L.A. County light rail construction authority forced to rebid project

Foothill Gold Line Construction Authority

The independent authority overseeing construction of the Los Angeles County Metropolitan Transportation Authority's A line has been forced to rebid the project's final 3.2-mile leg, because the final offer from the contractor came in hundreds of millions of dollars more than project estimates.

The Foothill Gold Line Construction Authority, an independent agency created in 1998 by California state lawmakers to plan, design and construct the 60.2-mile light rail line for L.A. Metro that will stretch from downtown Los Angeles to Montclair in San Bernardino County when complete, had selected Omaha, Nebraska-based Kiewit to build the final leg.

The situation illustrates how soaring construction costs, uncertainty about tariffs and other factors are affecting infrastructure projects.

Kiewit's team was the only one deemed qualified through the request-for-qualifications process, and thus, was the only team bidding on the project, said Lisa Levy Buch, chief communications and strategic development office of the Foothill Gold Line Construction Authority, project manager for the line.

The builder's final bid — after months of back-and-forth between the authority and the contractor — was $994 million, compared with the Foothill authority's most conservative estimate of $645.5 million, Buch said. 

"We had three independent cost estimates all at $645.5 million and below: and Metro, a separate agency from us, looked at it and said our most conservative estimate was too high," Buch said. 

The Foothill authority carries Gold Line in its moniker, rather than A line, because that was the line's original name before Metro renamed its lines several years ago.

The construction authority's board didn't consider it an issue that Kiewit was the only bidder to emerge from the request for qualifications process, because it constructed the last three projects for the authority and has historically come in as the lowest bidder by $50 million, Buch said.

The project was being constructed using the design-build model where a single entity handles both the design and construction phases of a project under a single contract.

"We are going to pivot from design-build, because what we learned is that design-build is no longer favored in the contracting community, because it puts the onus on the contractor to take on a lot of risk," Buch said. "We are pivoting, because we believe we have the funding necessary to do the project, we just need to do it in a way that is more favorable to the contracting community and in a way that provides more competition."

The Foothill Authority now plans to use a Construction Manager at Risk process, which is more like a traditional design-bid-build process, Buch said. The authority will hire a design firm through a request-for-proposal document expected to be released in June. The design firm will "cost out," the project, and then the authority will hire a construction manager to work with the design firm. 

The change means the contractor can bid on the project when it's closer to construction, so the costs will be more certain, Buch said.

"First COVID-19, and then the ongoing wars are affecting the economy," Buch said. "All those things make the future risks much greater than anyone was willing to bid on. Kiewit had padded risk costs on top of everything to ensure they would have a profit in the end."

"They came in $300 million over our most conservative estimate, so they were very, very risk averse," Buch said.

Teresa Shada, a Kiewit spokeswoman, declined to comment on the project or how economic pressures are affecting the construction industry.