The scheme is being built by Granite's joint venture Yaquina River Constructors (YRC). ODOT said that work on the project has been stalled since early 2010, when it was discovered that several of the bridge columns had moved out of plumb. According to ODOT, the design builder has made no acceptable progress on four major bridge sections and other related work since then.
ODOT has cited 26 points in its "not exhaustive" list of reasons why it says that YRC is in default. It accuses YRC, among other things, of failing to deliver the project, performing defective work, failing to provide an adequate design and failing to investigate the site conditions properly.
"Despite the contract amount having been substantially increased from $129,900,000 over the course of the Project, and ODOT's payment of and YRC's receipt of over $173,000,0000 to date, the Project remains materially incomplete and fundamentally defective," says ODOT's five-page letter.
ODOT said that the company now has 10 days to correct the default or to submit a proposal for correction satisfactory to ODOT. If that does not occur, one of the actions ODOT can take is to terminate the contract for default. ODOT said that whatever approach is taken, it intends to hold the design builder and its sureties financially responsible.
Granite said that it is confident it is not in default of its obligations under the contract and that the allegations contained in the notice are without merit. The company will contest the notice. "Granite has been in discussions with ODOT to address design issues and delays on the project due to unanticipated and continuing geotechnical conditions and landslide movement," it said in a statement. "Granite has been performing its duties under the contract including working with ODOT to determine how to safely and most cost-effectively complete the project. ODOT was fully aware of Granite's ongoing efforts and the company was surprised by ODOT's filing of the Notice."
Granite said that a Dispute Review Board (DRB) concluded in October 2011 that ODOT is responsible to pay YRC for the costs of the delay and new design and construction work required to address the ongoing landslide issues. "ODOT rejected the DRB's findings and unilaterally disbanded the board," said Granite. "The DRB comprises a panel of construction industry experts with experience in assessing disputes of this nature. Both parties agreed in the contract to place a large measure of importance on the DRB recommendations."
ODOT's letter sent on 16 March says that YRC is in material default of the contract for "among other reasons" 26 points ending with "YRC has effectively abandoned the Project". Other points include that "YRC failed to deliver the Project, including without limitation the completed roadway and bridges and landslide mitigation" and that "YRC failed to engineer, design and construct the Project in accordance with applicable standards of care, including enhanced standards required by the Contract Documents".
ODOT added: "This list is not exhaustive. It is illustrative of the fundamental and ongoing failures by YRC over the course of the Project from the time of its response to the request for proposals to the present day." It said that each of the points provides independent grounds for termination of the contract.
Granite president and CEO James Roberts said: "Granite Construction Company has never defaulted on a project in the history of the company. We take this Notice very seriously and intend to vigorously defend our position and reputation in this matter. Despite serious and unanticipated project difficulties, Granite remains committed to satisfying its contractual requirements on the US 20 project."
The project is creating a new, straighter 8.8km segment of US 20 between Corvallis and Newport to replace an existing narrow, 16km segment with hairpin turns and no passing lanes.
