Tunnels' leaks may hike cost of Big Dig

The hundreds of leaks permeating the Big Dig tunnels could drive up the project's $14.6 billion price tag, according to the US Department of Transportation inspector general.

In a Feb. 16 memo obtained by the Globe, Inspector General Kenneth M. Mead said he will not authorize the release of $81 million in federal funds for the Big Dig until the state presents him with a detailed account of how many leaks are in the tunnels, how they will be repaired, and how much that will cost.

''Until these unknowns are substantially resolved, we do not have a credible basis on which to conclude that the [Big Dig's] Finance Plan contains a cost estimate that is based on all known and reasonably expected costs," Mead's memo states.

The move is significant because it shows that, three months after revelations that hundreds of leaks riddle the tunnels, the top federal overseer of the Big Dig is not convinced the state has the situation under control. And if the Big Dig's price goes up, the difference would be borne entirely by the state. Mead's memo was sent to the Federal Highway Administration, the agency that provides the funds to the states for transportation projects.

In his memo, Mead notes that as of Feb. 5, there were 438 leaks in the Big Dig tunnels, but ''approximately 40,000 points" or locations in the tunnels yet to be inspected for problems.

''As a result, it is not known how many leaks there are, their severity, and the associated costs to repair them," Mead said.

The Massachusetts Turnpike Authority, which oversees the Big Dig, has downplayed the potential financial impact of the leaks, saying that spending on repairs will be borne by contractors. In addition, Doug Hanchett, a Turnpike Authority spokesman, issued a statement Friday saying that the agency has taken steps to respond to Mead's concerns, including the hiring of auditing firm Deloitte & Touche to assess the situation and produce a report on projected costs.

''We are in the process of addressing the Inspector General's concerns via the Deloitte & Touche audit and are confident that it will be completed in an expeditious manner," Hanchett said.

However, that report, originally scheduled to be completed in April, will not be done until June, meaning federal funds will not flow to the project until at least then.

The Big Dig is billions of dollars over budget and years past scheduled completion. In 2001, frustrated by cost overruns, Congress capped the federal contribution to the project at $8.5 billion and made annual payments subject to the Department of Transportation's approval of annual financial plans submitted by the Turnpike Authority.

Problems with leaks were revealed last September, after water gushed through a wall panel in the Interstate 93 northbound tunnel, pouring onto the road and forcing the closure of lanes to traffic. Two months later, independent engineers said that hundreds of leaks dotted the tunnels. A handful of those leaks appear to stem from construction defects in the tunnel's massive slurry walls. The rest are smaller fissures in the area where the tunnels' roof and walls meet.

Big Dig contractors and engineers are investigating the extent of the problem, and have not provided an estimate of the cost of fixing them. However, the price tag just to fix the wall panel where the September leak erupted could reach $750,000.

The first indication that Mead was considering holding back federal funds came in December, during a meeting with Governor Mitt Romney in Washington over the leak problem. Although Mead did not comment publicly after the meeting, Romney said that Mead had warned he may not release the funds, unless the state could quickly investigate and determine the scope of the problem.

Mead could not be reached for comment Friday.

The $81 million represents approximately 10 percent of projected state and federal spending on the Big Dig this year, the final year of construction on the massive project. The bulk of the funds being spent in the final stages of the project are from the state.

If the federal government does not release the $81 million for many months, the state could experience a cash-flow problem on the Big Dig that could force the Turnpike Authority to sell off property or raise tolls to close the gap. In past years, Mead's office has eventually signed off on the release of funds.

More ominous for the state would be an increase in the Big Dig's overall price tag, because the federal contribution cap means taxpayers and tollpayers would have to make up the difference.

US Representative Michael E. Capuano, a Somerville Democrat who sits on the House Transportation Committee, said Mead's move should be viewed with concern, not just for its financial implications.

''Eighty-one million dollars in a $15 billion project may not be statistically important, but it's an important commentary on the oversight of the project," said Capuano.

State Attorney General Thomas F. Reilly, who recently took over responsibility for investigating the leak problem and recouping costs from contractors, echoed Mead's concerns in an interview Friday, saying ''there is no certainty about the final cost of this project."

''We don't have a solution right now that's going to work, so we don't know what it will cost," Reilly said. ''We see a very clear indication how this can hurt the state further. This is one of the reasons we stepped in."

It is not the first time the federal government has held up payments to the state for the Big Dig. After cost overruns in 2002, federal officials postponed sending funds to the project for several months until the Turnpike Authority demonstrated it had a solid plan for covering $400 million in cost increases.

Governor Mitt Romney, through a spokesman, said Mead's decision to withhold funds until the true cost of the leaks is known puts the pressure squarely on Reilly and Massachusetts Turnpike Authority Chairman Matthew J. Amorello, a fellow Republican whom Romney has asked to resign because of the leaks.

''This underscores how critically important it is for the attorney general and the Turnpike Authority to get a grip on the tunnel leak problem, how much it will cost to fix it, and the recovery of those costs from responsible parties," said Romney communications director Eric Fehrnstrom. ''What hangs in the balance is $81 million in federal funds that we are all counting on to help pay for the project."

Raphael Lewis can be reached at rlewis@globe.com.