Bullet train contractor warns of further two-year delay as state struggles to secure land

A major construction team on the California bullet train project notified the state rail authority this month that it will not complete a 65-mile section of the future route in Kings County until at least April 14, 2025 — nearly two years after the date that the state included in a business plan adopted Thursday.

The additional delay could again boost costs and jeopardize the state’s funding plan to complete a partial operating system between Bakersfield and Merced by 2030. The project’s rising price tag has forced the state to repeatedly scale it back and delay indefinitely a goal to have the train running from Los Angeles to San Francisco — at speeds up to 220 miles per hour — by 2020.

The notification of the new delay came in a letter dated March 9 to the California High-Speed Rail Authority. A construction team led by the Spanish firm Dragados described a chaotic system for projecting future construction progress because of state delays in securing land for construction.

The Times obtained a copy of the letter, which complained that the rail authority’s failure to accurately predict land acquisition has tangled construction schedules and caused fitful conditions along the route.

Dragados said it has had to hire workers as land becomes available and then lay them off as it awaits new parcels. It said that “trepidation” among subcontractors and suppliers is resulting in higher risk that must be priced into bids for work. “Therefore, the impact of providing a schedule which includes incorrect right of way dates will only exacerbate these impacts,” the letter said.

Joe Hedges, the chief operating officer at the rail authority, downplayed the letter in an interview Saturday. He called it part of a back-and-forth bargaining process normal in the construction industry. The completion date of 2025 is subject to negotiation and the delays can be mitigated, he said. Hedges also disputed Dragados’ complaints about faulty state land forecasts.

“Is it unreliable? No,” Hedges said. “These are our best engineering guesses. These are our goals we are aspiring to achieve.”

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The Dragados letter was part of a long series of change orders — more than a dozen for about $150 million — that relate to delays caused largely by a lack of property.

A similar letter was sent last year by the construction team led by Tutor Perini, which is building 31 miles of rail structures in Fresno and Madera counties. The strongly worded letter said the team could miss its schedule, noting that more than 500 needed land parcels along the route were not available seven years after its construction contract was issued. It called the delays in buying land “beyond comprehension.”

Land acquisition has been a monumental hurdle for the project since 2012. In Kings County, the rail authority still needs 264 more parcels, but in January it acquired only nine. At that rate of progress, it would take 2½ years just to buy the land.

Hedges said the authority has made “great progress” in its land acquisitions. But about half of the remaining parcels across the Central Valley will have to be condemned, he said, requiring a slow legal process.

The pandemic has worsened the situation, owing to slowdowns at a courthouse that handles the condemnation suits. Gov. Gavin Newsom just appointed a new director of real property at the rail authority, Dennis Kim, who formerly worked at rail authority’s main consultant, WSP. Kim is the fourth property chief in recent years.

If Dragados does not finish its work until 2025, it is doubtful the state could install 171 miles of track, a highly complex digital signal and control system, and a high voltage power system in just five years, according to executives on the project who spoke with The Times.

The Dragados letter is part of a $134-million change order from 2019, one of many that has driven up the cost of the contract from $1.3 billion to $2.1 billion. In addition, there are a number of change orders proposed by the contractors — not disclosed by the rail authority — that could exceed the project’s budget if they are approved. In some cases, the proposed change orders originate from rail officials. Others originate from the contractors.

In its approval of the business plan Thursday, the rail authority decided to keep investing largely in the San Joaquin Valley, where it is building a partial segment from Bakersfield to Merced for $22 billion. The plan remains highly controversial. Last year, the state Assembly approved a resolution calling for a delay in the next major contract as a prelude to shifting some of the Central Valley funds to Southern California and the Bay Area.

The rail authority board is starting to express concerns. The vote to approve the business plan was 6 to 3, the first time in years that board dissension resulted in a split vote. The concern was that the project’s cost may continue rising beyond available funding amid uncertainties about what the Biden administration may do.

Board member Martha Escutia, a former state senator and a vice president at USC who voted against the plan, said it makes sense to complete 119 miles of construction underway but then pause until more information is available.

“I know you are not going to do that,” she told the board. Indeed, board members appointed by the governor, who has the power to name five of the nine members, outvoted the doubters.

The business plan reported a $330-million increase in the cost of the Central Valley construction since 2018. But that modest increase does not account for unprocessed change orders the construction teams have filed to deal with unforeseen problems. Under the rail authority’s policies, it only disclosed change orders that have been approved, and few, if any, have been approved since last year.

Dragados has pending change orders of $642.5 million, according to a log obtained by The Times. If all of those are approved, it could consume the remaining $264 million in contingency funding for the segment. The rail authority could tap other contingency accounts or shift other funds around, but ultimately it might have to seek more money from the Legislature.

Meanwhile, the Tutor Perini team has an estimated $250 million in pending change orders on its section of the line, according to another log, and project officials expect additional change orders are coming. They asked not to be identified because they are not authorized to talk to the news media.

Ferrovial, which is building just 22 miles of the rail in Tulare County, has had $193 million in change orders approved, sending its original $444-million contract to $638 million. Its work is projected to finish by April 2022.

Hedges said the proposed change orders are just a bargaining position of the contractors and are subject to negotiation, similar to what goes on at a used car lot. “There is this back-and-forth negotiation to determine a fair and reasonable price,” he said.