Book Description

The Federal Government's role in the Central Artery/Tunnel (CA/T) Project is one of oversight. Costing billions of Federal and State dollars, the CA/T Project is often referred to as "the largest public works project in American history." More Federal funding-$5.8 billion and growing-has been allocated to the CA/T Project than to any other construction project of its kind. As stewards of these tax dollars, the Federal Highway Administration (FHWA) is responsible for ensuring Federal funds are used responsibly and lawfully. To fulfill this fiduciary duty to the American people, the FHWA is governed by many statutes, regulations, and policies. As made clear by these legislative and administrative directives, the FHWA's oversight role is intended to be independent of the State's management of the Project. The FHWA Division Office is expected to evaluate critically the State's programs and provide technical assistance as needed. The FHWA has a long history of relying on a strong Federal/State partnership in carrying out its oversight role. Begun at the start of the Federal-aid highway program in 1916, the concept of a "partnership" reflects the FHWA's unique oversight approach to State transportation departments, whereby relationships are based on mutual trust, fairness, respect, cooperation, and communication. Although the FHWA makes Federal-aid highway funds available to the States, each State is responsible for managing and developing its projects, subject to Federal oversight. In the case of the CA/T Project, the FHWA's long history of strong Federal/State partnerships failed. On the one hand, the FHWA failed to maintain an independent enough relationship with the State to adequately fulfill its oversight role. On the other hand, the State breached its trust with the FHWA and others by intentionally withholding knowledge of the Project's potential cost overrun. In October 1999, the CA/T Project Director began a "bottom-up" review of all construction contracts to identify all future cost exposures on a contract by contract basis. The CA/T Project undertook this comprehensive cost review out of concern that costs would substantially exceed the $10.8 billion cost referred to repeatedly by Project managers in recent years. Although the FHWA Division Office did not receive complete information from the CA/T Project, it had received a draft of the U.S. Department of Transportation's Office of Inspector General (OIG) report dated October 7, 1999. In that draft, the OIG pointed out that the Project was experiencing significant construction cost increases, and if the trends continued the Project could need up to $942 million more in offsets or additional funding. The OIG draft report also pointed out that the Project's 1998 Finance Plan did not disclose significant cost information about the Project, such as construction cost increases or that contract awards were exceeding budget. These warnings should have caused the Division Office to scrutinize the information being provided by the Project more closely. However, the Division Office chose instead to continue to rely on assertions from the State that future cost increases were unlikely. Had FHWA independently reviewed the data provided by the OIG, it most likely would not have approved the finance plan presented by the CA/T Project in January 2000. On January 7, 2000, the Director of the CA/T Project submitted to the FHWA Massachusetts Division Office an "Annual Finance Plan" (Plan) that had been due in October 1999. According to Title 23, United States Code, Section 106, the Plan must provide a detailed estimate of the "cost to complete" the remaining elements of the CA/T Project, including reasonable assumptions of future cost increases. There was no indication in this Plan of a potential cost overrun.