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Explosives-handling Wharf Costs $267 Million Less than Expected

The Ohio-class ballistic-missile submarine USS Alabama (SSBN 731) returns to Naval Base Kitsap-Bangor following a strategic deterrent patrol. (U.S. Navy photo)
The Ohio-class ballistic-missile submarine USS Alabama (SSBN 731) returns to Naval Base Kitsap-Bangor following a strategic deterrent patrol. (U.S. Navy photo)

BANGOR — The Navy recently returned $267 million it was allocated for an explosive-handling wharf project at Naval Base Kitsap-Bangor.

When the project was authorized in 2012, the price was projected at $715 million, but a cost decrease notification issued last week by the Navy showed an adjusted price of $448 million.

One of the reasons the money wasn't needed was because a skilled local workforce was available through a project labor agreement, which U.S. Rep. Derek Kilmer touted Monday at the White House.

Design costs also were lower than expected; the contractor accepted less profit; and work was interrupted less often for ordnance operations at the old wharf and for migratory birds and marine mammals, according to the notification.

"We're 90 percent complete with the wharf," said Leslie Yuenger, Navy Facilities Engineering Command spokeswoman. "As part of normal practice, when we're pretty confident in the actual cost of the project, we return the funds no longer required back to the Navy military construction pot so other projects can use them. The contingencies planned for did not show up."

The Navy awarded a $341 million contract to EHW Constructors to build the wharf itself. The $715 million figure included hardening, building or demolishing facilities inside the wharf's explosive safety arcs.

The wharf was scheduled to be completed in January. In late November, that portion of the overall project was $14 million over budget. The Navy did not provide information on whether the deadline for the wharf was extended or whether its budget was adjusted.

Under a project labor agreement, a project manager agrees with an area trade union council before seeking bids from contractors. It specifies wages and fringe benefits, and usually includes procedures to resolve labor disputes. It typically bars unions from striking and contractors from locking out workers.

Opponents say PLAs are anti-competitive and increase costs. Proponents say they ensure decent wages, a quality workforce and timely completion of projects within budget.

Among those participating in Kilmer's meeting Monday were Labor Secretary Thomas Perez, director of the White House Domestic Policy Council Celia Munoz, Assistant Secretary of the Navy Steven Iselin, members of Congress and Lee Newgent, executive secretary of the Washington State Building and Construction Trades Council.

President Barack Obama issued an executive order in 2009 to promote the use of PLAs in federal projects. So far, the explosive-handling wharf is the only one to use the arrangement. Kilmer, D-Gig Harbor, believes it's a good model for future jobs.

"They are a win for workers who see more opportunities to receive a good wage," he said. "They're a win for taxpayers because projects are more likely to come in on time and under budget. And they're a win for the local community because job opportunities are available to residents."

The wharf is a good example of the Navy and local employees working together to produce a top-quality project that's under budget and on time, according to Newgent.

"Rep. Kilmer understands that a project of this magnitude is one of the greatest economic investments to our local community," he said.

The Navy said it needed a second wharf for loading and unloading missiles, torpedoes and ordnance from Trident II strategic ballistic missile submarines. Eight of the Navy's 14 are based at Bangor. The wharf also will serve as a backup for handling explosives for guided missile submarine, of which Bangor has two, and will provide a lay berth when not in use for ordnance handling.

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