Digging Big into the state’s pocket

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Ouch. The state has documented $173 million in new Big Dig cost overruns – and, worse, another $160 million in future costs.

Gov. Deval Patrick noted his “continued frustration with the contractor” and, together with Speaker DiMasi, pooh-poohed Treasurer Cahill’s suggestion that we increase taxes – I mean, tolls – to pay for new and future overruns.

The feds – yes, the same feds who bless the construction of bridges and highways to nowhere – are not going to pay any more for our project management failures. So we’re stuck waiting to see if we can post facto recover some of the cost overruns. That’s what the Speaker, Senate President and the Governor are all counting on – let’s let Attorney General Martha Coakley take Bechtel to court for costs associated with mismanagement and design and construction flaws.

I hate to be the skunk at the party, but, like, dudes, a third of a billion dollars is a lot of money – and way beyond any sum that we are likely to recover in court. So while we brace for more bad news and wait for the state’s lawyers to figure out their strategy, we might pause for a second and draw some lessons for the future.

Let me offer one.

When the state thinks about hiring out the construction of a capital asset, it should make it a practice to require that the vendor (here insert “Bechtel”) put up a bond worth a substantial portion of the contract amount. In drafting the contract, the state should establish quality measures and a specific set of timelines. If these are not met, the vendor (ahem, “Bechtel”) would forfeit a portion – or in the case of significant failure to deliver – all of the bonded amount.

Had we done this with the Big Dig, we would have pocketed a good amount of that bond up front rather than do what we are doing now – chasing the vendor from a position of absolute weakness. Bechtel knows we have a weak hand, and so do we. So weak is our hand that theirs is still in our pocket.