Virginia to terminate US 460 contract

The Virginia Department of Transportation (VDOT) has sent a letter to US 460 Mobility Partners, a consortium comprising Ferrovial Agroman Southeast and American Infrastructure, stating its intent to terminate the contract it awarded to the group in 2012.

“The Commonwealth has determined it is in the taxpayers’ best interest to terminate the contract,” Transportation Secretary Aubrey Layne said in a statement. “VDOT tried to work with the contractor to deliver the revised project in a cost effective manner. These efforts proved unsuccessful,” he said.

According to a VDOT spokesperson, Layne plans to recover any unearned funds from the contractor, which to date total slightly more than $250 million for design and mobilisation costs.

Initially procured under the Public Private Transportation Act (PPTA), US 460 has proven to be a persistent headache for the commonwealth. In its original concept, the project entailed building a new 55-mile road that would parallel US 460 and was estimated to cost $1.4 billion.

“The US 460 project was aggressively pursued by the previous administration without knowing if it would be permittable,” one source told Infrastructure Investor, referring to former Governor Bob McDonnell’s administration which awarded the contract as a P3.

However, soon after current Governor Terry McAuliffe assumed office in January 2014, it became apparent that the project would not receive a permit from the US Army Corps of Engineers (USACE) because of significant environmental impact on Virginia’s wetlands. While the contractor was responsible for acquiring the permit, it did not assume the risk of a permit not being granted.

Consequently, VDOT decided to suspend US 460 Mobility Partners’ contract in March 2014, so that the agency, along with its federal partners – the Federal Highway Administration (FHWA) and the USACE – could find an alternative route and proceed with the environmental studies required before a permit could be granted.

An alternative, with a much smaller footprint and a price tag ranging from $375 million to $425 million, has since been identified, according to VDOT’s website. Instead of 55 miles of new road, the project would comprise a 17-mile segment – part of which would include a new road – while the other part would involve upgrading an existing portion of US 460.

The project has also led to legislative reform. The state legislature passed House Bill 2 (HB2) into law in April 2014. The objective is “to avoid a situation again where the Commonwealth has a large investment yet no ability to move forward on the project,” Layne told Infrastructure Investor in an interview last year, referring to US 460.

The next step, according to the VDOT statement, is for the agency to conduct outreach on this alternative.

Once the decision is made that the alternative route is permittable, the project will undergo a scoring process in accordance with HB2 that will evaluate the necessity of the project compared to other projects the commonwealth has identified. The Commonwealth Transportation Board (CTB) will then decide whether the project will be funded and how it will be procured – although P3 delivery is probably unlikely, the source said.