State pays $20 million into canceled project

Materials for road bought under contract that wasn't called off

Posted: Wednesday, January 31, 2007

The state paid $20 million for material to build the Lynn Canal highway

north of Juneau even though Gov. Sarah Palin cancelled a project that would

have launched the first leg of the road.

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Rep. Bill Thomas, R-Haines, questioned on Tuesday the failure to cancel the procurement agreement after the construction contract was canceled.

The issue came up in a meeting of the House Finance Committee, which was hearing an overview of the state's Department of Transportation and Public Facilities activities.

"Who had the authorization?" Thomas asked. "I was under the impression that no money would be spent."

Under the Nov. 29 procurement contract, the state bought $20 million worth of material to build a gravel "pioneer" road northward from the end of Glacier Highway.

The road was intended to allow construction vehicles to work on the proposed Lynn Canal highway, which would connect the capital by road with the rest of Alaska.

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The Alaska Legislature last year approved $45 million toward construction of the Lynn Canal highway. Palin called off the project shortly after taking office, citing a hurried, unusual bidding process and questioning the pioneer road's utility.

The money for the materials contract went into concrete, pipe, pilings, culverts and other building necessities.

Mal Menzies, the transportation department's regional director, said the purchases were made in the state's economic interest, calling it "inflation proofing."

The price of construction material has risen substantially over the years the project has been in the works. The required federal permits are expected to be issued by April, he said.

Besides, "Gov. Palin has been in support of a permanent access," Menzies said.

Palin's office did not return phone calls seeking comment Tuesday.

Thomas questioned the wisdom of the expenditure.

"In private industry, we don't go buy materials if we don't have permits in hand. You'd go broke," Thomas said. "Why the favoritism for one road? I've got projects in Haines without permits, but no materials."

Menzies said no project was favored over any other. He said the Lynn Canal Highway project was so large that acquiring construction materials in advance would result in savings.

John MacKinnon gave the presentation to the committee in his role as acting transportation commissioner - a position he holds until Leo von Sheben takes over next week. MacKinnon said he anticipated there might be questions regarding the highway project and deferred to Mal Menzies, the regional department director.

"I do keep an arm's length," said MacKinnon, who owns property with his family about 40 miles north of Juneau, near what would have been the end of the pioneer road.

MacKinnon, who has recused himself from decisions concerning the project, has been named to continue in his previous position as deputy commissioner of highways.

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