City, Alaska delegation react to delay in port expansion

The proposed expansion of the Port of Nome is not going forward as expected as the news hit last week that the U.S. Army Corps of Engineers has canceled its solicitation process for the first phase of port construction.
To the surprise of port and City of Nome officials as well as both Alaskan Senators, the U.S. Army Corps of Engineers put out an amendment to the bidding solicitation that stated that the pricing received exceeded “statutory cost limitations” and that costs surpass the available funding for the project. The cancellation amendment was issued on Wednesday, Oct. 16.
Port Project Manager Joy Baker, the Mayor of Nome John Handeland and the interim City Manager Brooks Chandler met with the Army Corps at JBER in Anchorage on Monday to discuss how the project partners can forge a path forward.
Mayor Handeland said in statement to the Nugget, “It is disappointing that the Arctic Deep Draft Port at Nome project is experiencing another unexpected schedule interruption. It is a DELAY, not cancellation.”
 He said the City team met with U.S. Army Corps of Engineers Col. Jeff Palazzini, Alaska District Commander and his team . The city has “received assurance the COE is totally committed to building the project, an assurance also conveyed to us by Brigadier General Joseph Goetz, Division Commander located in Hawaii, who was in Nome recently. Headquarters in D.C. also has this very high on their radar,” Handeland said.
“The COE and the City, local sponsor, have agreed in principle to a course of action to evaluate options within available funding to build the first phase as a usable project based on a new solicitation, with future phases added as the project moves forward,” Handeland said.
Handeland said that Project Manager Baker will meet with the Corps again next week to review a revised cost estimate being prepared.  “The District COE team has been directed by the Colonel to get a revised solicitation on the street by January 15.  Joy will continue to meet as necessary to coordinate for the City, and more importantly hold their feet to the fire.  All members of the City delegation are also subject to non-disclosure agreements, but we will brief city, state and our federal delegation as information that can be shared becomes available.”
Joy Baker said in an interview with the Nugget on Tuesday that there is no timeline just yet on how to move forward. “It’s too soon to know what the timeline is going to be,” she said.  “We’re getting the design team back around the table, starting next week, to figure out the next steps and how we think we can get where we need to be to start the project.”
Spokesperson for the Corps John Budnik said in a statement that the Corps remains fully committed to awarding a construction contract for the Port of Nome Modification Project, the expansion’s official name. “However, we recently had to cancel the phase 1 contract solicitation because pricing was well above our statutory limit,” he said in an email to the Nome Nugget. “Our Congressional delegation, along with the City of Nome and the State of Alaska, successfully secured funding for this vital project benefitting the region and the nation through the Bipartisan Infrastructure Law, and the U.S. Army Corps of Engineers – Alaska District will aggressively pursue its safe construction to our high-quality standards, while being good stewards of taxpayer dollars.”

Reactions
Senator Dan Sullivan, when asked by Nugget reporter Anna Lionas at AFN for comment, said his office was not informed of the Corps’ decision and that his office remains focused on pursuing the port expansion. “The Corps needs to make sure we know these things,” he said. “I’m very focused on it and I’m a little bit mad, we should’ve had better communication with this.”
Senator Lisa Murkowski called the cancelation “shockingly unacceptable.” In an interview with the Nugget at AFN, she said she received the news while at conference in Reykjavik and immediately set up a call with the head of the Alaska Army Corps of Engineers. She said the Corps was going to meet with the City of Nome on Monday to walk them through the issues presented by the bid. “Part of what we saw was a lack of competition,” Murkowski said. “The bid that came in was over the statutory amount.”
The Corps declined to comment on how many bids were received, citing procurement laws.
Clearly irritated with the Corps’ decision, Murkowski said that federal resources had been allocated through the bipartisan infrastructure bill. “Let’s get moving on this,” she said. “If the first phase is somehow flawed in its design, we need to know that yesterday. If there is something else that we can get moving on now to get this in motion, we need to do that now.”
She said she had elevated the issue “as high up as I can get.”
“I’m going to be speaking directly with, not only with those in the Department of Defense but also the White House,” she said.
The significance of the port, she said, is not only important for Nome, the region, or the state. “We made this a priority, not because it’s an Alaskan earmark, but because it’s a national security piece of infrastructure that we need to have in place.” She added that failure of the project or even delay is not an option.
“This is bigger than just a port for the people of Nome and the region,” she said. “This is bigger than our state’s interest. And, really, it is significant from a national security perspective.”
She also took issue with how the Army Corps has failed to communicate the news of this magnitude with the City of Nome or the Alaska Delegation. When she questioned the Corps on that, the response was that procurement laws limit what they can divulge. “I understand the protocol, but this is a project of national security and we gotta get this moving,” Murkowski said.
She also addressed international implications.  “I think it was more than a bit ironic that I received this news while I was at an international, global Arctic conference, talking about how the United States is finally stepping into its role of an Arctic nation, moving forward with ports and harbors. How do others view the U.S. commitment now?”
The statement from the Corps to the Nugget said that the Corps’ Alaska District team is working in partnership with the City of Nome, and the entire USACE enterprise “to quickly pivot to several other options for bringing the benefits of the Port of Nome Modification Project to the state.  It is our highest priority to ensure the statewide economic and security benefits of this project are implemented.”
Asked if the cost estimate was too low, the Corps answered that the “bids for phase one as presently designed came in higher than expected.” However, the Corps rejected the notion that the cost estimates were flawed. “The Government always uses all information at its disposal to develop estimates for projects.  The circumstances and reasons which lead to prices being higher than expected on any project can vary widely.  USACE and the City of Nome will be taking the information learned during the solicitation process and assessing the best way forward.”
The Corps declined to comment on the number of bids received and how much over the statutory limit of 25 percent or more the bids came in.
Asked if the Corps will change the design to a less costly alternative or to pursue more funds, the Corps answered that the “USACE enterprise (Alaska District, Pacific Ocean Division and USACE Headquarters), in close consultation with the City of Nome, is diligently working on a path forward. As those conversations are ongoing, it is too early to discuss the specifics of any future action.”
“The USACE enterprise at all levels and the City of Nome are working on the path forward to reach a construction contract award. We absolutely agree on the importance of this project to the Nome community, State of Alaska and entire nation; and, therefore, will continue to diligently work to bring this project to a successful contract award,” the Corps said.
The Port of Nome modification project Phase One was projected to begin next summer. Work included the dismantling of the spur at the current causeway and to extend the causeway by 3,500 linear feet into the deep-water basin. Phase Two was to dredge the outer basin to minus 40-ft and Phase Three was to remove the eastern breakwater and construct a new causeway further east.
“The construction project aims to provide larger vessels improved access to Nome’s existing harbor by enlarging the outer basin and creating a new deep-water basin with a depth of minus 40 feet,” according to planning documents.
The Corps and the City signed a partnership agreement in January of this year, which pegged the costs of the entire project at $662,569 million. The federal portion of the costs were projected to be $596,312 million, and the city’s portion were a projected $66,257 million of the federal costs. Additional costs, including local service facilities —the cost borne by the City of Nome —were estimated at $244,423 million.
Under the Bipartisan Infrastructure Law, Congress allocated $250 million to the U.S. Army Corps of Engineers for the project in December 2020; in 2022, the Alaska State Legislature allocated $175 million toward the City of Nome’s cost obligations for the port expansion.

With reporting from Anna Lionas.