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The contract had been awarded to Southeast Road Builders, a Haines-based company.

Kiewit Pacific Corp. filed a lawsuit Tuesday to prevent the state from awarding the contract, contending Kiewit was actually the lower bidder.

That lawsuit was dismissed Thursday by Superior Court Judge Patrick J. McKay, who ruled that the construction company needed to follow state protest procedures, said state spokeswoman Mary Siroky.

Kiewit then appealed to the Supreme Court, prompting the state to reconsider its award of contract Friday to Southeast Road Builders.

"We have decided to not to award the contract," Siroky said. "We need to look at exactly what that suit is."

She said the state was waiting to receive legal advice from the attorney general's office.

The project is to be an 18-foot-wide gravel road extending 23 miles from Cascade Point to the Jualin Mine Access Road.

Because of cost limitations, two of the seven bridges initially slated for the road project have been removed. The state plans to employ a barging system until permanent bridges could be built later.

The state is rushing to secure a construction contract so it can begin digging when it has been granted all the required Army Corps of Engineer permits.

It has earmarked $30 million for construction costs plus an additional $15 million in materials costs.

Another $12.3 million is available to be used as matching funds for federal money, anticipated as a grant for the Lynn Canal Highway project as a whole.

Southeast Road Builders bid $18.6 million, while Kiewit Pacific Corp.'s bid $23.9 million.

• Brittany Retherford can be reached at brittany.retherford@juneauempire.com.