$663M Arctic port delayed, frustrating Nome officials and Alaska congressional delegation

A $663 million plan to build the first U.S. deepwater port for the Arctic has hit a snag that could set it back by several months, frustrating Alaska’s congressional delegation and officials in the city of Nome where the project would be built.

The U.S. Army Corps of Engineers earlier this month canceled a bid request for the project’s first phase of construction after proposed pricing came in “well above” statutory cost limitations and exceeded allocated funds, the agency said in a statement to reporters.

Alaska’s U.S. senators say only one bidder responded, perhaps because a limited number of contractors are available with other major construction projects in the state underway.

They say the proposed deepwater port is vital to national security. It’s one of the largest construction projects planned in Alaska.

The plans call for overhauling the Port of Nome in Northwest Alaska, near the Bering Strait. The port would support Navy destroyers, icebreaking ships and fuel-supply vessels as military tensions rise in the nearby Arctic, advocates say. It could also support emergency response vessels as commercial shipping traffic around the strait grows amid melting sea ice, advocates say.

U.S. Sens. Lisa Murkowski and Dan Sullivan, along with Nome Mayor John Handeland, say the setback amounts to a delay.

But they say the project, in the works for several years, will move ahead. They say they are communicating with Corps leaders to find a solution.

“It is disappointing that the Arctic Deep Draft Port at Nome project is experiencing another unexpected schedule interruption,” Handeland said in a prepared statement last week. “It is a DELAY, not cancellation.”

The first construction phase was expected to be completed around 2029 or 2030, said Joy Baker, Nome’s manager for the project.

The Corps said it remains fully committed to the project and “will diligently work” to bring it to a “successful contract award as quickly as possible.” The agency has declined to discuss details of potential solutions, as well as issues that led to the cancellation, citing limits in procurement law.

The project calls for expanding the port and dredging a new basin outside Nome that is 40 feet deep. The project has received $250 million in federal funds for the first phase, in the 2021 bipartisan infrastructure bill.

The federal government covers 90% of the cost, with Nome paying for 10% and other associated costs, according to a partnership agreement between the city and Corps.

Handeland, Murkowski and Sullivan say they have been told by Corps leaders that the agency will issue a revised solicitation. That’s expected early next year, restarting a process that began in February.

Handeland said Nome and the Corps have agreed to work together to evaluate options to build the first phase as a usable project, with available funding and after a new round of bidding.

The Corps said in a statement to reporters “it is too early to discuss the specifics of any future action.”

The agency declined to release the estimated cost of the project’s first phase. It has not disclosed the amount of the cost overrun, saying specific pricing from bidders cannot be released under the Procurement Integrity Act.

The Corps remains “fully committed to awarding a construction contract,” the Corps’ Alaska district said in the statement. It “will aggressively pursue” the project’s safe construction while protecting taxpayer dollars, it said.

“In partnership with the City of Nome, the Alaska District team is working with the entire (Army Corps) enterprise to quickly pivot to several other options for bringing the benefits of the Port of Nome Modification Project to the state,” the Corps’ statement said. “It is our highest priority to ensure the statewide economic and security benefits of this project are implemented.”

Senators say a lone bid was received

Murkowski and Sullivan said separately on Monday that only one company bid on the project.

Murkowski called the delayed bidding process a “kick in the stomach,” and said it comes with the project already behind schedule.

She said communication from the Corps has been lacking. It’s frustrating that the city and Alaska delegation did not get news from the Corps that the cancellation was coming.

“This is wrong,” she said. “If things were going off the rails, they should have told somebody.”

The project is increasingly critical following more military patrols by Russia and China near Alaska’s borders, she said. With sea ice melting, more ship traffic is also traversing the Bering Strait region and areas of the Arctic. The closest major port to the Arctic is Dutch Harbor, about 1,000 miles away, she said.

Sullivan said the delayed bidding process could result in a lost summer construction season. A bright side is perhaps more bidders will come forward in a future round, he said.

Sullivan said the Corps does not have the discretion to decide if the deepwater port will be built.

“It is going to get done,” he said. “In one of the many pieces of legislation that we have passed relating to this project, Congress let people know that this is of strategic importance, not just for economic security for Alaska, but for the national security for the United States of America.”

Sullivan said the project may have received only one bidder because other big infrastructure projects are underway in Alaska, limiting the availability of contractors.

Other projects include a seawall project to reduce coastal erosion in Utqiagvik, a bluff stabilization project in Kenai, and multiple highway projects, Sullivan said. Multibillion-dollar oil fields in Alaska’s North Slope oil fields are also being built.

“We are not going to sit back and say the Corps can take its time,” Murkowski said. “We’ll make sure this project moves forward and does so in a competent way.”

Murkowski said in talking with Corps leaders that she understands that the proposed cost of the first phase came in three times over the estimate. Perhaps the Corps estimate was too low, she said.

“Maybe the problem is the Corps overall is lacking in their ability to accurately provide the cost estimates that they need in certain areas,” she said.

It’s “incorrect to say that the government estimate was unrealistically low,” the Corps said in its statement.

“An accurate statement would be that the bids for phase one as presently designed came in higher than expected,” the Corps said. “The government always uses all information at its disposal to develop estimates for projects. The circumstances and reasons which lead to prices being higher than expected on any project can vary widely.”

U.S. Rep. Mary Peltola said in a statement that the bid cancellation is “frustrating and unwelcome.”

“The Port of Nome Expansion Project is a critical priority for the Bering Straits region, our state, and our country,” she said. “My office has been monitoring closely and has been in contact with the Corps and the City of Nome.”

“I am hopeful that the City of Nome and the Corps will find a path forward, and am doing everything I can to ensure that this important project is able to continue moving forward,” her office said.