Increased Steel Costs May Delay Virginia Highway Work

Mon April 12, 2004 - National Edition

RICHMOND, VA (AP) Sharply escalating steel prices threaten to add costs and delays to Virginia’s highway construction program, state road officials said.

The price of scrap steel increased almost 50 percent in the first two months of 2004, according to the Congressional Research Service.

"This is a serious problem" that potentially could affect the prices and schedules of road construction projects, state Transportation Commissioner Philip Shucet said.

The Virginia Department of Transportation (VDOT) plans to put clauses in new contracts that adjust for rising steel prices. Dealing with the almost 200 projects now in the works –– and under contract –– is a tougher knot to untie.

"Some highway contractors are more than mildly threatened with the loss of their business," Shucet told the Commonwealth Transportation Board recently. "If our contractors are crippled, then that’s not doing us any good."

It’s a huge issue with the Woodrow Wilson Bridge and Springfield Interchange projects in northern Virginia, he said. Manassas-based Williams Industries Inc. has large contracts for the bridging steel on the two projects, some of the largest in the nation.

"Without some type of adjustment in our contract values," said Frank Williams, the firm’s president and chief executive officer, "I don’t think we’re going to be able to financially afford to perform those contracts."

A Williams Industries subsidiary, the Williams Bridge Co., won a $22 million contract in January to fabricate and erect more than 14,650 tons (13,290 t) of steel for nine bridges in the Springfield Interchange.

The company also won a contract a year ago for more than 13,500 tons (12,245 t) of steel for the Virginia approach of the Woodrow Wilson Bridge over the Potomac River. Valued at almost $30 million, it is the firm’s largest-ever contract.

The Transportation Department would like to help out companies in Williams’ position, considering their problems on a case-by-case basis, said Malcolm T. Kerley, VDOT’s chief engineer.

On the other hand, officials say the state does have legally binding contracts with the companies, which entered into them with open eyes.

"The only reason we would want to give them any relief is to keep them from going out of business," one VDOT official said.

With a budget of $3.7 billion this year, VDOT is responsible for building and maintaining more than 57,000 miles of roads and more than 12,000 bridges that make up the nation’s third-largest state-maintained road network.

The $676-million Springfield Interchange work is a multiphase project on interstates 95, 395 and 495, one of the nation’s busiest highway chokepoints. Replacing the overloaded Woodrow Wilson Bridge on I-95 is a $2.6 billion project that also involves reconstructing 7.5 miles of the Capital Beltway and widening the bridge’s roadway to 12 lanes.