Nov. 6 – As the city of Anchorage moves forward with the massive modernization project at the Port of Don Young in Alaska, city officials say construction on the first cargo docking terminal is likely to be delayed, and much of that work will not begin next summer as previously thought.
That’s because the city didn’t receive any bids from construction companies after going through a months-long procurement process to select one.
“We’re anticipating a one-season delay on the dock construction itself. There are other parts of the project, things like the electrical systems — for the work to continue on schedule,” said Jim Jager, the port’s spokesman.
The city is now reworking its bid package to make it more attractive to potential bidders, City Manager Becky Windt Pearson told the Anchorage Assembly last week.
At the same time, the assembly will vote on a list of measures related to the modernization project.
During a Wednesday meeting, council members will consider whether to finalize the expanded construction design for loading dock terminal two; whether to approve $180 million to $250 million in proposed bonds, much of which would fund the next phase of the work; and proposed tariff increases to pay for these bonds.
The port’s infrastructure is failing, threatening a critical part of the state’s supply chain, and port officials have stressed the urgency of closing at least one cargo terminal as quickly as possible.
Despite the contract freeze, city officials say they are working to keep the project moving through the next construction season.
“We don’t expect the project to be paused by any means,” Bill Falsey, chief administrative officer, said in an interview.
For example, the city plans to build an electrical substation next season, and other preparatory work for the cargo terminal may continue, he said.
“Our intent is to resend the RFP, get vendors and award a contract (so that) the construction seasons are used and we’re still making progress,” he said.
Without the capital improvements, the Alaska port “will have to close within ten years,” according to a memo for the bond proposal.
Officials have given the port a similar life estimate for years, saying in 2017 that the port only has about 10 years left.
The port handles about 75% of the state’s inbound cargo, including goods such as food, fuel, construction materials, vehicles and tools. About 90% of Alaskans rely on goods coming through the port.
Estimates put the total cost of the modernization project at somewhere between $1.8 billion and $2.2 billion.
No offer
In January, the city began a prequalification process for potential bidders on a contract to build loading dock terminal one. It identified two: Manson Construction and Kiewit Corp., Windt Pearson said. But when the bidding window closed in September, no bids were received.
The administration is “working as quickly as possible to gather feedback, specifically from these two qualified bidders together, from our project management team and from our legal team, on how we can adjust the terms of the construction deal to make it attractive, to make sure that we have bidders this time, make sure we can get the project back on the street as quickly as possible,” Windt Pearson said.
City officials say there are likely many factors why no bids were received. They include several major risk considerations, such as extremely long “lead times” to procure expensive materials — costs a contractor would have had to shoulder until they are reimbursed by the city for their work.
“I think part of it is that our project is really big and complicated and has lots of risks, everything from weather, short construction seasons, difficult logistics, challenging permitting, that just made it a really sticky project for people, Jager said.
Another issue is that federal money for major transportation and energy projects is flowing and competition for contractors is high, he said.
“It’s a contractor’s market right now because there are a lot of big projects out there,” Jager said.
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Windt Pearson last week told assembly members that the proposed bond sale would likely help alleviate some concerns from construction companies. The approximately 180 million from bond sales will finance work and payments related to the port in 2025.
“One of the feedbacks we got from the potential bidders on the contract was, ‘We feel an uncertainty that you’re ready to pay for this.’ And so that’s a factor here as well, in terms of timing. It’s a question of “chicken or the egg,” said Windt Pearson.
Increases in the tariff will be passed on to consumers. Those increases will be in place for many years until the bonds are paid off, Falsey said.
But the economic consequences for everyday consumers will likely be relatively small. For example, the duty on a barrel of petroleum products would increase to 19 cents in 2026.
“You might start to see an effect at the gas pump, but it’s pretty small,” Falsey said.
For cargo, the tariff would rise to $8.29 per tonne, affecting the price of goods from groceries to construction materials, vehicles and heavy equipment.
Final terminal design
Wednesday’s vote is expected to cap a nearly two-year debate over whether to move forward with an expanded, more expensive design for the two cargo terminals.
An early design concept approved by the Anchorage Assembly in 2021 called for a wider cargo terminal to be built to use cargo cranes to move cargo, and a second, narrower terminal to handle “roll on, roll off” cargo – cargo that rolls off ocean freighters directly to the port.
Assembly members on Wednesday will vote on whether to approve an expanded design: Cargo Terminal Two would be built to the same 120-foot width as Terminal One. It would allow both piers to accommodate 100-gauge cranes, although roll-on, roll-off cargo could only be handled at terminal two during the design.
Last summer, the Assembly approved a measure that cleared the way for the expanded, uniform width design for both terminals, but made the final decision on Terminal Two’s design.
The port’s Design Advisory Board unanimously approved the design of Terminal Two in June, and congregation members appear poised to approve the measure. However, some have expressed concern about a lack of “roll-on, roll-off” capacity at both planned cargo terminals.
“At one point the port director said what (the municipality) needed, absent any of the other users, was full redundancy. This redundancy and resilience at the port. We needed the two mirrored docks. And so that’s where I think this question comes from “, Assembly Vice President Meg Zaletel said at the meeting last week.
Eric Adams, who is overseeing the port modernization as a project manager with Jacobs Engineering, advised that adding roll-on cargo bays to terminal one would delay construction due to additional permitting requirements and should wait until after both cargo terminals are built.
