TASK FORCE REPORT ON BOSTON'S CENTRAL ARTERY/TUNNEL PROJECT RECOMMENDS STRENGTHENED OVERSIGHT, MORE FISCAL RESPONSIBILITY
Federal Highway Administration
April 11, 2000
FOR IMMEDIATE RELEASE
Tuesday, April 11, 2000
Contact: Virginia Miller
U.S. Transportation Secretary Rodney E. Slater today accepted a report by the Federal Task Force for the Central Artery/Tunnel (CA/T) Project that included strong recommendations to strengthen federal oversight of the Boston project and require fiscal responsibility from the CA/T project leadership.
"The Task Force did what I asked and fulfilled its mission. I have accepted their recommendations which will help improve fiscal accountability, advance the project toward successful completion, and lead to a sound financial investment," Secretary Slater said. "Implementing these recommendations is necessary to restore integrity and public confidence in this important public works project."
In its report, the Task Force faulted Massachusetts for breaching its trust with the U.S. Department of Transportation’s Federal Highway Administration (FHWA) and others by "intentionally withholding knowledge of the Project’s potential cost overrun." It also faulted FHWA for failing to maintain a sufficiently independent relationship with CA/T Project leadership to adequately fulfill its oversight role.
The Task Force Report summarized its 34 recommendations by stating that the Federal Highway Administration (FHWA) "must move beyond the failed ‘partnership’ approach, which the state betrayed by its actions, in order to achieve independent and critical oversight of the CA/T Project."
The Task Force Report briefly discusses the financial plan submitted to FHWA by Massachusetts on March 15. FHWA is in the process of completing an analysis of that financial plan. The final analysis is expected shortly.
The multi-disciplinary Task Force was appointed in late February to analyze the oversight process for the CA/T Project, review the structure of the FHWA Massachusetts Division Office, determine the effectiveness of financial documents and recommend changes to FHWA policy or procedures.
The task force report noted that the CA/T Project could cost an additional $300 to $480 million, bringing the cost overrun to $1.7-$1.9 billion and the total estimated cost of the project to $13.4-$13.6 billion. Key recommendations of a total of 34 are attached. The report is on the Internet at http://www.fhwa.dot.gov.
FEDERAL TASK FORCE CENTRAL ARTERY/TUNNEL PROJECT
PARTIAL LIST OF RECOMMENDATIONS
1. Require FHWA to move beyond its failed "partnership" approach to oversight in order to achieve more independent oversight.
2. Designate the Massachusetts Highway Department (MHD) and the Massachusetts Turnpike Authority (MTA) as "high risk" grantees, requiring them to submit more detailed financial reports.
3. Recommend that the Secretary request the Governor to reevaluate the appropriateness of MTA’s continuing role in day-to-day management and control over the CA/T Project.
4. Require Bechtel and Parsons-Brinckerhoff to submit a certified letter to the FHWA describing their role in the management of the CA/T Project, including whether either company raised questions regarding escalating cost exposure and/or the decision to withhold material information from the FHWA.
5. Require FHWA Chief Counsel to review the State’s failure to disclose the $1.4 billion overrun and recommend whether that failure warrants federal debarment action.
6. Recommend the Secretary consult with the Governor to seek changes in the State CA/T Project leadership consistent with the announced changes in Federal CA/T Project leadership.
7. Withdraw the delegation of authority from the state to accept annual finance plans for the CA/T Project to FHWA headquarters and provide more detailed financial guidance on mega project oversight.
8. Require written assurance from the State that all data from its own independent audits of the CA/T Project will be provided to FHWA.
9. Require the MHD to reach agreement with local officials on the terms of a balanced statewide program and make this agreement a formal condition of State Transportation Improvement Plan (STIP) approval.
10. Require the CA/T Project management to obtain independent certification as to the accuracy of the information contained in the Finance Plan.
11. Require that the Finance Plan be based on more realistic cost and revenue scenarios. Owner Controller Insurance Program (OCIP) credits must be excluded. The Finance Plan must include contingency plans to cover potential revenue shortfalls or cost overruns. Legislative support needs to be demonstrated, or use general funds as a surety to finance the $1.4 billion overrun.
12. The CA/T Project could cost an additional $300 to $480 million, bringing the cost overrun to $1.7 to $1.88 billion. If this occurs, the total project cost would be in the range of $13.4 billion to $13.6 billion. The State must provide contingency plans for financing these anticipated increased costs.
13. Require the state to sign an agreement with FHWA formalizing the recommendations in the Task Force Report which are relevant to the working relationship between the parties
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