Special Reports

Bridge lawsuit exposes high drama

Construction industry heavyweights prefer to keep the messy details of their work out of public view.

Like its parents Bechtel International and Kiewit Pacific, Tacoma Narrows Constructors takes great pains never to allow glimpses into the sausage factory that looms behind its front offices in Gig Harbor.

We know TNC is being paid a flat rate of $615 million to build the new Tacoma Narrows bridge because that detail is in a public contract with the state Department of Transportation.

Beyond that, TNC never reveals costs, even of the smallest nuts and bolts. And it never talks about its problems with subcontractors, preferring to maintain the illusion that building bridges is effortless and problem-free.

So last September, when the Japanese giants Nippon Steel and Kawada Industries sued TNC and Korea’s Samsung Heavy Industries over construction of the bridge’s deck, the public court documents offered a rare and revealing look behind the scenes.

The companies are linked in a contractual chain: TNC agreed to pay $63 million to the Nippon-Kawada partnership, known as NSKB, to provide the bridge’s suspension cable wire and deck, among other things. NSKB, in turn, agreed to pay Samsung $24.6 million to do the deck fabrication at its shipyard on Koje Island.

Those deals, court records show, became the basis for a still raging dispute that has elevated the blood pressure of top-level managers in three countries.

Attempts to resolve differences included an unsuccessful group session on Maui with Antonio Piazza, an $8,000-a-day mediator who bases his techniques on aikido, the Japanese martial art intended to resolve conflict without escalating violence.

TNC’s “design-build” contract with the state of Washington lies at the root of the problem. In design-build situations, bids often are necessary before the design is complete, which can make things risky for subcontractors.

Rather than having the bridge fully designed before putting it out for construction bids, the state laid out generally what it wanted and hired TNC to both design and build the bridge.

NSKB and Samsung submitted their bids in 2002, based on design drawings of the deck that were 10 percent complete. When Samsung received the finished design in September 2003, it concluded the job was going to take a lot longer and cost a lot more than it had bargained on.

At the end of 2004, after it had been working on the deck for eight months, Samsung estimated the cost of the work would be $79 million, more than three times the $24.6 million it was being paid.

Samsung and NSKB complained that TNC had hooked them on a bait-and-switch operation, alleging it had made “radical changes” to the deck design after the bids were in.

TNC insists there were no radical changes, just poor cost estimating and failure by its subcontractors to include large enough hedge factors for uncertainties.

After a three-day session with Piazza, NSKB and TNC came up with an additional $12 million for Samsung.

Samsung said that wasn’t enough, and after nine months of unheeded complaints, the shipbuilder dropped a bomb. On Sept. 5, it pulled its workers off the bridge job and told the NSKB representatives at its shipyard to turn in their gate passes.

In Gig Harbor, that caused something close to panic.

The deck already was months behind schedule because of the complexity of the construction. Further delays would mean there wouldn’t be time to waterproof and pave the deck before the rains started this fall.

That almost certainly would mean TNC would miss the April 2007 completion deadline.

In the worst case, the project could be held up for years.

Missing deadlines means financial penalties ($12,500 a day for the first three months, then $125,000 a day to a cap of $45 million). But in the construction industry, lateness also is a severe embarrassment and damages reputations.

TNC project manager Manuel Rondon, along with his attorneys and top lieutenant, Dave Climie, hustled to negotiate with Samsung, in South Korea and in Washington, D.C.

NSKB refused to take part, putting TNC in the odd position of negotiating one-on-one with Samsung, with which it had no direct contract.

TNC struck a deal with Samsung for another payment, this one for $25.5 million, but NSKB refused to pay a share of it. Instead, it sued in Thurston County Superior Court, asking the judge to order Samsung back to work for the already agreed-on price. TNC went ahead with the deal anyway, paying NSKB’s share by drawing $12.9 million on a letter of credit it holds at NSKB’s bank. Samsung is working on the deck again, but relations with NSKB are poor and the storm of court filings continues.

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