ANNAPOLIS, MARCH 3 -- The Maryland Board of Public Works cleared the way today for the start in May of the long-awaited Ocean City beach replenishment project.

The three-member board approved a $12.2 million contract wiith two companies that will undertake the dredging and pumping of sand as a joint venture.

Great Lakes Dredge and Drydock Co. has been accused of bid-rigging, and its partner, American Dredging Co., is under investigation for the same offense, Deputy Attorney General Charles Monk told the board.

But the state has received sworn statements from the companies that the principals allegedly involved in the corrupt activity are no longer with the firms, Monk said.

Maryland will reserve the right to bar the companies from future contracts with the state if it uncovers, over the next five years, any new information about corruption, Monk added.

The only other company capable of undertaking the project submitted a bid that was nearly $5 million higher.

Gov. William Donald Schaefer, who sits as chairman of the Public Works Board, said he found it strange that the attorney general's office would recommend the approval of contracts with such companies.

But the governor said he felt compelled to vote in favor of the contract, which he described as a "gamble," because he does not want the much-needed project to be delayed further.

State Comptroller Louis Goldstein suggested the state prohibit any contract changes that would allow the companies to receive any payments above the bid price. He said he was concerned the contractors may have engaged in "lowballing," the practice of coming in with an unrealistically low bid and seeking additional payments later.

An estimated 2.3 million cubic yards of sand will be dredged from sites about two miles off shore and then be pumped on to more than eight miles of coastline.

The beach will remain open throughout the project, scheduled to be completed around September, and state officials said they hope the dredging will become a tourist attraction.