New bids for Southwest light rail don't yield a bargain

Firms hoping to build the Southwest light rail line have submitted bids that were pricier than the lowest offer in September, frustrating the Metropolitan Council's quest for a cheaper deal.

The council on Thursday unveiled two new bids from construction firms vying to build the $1.9 billion transit line between downtown Minneapolis and Eden Prairie, the state's largest-ever public works project. It rejected four bids for the project last fall because they were too costly and because some proposed subcontractors were ineligible.

The lowest bid in round two was $799 million, submitted by Lunda/C.S. McCrossan, which had previously made a higher bid. Their new offer was nearly $3 million more than the 2017 low bid of Ames Kraemer, which quoted $812 million this time.

Council staffers said they would need to review it before announcing later this month how the estimate fits within the overall project budget — the agency has declined to say how much it anticipates spending on construction. Other costs include design, engineering and acquisition of right of way.

Mark Fuhrmann, the Met Council's program director of light rail projects, said it was too early to know if the new bids were a showstopper.

"That's part of our technical assessment at this point," Fuhrmann said. "This project still has very strong support locally and regionally. And this project also is on the shortlist to receive funding from the federal government given the appropriations made by the Congress a month ago."

Rising prices for steel and diesel fuel have pushed up the cost for bidders, Fuhrmann said. Steel prices have risen 40 percent since August 2017, while diesel fuel prices have risen by 17 percent, according to the council.

Project spokeswoman Laura Baenen said the council anticipated the bids would be higher than the lowest bid last year due to rising commodity costs and a tight labor market, and other costs associated with the delay.

It also tweaked its specifications from the initial bidding, removing quality management services and accounting for steel price changes, for example.

Baenen said the council will have to decide in conjunction with Hennepin County how to proceed if the bids remain over the council's construction target. County Commissioner Peter McLaughlin declined to comment when reached on Thursday.

Another reason the bids were rejected in September was because subcontractors involved in the bids had worked with AECOM on the design of the project, which the council said made them ineligible. This was the case for three of the four bidders.

When the council rejected the bids in September, Met Council Member Harry Melander expressed frustration with additional costs and delays of the project. Melander, president of the Minnesota State Building and Construction Trades Council, voted against the rejection.

"For us to think that we're going to have a reduction in price, that would be great, I hope that is the case," Melander said at the time. "I hope in two or three months when this comes in front of us again you can all say that I was wrong, but I'm just not sure that's going to be the case."

Melander asked Chairwoman Alene Tchourumoff what would happen if the bids came in too high in the second round.

"This is one of the reasons why we have to work really closely with our funding partners to ensure that we take whatever actions we can take in these bid specifications to reduce costs where we can," Tchourumoff said. "And really trying to be innovative in those cost-reduction strategies in this next bid."