California taxpayers are feeling the loss today after state officials revealed they had to spend millions in additional taxpayer dollars to repair the San Francisco-Oakland Bay Bridge after paying a Chinese firm to perform the work.
State officials hired Shanghai Zhenhua Port Machinery Co. in 2006 to perform repair work as well as new construction on the bridge. State officials made the decision to go with Zhenhua because they were the lowest bidder and estimated the work would be complete sooner as compared to bids by competitors. Going with the lowest bidder allowed state officials to have the repair work completed for at least $250 million less than the next lowest bidder at a time when the state’s revenues were already well short of expenses.
However, according to construction records, Zhenhua had never before performed repair work on a bridge. In addition, the company had little experience performing construction work in the United States, where construction safety standards far exceed those in China and many other nations.
In the end, the lack of experience led to delays in the project and costly reperformance of Zhenhua’s work as their original repair work and materials began to quickly show signs of failure. The final cost for the project was in excess of $6.5 billion, several billion dollars over the original budget.
State officials paid Zhenhua additional funds to repair sections of the bridge the firm had just repaired. In addition, officials paid Zhenhua additional money as an incentive to speed up construction when the project began to experience delays.
At least two individuals overseeing Zhenhua’s work—one a member of the California Department of Transportation (Caltrans), the California agency responsible for the state’s traffic and rail infrastructure, and the other a contractor from another firm—voiced concerns during the project that Zhenhua’s work was being done in a manner that would require rework. However, instead of heading the warnings by those individuals, Caltrans reassigned those individuals away from the bridge repair project.
In January, at a hearing before the California senate, those two individuals testified about the concerns they expressed during the project. Their concerns included use of substandard materials on the project, materials that Zhenhua brought in from China. In addition, the two individuals noted cracks in welds between steel components where the welders had identified the work as complete.
In addition, outside experts warned Caltrans before hiring Zhenhua that use of the firm was risky because of their lack of qualified employees, since the company was known for crane construction, not bridge construction.
The setbacks and cost overruns of the San Francisco-Oakland Bay Bridge are the latest examples where the use of Chinese-based firms on American construction projects because they were the lowest bidder has led to rework at significant expense. The United Steelworkers continue to voice their concerns at this practice.
“Fundamentally, you don’t think about country of origin,” said Gary Hubbard, who serves as a spokesperson for the United Steelworkers. “[However], if America wants to be a global leader, we have to act like one, not look for cheap alternatives.”
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Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.