnesota Management & Budget department on the shutdown. That assessment said the shutdown had essentially zero impact on the budget because it cost the state $60 million in lost revenue but saved it $65 million in salaries.

Minnesota Management & Budget Commissioner Jim Schowalter acknowledged last month that lawsuits or other claims by contractors and vendors could cause costs to rise. "There are likely to be lingering impacts," he said at the time.

But Worke said contractors were "a little dismayed when we saw that MMB report... that basically said there was really no impact. It gave a short mention ... to these transportation claims still pending."

Project delays

As for progress on the projects, MnDOT says the impact of the shutdown was blunted by favorable weather from August through November that allowed contractors to work longer.

Still, several projects are likely to experience significant delays, including the I-35E resurfacing from I-694 northward to its connection with I-35W at Forest Lake. It was scheduled to be completed this fall, but "because of the shutdown, it was only half completed and will be finished next year," said MnDOT spokesman Kevin Gutknecht.

I-35 bridge and pavement replacement in Duluth scheduled for completion this year will be delayed until 2012.

Work on three bridges at Plato Boulevard and Eaton and Concord streets -- part of the Lafayette Bridge project -- are expected to be delayed because of the shutdown, said MnDOT spokesman Kent Barnard.

"We should have been done this fall ... and now we're not going to start up until spring and probably not be done until maybe July," Barnard said.

Completion of the new Lafayette Bridge is not expected to be delayed because it is to be finished in 2014, allowing enough time to catch up.

Berg thought replacing the Hastings Bridge could be delayed by as much as a year, but MnDOT says it hasn't determined how much the shutdown affected the project. Flooding of the Mississippi River, which the bridge crosses, contributed to delays.

"That's the internal debate: high water, shutdown -- one or the other, both?" asked spokesman J.P. Gillach. "It's premature to say that it's going to be delayed by a full 12 months."

Pat Doyle • 612-673-4504

  • 93

    Contractor claims since the July state government shutdown

    28

    Settled by extending contract time

    11

    Cash settlements

    54

    Still in negotiation

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