Douglas dredging bill doubles

City disputes contractor's claim; subcontractors seek payment

Posted: Monday, October 21, 2002

In spring 2001, the city accepted a Bellingham, Wash., company's low bid of $2.39 million to dredge 66,500 cubic yards of material from Douglas Harbor and build a two-lane launch ramp for boaters.

More than a year and a half later:

• The contractor, BOSS Construction, wants the city to pay nearly double the contract price because of what it says were unexpected soil conditions.

• The city disputes that complaint and is assessing penalties against BOSS because it finished the job more than four months late.

• Several local subcontractors who worked on the project say they are owed tens of thousands of dollars.

In documents submitted last month, BOSS asked the city for another $2.03 million, citing "differing site conditions" than expected. The company switched dredging methods in the middle of the project when it had trouble removing dense glacial sediment from the harbor, according to a letter to the city from company President Tim Hart.

"Simply stated, once we removed the diggable material above the glacial till, our production dropped dramatically," he wrote.

The city doesn't agree with the $2 million claim, said City Attorney John Corso.

"The city's position is there is not, at least not as the term posits, a legal claim. The site conditions were what they were," he said. "We don't guarantee site conditions. We tell bidders they can rely on data in reports and draw their own conclusions."

The city will respond to the claim and review the technical data involved, Corso said.

"In situations like this, it's not uncommon that the real dispute is between the contractor and the engineering firm," he said.

City Engineering Director John Stone said the city is having a designer and consultant look at BOSS' request. It could take a couple of months for the city to respond and longer to resolve the issue, he said.

"It could take a couple of years to wind through the proceedings that may take place on it," he said.

BOSS started dredging in late September 2001 by dragging winch-powered buckets along the bottom of Douglas Harbor, according to report prepared for the company and submitted to the city. After production dropped off, the company switched to a more expensive method that used a clamshell bucket powered with a hydraulic backhoe on a barge. They still had problems, said Hart, the company's president.

"When we first started having trouble, we initially thought it might have been our system. When we started the second system and ran into trouble ... we realized it was way harder than what was represented in the drawings," he said.

Peratrovich, Nottingham and Drage, the Juneau-based engineering firm involved with the project, declined to comment today because the dispute is a contract issue, Vice President Dick Somerville said. The company authored some of the Douglas Harbor soil reports.

In the end, work on the project ran 130 days behind schedule. BOSS substantially had completed the project by May 8, more than four months after a Dec. 25 deadline, according to the city. Because of the delay, BOSS owes the city approximately $100,000 in damages plus some money for materials, according to city project manager Tim Montgomery. The city and BOSS are discussing those charges.

The separate, second phase of the project included dredging the north end of Steamship Wharf downtown and widening Savikko Road in Douglas. The contractor was Secon Inc. of Juneau, which bid $1.18 million for the project and finished on time.

The city has $277,000 remaining in the account for the first phase of the Douglas Harbor project, Montgomery said. The second lowest of the nine bidders on the first phase of the Douglas Harbor project was SECON, with a $2.49 million bid.

Meanwhile, at least seven subcontractors from Juneau and Southeast Alaska have filed claims totaling $150,000 with BOSS' bonding company, according to the city. Companies aren't required to inform the city if they file a claim.

Jim Sidney, co-owner of Jug's Trucking of Juneau, said BOSS owes his company $29,000 plus interest and attorney's fees for hauling shot rock from lower Fish Creek. Sidney said he tried to organize a wildcat strike in March to secure payment, but the other subcontractors talked him out of it. He estimates BOSS owes subcontractors about a half-million dollars for work on the project.

It's fairly unusual for subcontractors in Juneau not to get paid, he said.

"I've done this for seven years hauling dirt and I've only had to beat up on people twice," he said.

BOSS also owes Bicknell Inc. of Juneau for work on the project, owner Sandy Bicknell said. He declined to say exactly how much BOSS owes him, but estimated it was more than some people make in a year. Bicknell's company crushed material and leased equipment to BOSS.

"We've been paid some, but not what we've got coming," he said.

Bicknell filed with Boss' bonding company in the spring and has yet to see the money. He'd like the city to get more involved, he said. He's considered blocking access to Douglas Harbor if nothing happens, he said.

"The city could apply more pressure on BOSS or the bonding company," he said. "That's not what this community is about, to have an out-of-down contractor come out and stiff everybody."

In cases like this, a bonding company provides insurance to pay subcontractors and suppliers if necessary. Travelers Casualty and Surety Company of Hartford, Conn., provided the payment bond for the Douglas Harbor phase one project, according to city documents.

Hart of BOSS Construction, who said he has experience working in Alaska, said the cost of the Douglas project and unexpected site conditions affected the company's ability to pay some of its subcontractors and suppliers.

"However, we are hopeful of making arrangements to pay many of these folks in the relatively near future," he said in a written statement to the Empire.

Despite criticism from subcontractors, Hart said is hopeful the dispute will be resolved without going to court.

"Through this process, we got good support from the community and the suppliers and the subcontractors," he said. "I was just really impressed and everybody recognized what we were going through and stepped up to help. The city was supportive during this entire process."

While the city requires a general contractor have a performance and payment bond, Corso said the city's responsibility to subcontractors is limited. The prime contractor is responsible for paying its subcontractors, he said. In this case, the prime contractor's bonding company also is involved,

"What the bonding company does in the course of issuing a bond is to investigate the skills and assets of a general contractor and assume the risk something bad may happen," he said. "It can be a difficult course for a subcontractor, but at least it's there."

In general, city code requires the Juneau Assembly award large contracts to the "lowest qualified bidder." In this case, "qualified" means responsible and responsive to the bid invitation, Corso said. The city relies on bonding companies to determine whether a contractor is responsible and did so in this case, he said.

"They're better at that because it's their business," he said.

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