In Deep S**t?

[May 25th, 2005] Portland's City Council will decide this Thursday whether to plunge into the battle between two contractors over $400 million worth of sewer tunneling under the east side.

The project is colossal. So are the stakes for Portland ratepayers, whose bills have already climbed more than 200 percent since the city's so-called Big Pipe project began in 1993.

Part one of the court-ordered effort to keep sewage out of the Willamette River is a three-mile-plus, $300 million westside tunnel that starts operation next year.

Part two will begin with a shaft in a parking lot at the Oregon Museum of Science and Industry, on the Willamette's east bank. There, hundreds of workers will use massive machines to bore a tunnel six miles long and 22 feet wide.

The whole project must be done by December 2011, and the city faces millions in fines (which would presumably mean even higher sewer bills) if the contractor blows the deadline. The eastside project is already falling behind schedule: Preliminary work was supposed to begin April 1, but the westside tunnel contractors forced a delay by challenging the city's decision to give the eastside job to another company.

At issue: a memo written by two Bureau of Environmental Services staffers, assessing the safety programs of eastside bidders. Impregilo, the Italian firm digging the westside tunnel, claims the memo unfairly gave higher safety marks to a competing joint venture led by Nebraska-based contracting giant Kiewit.

Impregilo argues the memo tainted the selection by relying on information reported by the bidding companies themselves, among other problems.

When BES awarded Kiewit the job in January, agency director Dean Marriott singled out safety as the decisive factor in Kiewit's higher overall score. That puzzled some political insiders and others familiar with Impregilo's westside work, where the firm has won praise from minority contractors' associations, a rave from an outside auditor and consistently high safety scores from workers' comp inspectors.

Even one of the bureau staffers who wrote the safety assessment was surprised by the Kiewit victory over Impregilo's joint venture.

"[W]e thought that probably Impregilo-Healy-Obayashi would have been successful and got the job," Patrick Duffy said in a sworn deposition.

In addition to claiming BES staff screwed up, Impregilo is likely to argue that it offers a better eastside proposal. Kiewit proposes using just one tunnel-boring machine, for instance, while Impregilo's team would use two, providing a safeguard if one breaks down. Impregilo also asked for a lower fixed fee and estimated its total final costs, while Kiewit did not. (The bid process did not require an estimate.)

The City Council will vote Thursday whether to schedule a full hearing or reject Impregilo's appeal, which has already lost in two preliminary administrative hearings. If Impregilo doesn't prevail, it's likely to sue the city and seek an injunction to further delay Big Pipe work.

Kiewit, for its part, says its team won the eastside project fair and square, and that it hasn't weighed its legal options if it loses the work.

The BES' Marriott defends the way Kiewit won the work. "I have said the selection process was set up to be fair, and was applied fairly," he says. "A lot of suggestions are being made by people who weren't part of the process."