Bay Bridge

Californians pay for Bay Bridge flaws, but wind farm recoups costs from same contractor

The Greater Gabbard Offshore Wind Farm in the North Sea off Suffolk, England, is one of the world’s biggest wind-energy projects. The wind farm partners won an arbitration judgment of more than $400 million against the project’s prime contractor because of faulty welding.
The Greater Gabbard Offshore Wind Farm in the North Sea off Suffolk, England, is one of the world’s biggest wind-energy projects. The wind farm partners won an arbitration judgment of more than $400 million against the project’s prime contractor because of faulty welding. SSE

This is a tale of two projects.

One – the $6.5 billion San Francisco-Oakland Bay Bridge – is the largest public works project in state history. (More specifically, its $2 billion suspension-span segment.) The other – the $1.8 billion Greater Gabbard Offshore Wind Farm in the North Sea off Suffolk, England – is one of the world’s biggest wind-energy projects.

Both were built between 2008 and 2011 in the same Shanghai, China, factory complex. Each suffered from mistakes by inadequately trained Chinese welders. Thousands of welds in the towers for the 140 giant wind turbines cracked. Hundreds of welds in the Bay Bridge roadway cracked, too. Both were contracted and managed by Fluor Corp., an Irving, Texas-based construction firm – by itself for the wind farm, and in a joint venture with Corapolis, Pa.-based American Bridge Co. for the Bay Bridge.

Each required costly repairs. Who paid for the repairs and problems differed markedly.

After a dispute about who would pay for the problems, the wind farm partners won an arbitration judgment worth more than $400 million.

California officials did not get refunds. Feeling pressure to complete the long-delayed bridge, meant to endure a major quake, they paid more. They paid contractors $535 million extra, more than half of that to overcome delays and other problems related to welding. Then they lowered standards and approved a bridge riddled with cracks.

The wind farm owners had to lower their standards, too. The towers that support their wind turbines have some inferior welds. But the risks are different. The North Sea experiences relatively minor earthquakes, a lesser danger than faults that threaten 270,000 motorists who cross the Bay Bridge every day.

Both parties knew about the others’ Shanghai issues. Nicholas Rigby, former dispute director for RWE Innogy, co-owner of the wind farm with SSE PLC, said the Chinese firm lacked the right kind of experience.

Caltrans toll bridge program manager Tony Anziano said he considered the concurrent problems with the wind farm welds irrelevant to the Bay Bridge.

“(R)egardless of what was going on with other projects, we had a very good handle on what was going on with our projects,” he said. “We fully understood what we were getting. We fully understood what the issues were. We fully understood what the resolution was going to be.”

State Sen. Mark DeSaulnier, D-Concord, outgoing chairman of the Transportation and Housing Committee, called state officials’ added payments, especially in light of their knowledge of the wind farm problems, “unbelievable.”

DeSaulnier, who was elected to Congress in November, said California officials “allowed themselves to be extorted – and didn’t do anything about it.”

Fast work, big problems

Shanghai Zhenhua Heavy Industry Co., Ltd., or ZPMC, is the world’s largest manufacturer of container-port cranes. It manufactured major parts of both projects at its vast complex on Changxing Island at the mouth of the Yangtze River.

To save time and money, the California Department of Transportation and the Toll Bridge Program Oversight Committee looked to China. They even sacrificed federal support, which required American manufacturing.

ZPMC promised efficient, penthouse quality at bargain-basement prices. The wind farm owners and California officials found that irresistible despite ZPMC’s inexperience building wind farms or bridges.

The Chinese firm, a subsidiary of a state-controlled enterprise, produced the wind farm monopiles and transition structures to be placed 14 miles off the coast of England. These are steel tubes secured undersea at a depth of up to 112 feet. Above the water, the towers are topped by turbine rotors.

In 2009, Greater Gabbard’s owners shipped some tower structures from Shanghai to the Netherlands where their quality was checked. On his first day on the job, welding expert Sander Somers tested 20 locations and found 14 transverse cracks – crossing the width of welds and posing a threat to structural integrity.

Soon after, “the circus started,” Somers said in a recent interview with The Sacramento Bee. Dozens of experts descended on the project. The problems were so extensive that virtually every qualified firm in the nation was hired to find flaws using magnetic and ultrasonic testing techniques, he said.

The Netherlands inspectors found more than 7,000 cracks and nearly 900 other defects, according to legal documents obtained by The Bee.

These included many hydrogen-related cracks, often caused when moisture is not removed by correctly pre-heating the base metal. Such welds should be “easy-peasy, if you take your time and follow the procedures,” Somers said.

An analysis by Cambridge, England-based TWI, one of the world’s leading welding research authorities, blamed the problems on ZPMC’s “poor workmanship,” according to the legal filings in London’s High Court of Justice.

Fluor supervised ZPMC, its subcontractor. In a letter to ZPMC, Fluor called the quality problems “catastrophic.”

“Winter was coming on, and they had to move these monopiles to the North Sea,” Somers said.

To push the job faster, the wind farm’s owners, along with managers from Fluor, ZPMC and the testing contractors, decided to reduce the stringency of the tests and requirements, he said. The worst defects were repaired, but many others remained, similar to what was being done with the Bay Bridge construction.

Dutch welding expert Leon Birsak said he was brought to Shanghai in 2009 to audit ongoing production. When he arrived at ZPMC’s complex, Birsak said, he found imprecise cuts on many steel plates that formed the parts. Efforts to close resulting gaps in alignment with welds caused cracks and other imperfections.

Many defects were missed. Others were ignored, he said. Inspectors for the army of workers building the towers seemed overwhelmed.

RWE Innogy and SSE Plc had ordered the Ferrari of wind farms, Birsak said. “If you have somebody who is able to build a Ferrari, and has all the tools, but uses the tools wrong, at the end you get maybe a small Datsun.”

In an email response to written questions, ZPMC’s director of operations in the Netherlands, Tony Tomasouw, said his firm’s welders were well qualified and their work was “carefully, strictly inspected and spot-checked by not only ZPMC but also the general contractor, the customer and several independent institutions” on both jobs.

But ZPMC’s chief problem was inexperience, said Rigby, the former dispute director for RWE Innogy. “The first time somebody does something, it’s not going to go quite as smoothly,” he said.

Poor records

One casualty of the firm’s inexperience was timely record keeping, a basic quality-control practice that was missing on both projects. Birsak asked for welding and test records to assess and improve inspections. But nothing had been recorded into a job database, according to Birsak, and ZPMC took days to locate handwritten records.

Enormous costs for new inspections and repairs led to the 2011 dispute between the wind farm owners and Fluor, which attempted to get compensation to cover its costs.

Although the parties kept the arbitration ruling private, in 2012 Fluor lost and took a $416 million charge against earnings for the welding problems, according to filings with the U.S. Securities and Exchange Commission.

Representatives from SSE, RWE Innogy and Fluor said no one from their companies would respond to questions. But in a press release after the ruling, SSE said, “(T)he wind farm has performed well since it was energised ...”

David Seaton, Fluor’s chairman and chief executive officer, said in his company release “...(W)e are pleased that the operating wind farm is meeting the owner’s operating expectations.”

Although Fluor had previously defended itself and ZPMC against the wind farm owners, in September Fluor filed a claim in London against ZPMC for £250 million (nearly $400 million) to cover Fluor’s losses for “defective welds performed by ZPMC.” The complaint noted that the problems were “breaches of the contract between ZPMC and Fluor” that required “extensive testing and repairs.”

In its legal rejoinder, ZPMC denied that its welds contained cracks or other defects.

Bridge problems

The prime contractor for the Bay Bridge suspension span was ABF – a joint venture of American Bridge Co. and Fluor. Yet Fluor never mentioned the problems plaguing its wind farm project, Anziano said in the first interview he has given to The Bee after years of requests.

Even so, knowledge of those problems circulated informally among members of the Bay Bridge team, he said. Anziano said he didn’t know if the two projects’ problems were parallel, noting that their welding characteristics might have differed greatly.

“(W)e, first of all, had our own very large quality assurance presence on the island ...” Anziano said. “I can’t say that I ever heard of anybody saying that there was a strain on ZPMC quality control staff that was working on the Bay Bridge because of other projects.”

Yet similar problems simultaneously played out with the Bay Bridge project, leading to hundreds of cracked welds, according to Caltrans documents described in a Bee investigation published in June.

Caltrans ultimately accepted a product that violated a prohibition against cracks in the bridge welding code. Some former managers of the project said the new span would likely require extraordinary, costly maintenance.

DeSaulnier has called for a criminal investigation by state Attorney General Kamala Harris into the handling of the welds and other aspects of the bridge project by Caltrans and its contractors.

Caltrans paid ABF and ZPMC about $14 million extra to keep track of the work on top of $22 million previously allocated in the contract. This included a process to certify parts as ready to go. It relied on a comprehensive database for “real-time” access to welding test data, to be filled in as soon as the testing occurred, according to a contract change order.

Yet, ZPMC’s record keeping for the Bay Bridge mirrored that of the wind farm. About three years after the last Bay Bridge weld was completed the database is still being assembled from what Anziano called “hundreds of boxes” of ZPMC’s paper records.

Anziano – who will soon be moved off the Bay Bridge job, according to Caltrans – said the actual purpose of the database was as an easy-access reference for future maintenance questions. The contract change order does not mention maintenance. It focused strictly on assuring high quality before the parts shipped from China to Oakland.

Christopher Bakes, a partner at the law firm Locke Lord LLP, testified in August as a construction industry expert at a California Senate hearing about the bridge.

“The whole notion is that the database is a repository of ongoing performance activity, so you have a contemporaneous record should there be a failure,” Bakes said in a recent interview describing possible evidence of negligence. He called the long delay to complete the document “absurd.”

Bakes, who has litigated many large construction disputes, said in a letter to DeSaulnier: “The database’s incompleteness may itself be evidence ... and each new entry now taints this evidence.”

Brian A. Petersen, ABF’s project director, declined to comment.

The ZPMC weld connection

In September 2012, the Greater Gabbard Offshore Wind Farm was completed. Its turbines, attached to undersea cables, deliver power to 530,000 homes. Fluor and ZPMC are still in court arguing about who should pay for the partial repairs. Passengers on ships and airplanes can see the distinctive row of wind towers, but not their flaws.

In September 2013, the eastern span of the Bay Bridge opened after years of delays and cost overruns. The “lifeline” structure between Oakland and San Francisco already has required repairs for broken bolts. Its flawed welds and other possible defects have been debated for years in state Senate hearings and criticized in analyses by independent experts.

Countering the negative image, ABF and other Bay Bridge contractors made a promotional film touting the wonders of the structure. “Lifespan,” the 2-hour, 51-minute production, reviews the construction of the bridge.

In it, officials praised ZPMC, even noting the wind farm.

Steve Heminger, chairman of the Toll Bridge Program Oversight Committee, said ZPMC was a great partner for the bridge. He cited its huge capacity and skill as a maker of “wind turbines.” Heminger declined to comment about his observations in the film.

But ZPMC caused problems and cost money, according to officials on both projects.

“We never fully understood the relationship between ZPMC and Fluor,” said Rigby, formerly of RWE Innogy, one of the wind farm partners. “Fluor didn’t listen to us, or Fluor listened to us but then they weren’t able to get ZPMC to do it.”

Bay Bridge officials echoed that. Rick Morrow, a supervising Caltrans engineer, wrote in his job diary in 2008, “Is ABF unable to control ZPMC or doesn’t want to?”

They also pointed how the projects diverge. “...(T)here is a very big difference between a wind farm project and a project where we had thousands of lives at stake,” Anziano said.

“We have traded money for time,” Heminger, has often said. “We never once traded quality for time.” Anziano agreed. But many independent engineers as well as some who worked on the project have disputed this assertion.

Bridge authorities paid hundreds of millions of dollars to ABF and ZPMC to speed up work slowed down by the contractors’ own blunders. In all, Caltrans has paid $2 billion on the nearly completed project.

Somehow, the wind farm owners got both money and time. They won the $416 million judgment over Fluor, and most of the project, originally expected to open in late 2011, was generating energy in early 2012.

DeSaulnier said state and federal officials should consider suing the bridge contractors to recoup some lost funds, and to ensure that “companies that have done this inferior work don’t get (state) work in the future.”

Call The Bee’s Charles Piller, (916) 321-1113. Follow him on Twitter @cpiller. The Bee’s Pete Basofin and Richard Chang contributed to this story.

About ZPMC

Shanghai Zhenhua Heavy Industry Co., Ltd., or ZPMC, built most of the new San Francisco-Oakland Bay Bridge suspension span tower and roadway. Although publicly traded on the Shanghai stock exchange, ZPMC is a subsidiary of state-controlled China Communications Construction Co., Ltd.

Incorporated: Feb. 14, 1992, as Shanghai Zhenhua Port Machinery Co., Ltd. (name later changed to reflect diversification).

Headquarters: Shanghai, China.

Chief production facility: Changxing Island, Shanghai.

Main business: Container port cranes, with more than 70 percent of world market.

Other businesses: Bridge building, shipping, wind farms, offshore drilling platforms.

Market capitalization: $23 billion.

Sources: ZPMC, Morningstar Inc., China Communications Construction Co. Ltd., Google Finance. Bee research by Charles Piller.