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The Boston Globe OnlineBoston.com Boston Globe Online / Easy Pass

Audits question $1m fee for Big Dig consultant

By Sean P. Murphy, and Raphael Lewis, Globe Staff, 4/12/2003

   
 THE SERIES

PART ONE
Bechtel's mistakes drive up cost overruns, and company profits.

Graphics
Bechtel's fee overruns
Map of major conflicts
History of the contract
Contract modifications
Cross section of roadway
Construction cost overruns


PART TWO
State officials overlook and excuse Bechtel's mistakes for a decade.

Graphic
Cost recoveries initiated


PART THREE
Powerfull allies help protect Bechtel and its bottom line.

 FOLLOW-UPS

This series has generated strong response from the state, the public, and Globe columnists.
More Globe coverage

 GLOBE DEFENSE OF SERIES

On Feb. 20, 2003, Bechtel/Parsons Brinckerhoff issued a document disputing the findings of the "Easy Pass" series. Globe editor Martin Baron responded with a defense of the Globe's reporting.
Read Bechtel's statement
Read the Globe's statement

 PHOTO GALLERY

Building a reputation
Bechtel has never shied away from big construction projects, but worldwide achievements are accompanied by controversy.
See past Bechtel projects

 FROM THE ARCHIVES

2001
Review cites flaws at Big Dig
Cerasoli charges Big Dig coverup
$1.4b overrun known in '99
Firm rejects call to offset costs
'99 memos warned of tunnel leaks

2002
Officials disclose more defects
Lawsuit raises Big Dig questions
State to reopen deal with Bechtel
Big Dig hires quality manager
US knew of hidden expenses
Big Dig overrun just plain big
SEC probers to target Big Dig
Big Dig review to target overruns
Turnpike, firm set deal on leak cost

2003
Contracts to be reviewed

 RELATED LINKS

Central Artery/Tunnel Project
www.bigdig.com

Bechtel
www.bechtel.com

Parsons Brinckerhoff
www.pbworld.com

State Inspector General reports
On the history of the Central Artery/Tunnel project's finances:
www.state.ma.us/ig/publ/cat01ex.htm
On the Central Artery/Tunnel project's attempts to recover money for mistakes:
www.state.ma.us/ig/publ/catcrex.htm

About "Scheme Z" bridge design
libraries.mit.edu/rotch/artery/

State oversight of the Big Dig
www.state.ma.us/catocc/

Mass. Turnpike Authority
www.massturnpike.com

The Artery Business Committee
www.arterybusiness.com

 ONLINE CHAT

On February 11, 2003, Globe reporter Raphael Lewis chatted with Boston.com readers about the Bechtel series.
Transcript of chat

 CONTACT THE GLOBE

Any tips? Let us know.
Phone: 617-929-3379
E-mail: bigdigtips@globe.com

 MORE BOSTON.COM COVERAGE


Beyond the Big Dig   What happens to the ribbon of land being created by the depression of the Central Artery? A joint effort between The Boston Globe, MIT, and WCVB-TV explores.
A special report


Progress updates on the Big Dig. Info
 


One of the companies managing the Big Dig billed the public $1 million for the consulting work of a former state official and congressional aide who acknowledged spending "70 percent" of his time finding other government projects for the firm, according to interviews and newly released audits.

The audits, which also concluded that Parsons Brinckerhoff overbilled the project $31 million through 1997, were released yesterday after the firm dropped a legal bid to keep them confidential.

According to the audits, the company owned by James F. O'Leary, a former MBTA general manager and longtime aide to US Representative J. Joseph Moakley, has been paid an $8,000 monthly retainer since 1989, which Parsons Brinckerhoff said was a necessary business expense reimbursable with public funds.

The federal auditors, after repeatedly demanding a detailed explanation of the billings, questioned whether such reimbursements were legal. In their audit, they wrote that Parsons Brinckerhoff "has not provided evidence of any work actually performed" by O'Leary's company, Alternate Concepts Inc. They recommended that public agencies no longer reimburse Parsons Brinckerhoff for O'Leary's work and seek to recoup the previous payments.

"In several letters beginning June 15, 2000, we requested documentation of the actual services performed by, and the reason for, retaining ACI in sufficient detail to enable us to determine whether the services . . . were necessary and customary and do not violate law or regulation," said the audit reports, written by the Defense Contract Auditing Agency, the auditing arm of the US military. "To date, (Parsons Brinckerhoff) has not provided adequate information in this regard. Thus, we questioned the cost."

The audit reports say that Parsons Brinckerhoff provided "a brief description of some types of anticipated services," but that was all. "There is no mention of actual work performed by ACI."

A Parsons Brinckerhoff spokesman declined to comment on the O'Leary billings, referring reporters yesterday to the firm's written rebuttals to auditors. In those documents, Parsons Brinckerhoff insisted that adequate documentation was provided to back up the work O'Leary performed.

In an interview yesterday, O'Leary, whose firm recently won the $1 billion, five-year contract to run the T's commuter rail service, said that "70 percent" of his work for Parsons Brinckerhoff had not been related to the Big Dig project.

"I was helping them get projects," O'Leary said. "Helping to write proposals and strategies on how to get financing" for new publicly funded work.

O'Leary said that he did provide "strategic planning" related to the company's Big Dig work, but only "occasionally."

"I worked on funding proposals -- identifying funding sources in the US Congress," said O'Leary. He said that he was not a lobbyist because he said he did not directly contact lawmakers or their staff, but instead advised Parsons Brinckerhoff on how to access funding.

Federal laws prohibit the use of federal highway dollars for lobbying.

O'Leary said his contact at Parsons Brinckerhoff was Morris Levy, the firm's senior vice president. Levy, according to campaign finance records, contributed $2,000 to Moakley between 1992 and 2000, before the longtime South Boston Democrat died.

Parsons Brinckerhoff was selected to manage the construction and design of the new federal courthouse on the South Boston waterfront, a project championed by Moakley, as was the Big Dig. The courthouse, which opened in 1998, bears Moakley's name.

O'Leary said he did not assist Parsons Brinckerhoff in obtaining the courthouse contract.

A lifelong Bostonian, O'Leary's public career began in the early 1970s when he became a top aide to Moakley, whose rapid ascent in Congress would bring tens of millions of dollars in federally funded projects to the region, much of it in transportation.

After six years with Moakley, O'Leary landed a job at the state's Executive Office of Transportation and Construction. He departed after two years to lead the Massachusetts Bay Transportation Authority.

It was during O'Leary's tenure as T general manager that the agency underwent a massive, federally funded expansion, which included the Red Line extension and the creation of the Orange Line.

O'Leary left the MBTA post in 1989 to form ACI, a transportation consulting firm. He was joined by Richard M. Brown, the former MBTA treasurer, and Jane F. Daly, the agency's former deputy general manager. One of their first clients was Parsons Brinckerhoff, which had been managing the Big Dig along with Bechtel Corp., since the mid-1980s, O'Leary said yesterday.

Bechtel and Parsons Brinckerhoff, the private-sector managers of the Big Dig, have been under intense scrutiny in recent weeks as legislators, Governor Mitt Romney, and several state and federal agencies clamor to recoup funds lost to management mistakes on the project. The state has recouped just $35,707 for such mistakes. Construction cost overruns now top $1.8 billion, and design overruns have eclipsed the half-billion dollar mark.

In January, the Globe, invoking the state's public records law, requested copies of the audits after learning that Parsons Brinckerhoff was being accused of overbilling by $31 million through the first 10 years on the job. Big Dig chief counsel Kurt Dettman, citing the threat of a lawsuit from Bechtel/Parsons, denied the request.

After the Globe wrote a story about the audits earlier this month, state Senator Marc R. Pacheco also requested the audits, but Bechtel/Parsons sued in state court, seeking an injunction blocking their release.

On Thursday, Judge Allan van Gestel denied the company's attempts to keep the audits from Pacheco, the Globe, and the Associated Press, which joined the case. Yesterday, Bechtel/Parsons declined to appeal.

Currently, Parsons Brinckerhoff, the Turnpike Authority, and the Highway Department are in confidential mediation talks to resolve the dispute over the federal auditors' contention that the company overbilled the project for $31 million. Legislators are hinting that they might attempt to join those proceedings as part of a new, independent process to recover costs from errors and mismanagment on the $14.6 billion Big Dig project. They plan to file legislation to create a panel to oversee that process.

Pacheco, a Taunton Democrat and chairman of the Post Audit and Oversight Committee, said he and his staff will now pore over the thousands of pages of audit materials released yesterday. He said the committee scheduled an appointment to be briefed on the audit findings by officials with the state Highway Department.

Sean P. Murphy can be reached at smurphy@globe.com. Raphael Lewis can be reached at rlewis@globe.com.

This story ran on page A1 of the Boston Globe on 4/12/2003.
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