The Monorail Bidder Breakup

A key partner in Cascadia Monorail is pulling out. Project managers had known for weeks but didn't tell the public.

It turns out that the Seattle Monorail Project had something momentous to announce at its April 6 board meeting after all: Half of the sole bidder's construction-team leadership was suddenly pulling out because of the financial risks—and will not be replaced. But despite a mantra of "transparency" to keep the public informed, SMP made no such announcement. The monorail staff and board never mentioned this stunning turn of events.

The media had been called in for what was rumored to be a big announcement, and it seemed likely that SMP and Cascadia Monorail—the lone bidder on the $1.69 billion monorail plan—had reached agreement. Instead, SMP Executive Director Joel Horn said merely that the agency had "made progress" with Cascadia and expected a deal within two to three months. He and board members said nothing to dissuade reporters and the public of the notion that talks with Cascadia were proceeding routinely, with nothing but details in the way of agreement.

Boise-based Washington Group International, according to a company spokesperson last week, notified the agency before the meeting that it was quitting the team. WGI and Fluor Corp. headed the 29-company Cascadia construction consortium that hopes to build the new monorail.

SMP spokesperson Natasha Jones this week said the latest word is that WGI will not be replaced and the Cascadia consortium will reorganize from within. She said SMP made no announcement at the April meeting "because it wasn't a done deal. And it's still not a done deal. We need to approve a substitution [for WGI] to the Cascadia team." WGI's pullout, however, is a done deal. It told SMP three weeks ago.

In press statements and literature, SMP has always referred to the construction consortium as "led by" WGI and Fluor. But the agency and Fluor claim the loss of half the construction project's leadership won't affect the bid process or plans to have trains on the tracks in 2009 or 2010. "It's fairly common" for a team member to drop out during the bidding, Jones says, "and there can be any number of reasons."

Six Christian Silva, WGI vice president, last week would not comment on the pullout. But he earlier told The Seattle Times, which first reported the news on Thursday, April 28, that "WGI's perception was the risk was too great, and considering the financial objectives involved, it [WGI] had extended itself as far as it could."

In the wake of the Times story, the monorail project finally told its supporters, in an e-mail and a press release on its Web site later that day, about the WGI pullout. The odd announcement seemed to fault the Times and included instructions on how to read the newspaper: "We know that many folks skim headlines and get a false impression about what's going on, and the misimpression takes on a life of its own as radio and TV simply repeat the headline as their 'news.' That's exactly what happened with the article about the Monorail in the Seattle Times ..." SMP hoped the story didn't raise "unnecessary" concern, adding: "Rather than relying on the headline, please read the full story." (The headline, accurately and succinctly, said: "Major monorail partner pulls out of project"). The monorail's press release characterized the pullout as a "restructure" by Cascadia and promised more info "in the near future."

Something else has come to light, involving a proposal requirement that forced the only other bidder, Team Monorail, to pull out last summer. At the April 6 meeting, Horn announced that Cascadia had submitted a "refined" bid that included a $25 million bond to guarantee construction if the bid was accepted. The offer "shows the seriousness of their proposal," Horn said. Did that mean Cascadia had gotten around a required $500 million performance bond that was required by the original request for proposals—a potential cost that drove Team Monorail from the bid competition?

The monorail authority says the $500 million is still a requirement of any deal, in addition to the $25 million proposal bond. But there is no certainty the hefty requirement will remain, the agency says. "It was still part of the proposal as of last week," says SMP spokesperson Jones, confirming for the first time one aspect of the secret negotiations, now in their eighth month. "But that could be changing as we speak."

Headed by Bombardier of Canada, Team Monorail now wants to be reconsidered and claims it can build the 13.7-mile Green Line, from Crown Hill to West Seattle, for $1.4 billion. Team Monorail spokesperson John Wilson last week said that if SMP indeed dropped the bonding requirement, or lowered it, Team Monorail should be allowed to submit an offer.

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