News Archive
Big Dig deal costs Bechtel, Parsons Brinckerhoff
Released on 24/01/2008
US Attorney Michael J. Sullivan has called a multi-million-dollar settlement by Bechtel and Parsons Brinckerhoff over defects on Boston’s ‘Big Dig’ a victory in the fight against waste, fraud and corruption.
The two American construction and engineering giants have agreed to pay more than US$407m to resolve claims over defects on the massive infrastructure project, which was the scene of a tunnel collapse that killed woman in July 2006.
The Bechtel/Parsons Brinckerhoff joint venture acted as management consultant for Boston’s Central Artery/Tunnel project, known locally as the Big Dig.
The agreement with the State of Massachusetts is to resolve criminal and civil claims over failures and defects in the US$15bn project.
Twenty-four consultants and contractors have agreed to pay an additional US$51m to resolve cost recovery issues associated with Big Dig design.
This brings total recovery to date to more than $500 million, including payments under the plea agreement reached with Aggregate Industries over concrete supply last summer. The fund is expected to grow as further recoveries from Big Dig contractors come in.
Most of the money will be held in a project trust fund to provide for non-routine repairs and maintenance.
The agreement with the Bechtel/Parsons Brinckerhoff JV (B/PB) does not, however, release it from liability for any catastrophic events which occur in the next 10 years.
Federal and state governments retain the right to sue over events causing more than $50 million damages, capped at $100 million per event. Issues arising beyond that level would be resolved by binding arbitration.
Another important feature of the agreement is the requirement that B/PB enact corporate compliance programs designed to prevent any similar conduct occurring on future public construction projects.
To meet this demand, the Bechtel chairman John MacDonald has promised specific actions to enhance existing training, compliance and quality assurance programs.
Bechtel is to meet $352 million of the penalty, PB $47 million, which includes contributions to the project trust fund.
The agreement also requires the two companies to conduct an internal investigation and report to the Federal and State Governments if any construction defects are revealed that might lead to a fatal accident such as occurred in July 2006, when part of the ceiling collapsed in the I-90 connector tunnel.
B/PB has acknowledged certain shortcomings in meeting its oversight responsibilities concerning construction of the ceiling in the portal area of the I-90 tunnel, failing adequately to investigate why the epoxy bolts were not withstanding the load of the ceiling panels.
There were also findings related to failure to fulfil construction management obligations regarding contract modifications, and to meet oversight obligations with respect to use of non-specification concrete.
US Attorney Michael J. Sullivan commented: “The settlement with Bechtel and Parsons Brinckerhoff is continuing evidence of our commitment to vigorously investigate and prosecute those who have perpetrated a fraud on American taxpayers.
“It is critically important that Federal and State tax dollars needed to fund important public works projects like the Big Dig are safeguarded against waste, fraud and corruption.
“Our work is not done,” he continued, promising to dedicate resources and time to completing a comprehensive review of the Big Dig project.
Martha Coakley, Massachusetts Attorney General, believes the global agreement reached over the Big Dig issues to be the best possible resolution for the state and the federal government.
“All the while we have been ever mindful that Milena Del Valle lost her life on July 10, 2006.
“The landmark agreement with Bechtel, Parsons Brinckerhoff and other contractors allows us to resolve criminal and civil claims, to provide for future repairs and to ensure the safety of the Big Dig tunnels.”
