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By K. Dixon Wright

When the space shuttle Endeavour flew its 25 missions for NASA, it sped through space to an orbiting space station at about 17,500 miles per hour. On its much shorter trip to a new home in Los Angeles this past October, the retired space shuttle traveled at the more sedate rate of about two miles per hour -- yet from a risk management and underwriting perspective the journey was almost as perilous as a trip through outer space.

Perhaps the most challenging task in all of this fell to the Sarens Group, the global heavy lifting and transportation company, whose veteran engineers had the responsibility of plotting the Endeavor's route.

But those working behind the scenes to line up all the requirements for the two-day journey had their own challenges to overcome. At Wells Fargo Insurance Services USA Inc., we saw that first hand when we took on the task of arranging surety bonds under circumstances that were far from typical.

A Final Journey

When NASA retired its space shuttle fleet, the federal agency arranged for its three famous space shuttles to be put on permanent display around the nation. The Endeavour, which flew into space for the first time in 1992 and logged almost 123 million miles by the end of its last flight in 2011, was assigned to the nonprofit California Science Center in Los Angeles.

The shuttle arrived at Los Angeles International Airport atop a jumbo jet, but that still left it short of its final destination: a new display pavilion constructed at the California Science Center 12 miles away. The challenge was to move the spacecraft through the streets of Los Angeles and Inglewood -- and the statistics showed just how daunting the task would be. With a wing span of 78 feet, the Endeavour weighs 80 tons, is 122 feet long and stands 57 feet high.

The Sarens Group's job was to determine the best way to move the shuttle through city streets and across a state highway, all without mangling the roadways, crushing sewer and water pipes buried below the surface, snagging power and telephone lines, toppling trees, damaging private property or stalling traffic in car-dependent Los Angeles.

Lifting the Endeavor looked to be quite possible. Sarens has a giant crane which is built to lift up to 3200 metric tons. The company's specialized trailers have transported massive nuclear power plant components in the past.

Nonetheless, the multiple public agencies whose jurisdictions came into play over the 12-mile route needed the guarantee that only surety bonding can provide. And because the bonding would take place under unusual conditions, relationship strength was going to be cruicial.

Putting the First Bond in Place

Surety bonding is usually straightforward. A qualified company enters into a clearly defined, achievable contract to perform a service for a public or private entity. If the company fails to perform the contract, a surety bond provides the financial resources to complete the contract without the entity having to pay anything beyond the original contracted amount.

The surety bond creates a financial safety net for public and private entities that allows projects to go forward. Conversely, the lack of available bonding can kill a project.

For the space shuttle journey, the surety bonding process began a year in advance of the October 2012 move. The California Science Center asked contractors bidding on the project to provide a letter by October 17, 2011 guaranteeing that they would be able to arrange surety bonding. This requirement needed to be met even though the Center had not yet raised the funds from its donors to pay for the project and there was no plan in place for how it would happen -- in fact, there was no assurance it could even be done.

Based on Sarens' worldwide reputation and our 25-year relationship of providing bonding services to their Rigging International subsidiary, Wells Fargo Insurance was able to help Sarens obtain the necessary letter from our surety partner, RLI.

So far, so good.

Bonding in Absence of a Contract

One thing became clear over the course of the project: Everyone wanted to help get the job done -- but no one wanted to be left holding the bag if something went wrong. With the surety bonding in place to cover the contract between the California Science Center and Sarens, one might presume nothing more was needed. That proved not to be the case.

By September 2012, Caltrans had decided it could only issue permits to allow transport along Lincoln Boulevard and across the San Diego Freeway, known to commuters as "The 405", if there were bonding in place to cover potential damages. However, there was no contract between Sarens and Caltrans -- and the California Science Center had no resources that would allow recovery if something went wrong. In addition, there was also no accurate estimate of how much potential damages might amount to, but Caltrans decided to ask for bonds in the amount of $200,000 and $500,000.

Despite these unusual circumstances -- no contract with Caltrans, no Center resources and no accurate assessment of potential liabilities -- Wells Fargo Insurance and RLI proceeded to arrange for $700,000 in surety bonds on October 2, 2012. The move was scheduled to begin 10 days later, on October 12.

Two days later, on October 4, Caltrans asked for the surety amount to be increased to $1 million. There was no documentation to support an increased bond requirement, but Wells Fargo Insurance and RLI went ahead and made the arrangements for the new larger bonds.

One Final Twist

As the time for the move neared, the Los Angeles International Airport staff began to worry about having the massive Sarens crane on airport property at the beginning of the shuttle's journey. By standing policy, any work done on airport property by outside vendors must be bonded.

What made the request for bonding unusual is that the airport wanted the bond to be issued with Sarens as the contractor naming Sarens as the obligee (the protected party) rather than the airport. At Wells Fargo Insurance's suggestion, the California Science Center was named as the obligee and the bond was made in the amount of the original contract with Sarens for project planning. All of the surety bonding was now in place.

A Happy Ending

The Endeavour took two days to inch toward the science center, completing its journey on a balmy Sunday afternoon. Hundreds of thousands of people lined the streets of the city to watch the shuttle pass, according to news reports.

Numerous trees had to be cut down for Endeavor to pass and the city used almost 1,000 police officers and 200 firefighters to help insure safe passage, said news reports.

As well understood in advance, the route through a densely populated urban area was challenging. At some points along the way, the distance between a wing tip and an obstacle could be measured in inches. Crews laid 2,700 steel plates along the route to protect underground utilities. Other crews adjusted utility lines so the shuttle could pass without disrupting power to neighborhoods.

The visible effort of all those involved during the two-day transit was an impressive reminder of the careful planning involved in the Endeavour's transit. But behind the scenes, some of us could finally relax, knowing that surety, our part of the project -- far less physical, but no less important -- was complete and in place.

K. Dixon Wright is senior vice president, surety for Wells Fargo Insurance Services USA Inc.'s San Francisco Surety Practice team. He has 30 years of experience designing comprehensive surety plans for a wide range of surety bond needs. He can be reached at riskletters@lrp.com

February 21, 2013

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