As I reported in the February issue of Mealey's Litigation Report: Construction Defects, a pair of contractors in a joint venture agreed late last month to split the bulk of a $458 million settlement with the U.S. and Massachusetts government over their allegedly shoddy work on Boston's Big Dig, a highway tunnel project that essentially relocated an elevated interstate highway below ground where it runs through the city. According to the governments, management consultants Bechtel Infrastructure Corp. and Parsons Brinckerhoff Americas Inc., in a joint venture known as B/PB, failed to, among other things, properly oversee subcontractors and monitor work on the project. The governments said those failures contributed to problems ranging from relatively minor leaks and flooding to the July 2006 tunnel collapse that buried a car under several tons of concrete from a suspended ceiling, killing Milena Del Valle and wounding her husband.
The question is: was this a good settlement? The settlement amount -- $407 million from B/PB, the rest from two dozen subcontractors -- is no small sum, and a sizeable chunk of the money is earmarked for trust funds for repair, maintenance and infrastructure improvements on the project. And the agreement also forces B/PB to own up to their contributions to the problems plaguing the tunnel, which are ongoing; to bear responsibility for future "catastrophic events"; and to institute a corporate responsibility program to ensure such events don't occur.
But the settlement contains a number of "outs" for B/PB, like a 10-year window for those catastrophes, a minimum of $50 million in damages built into the definition of "catastrophic event," and a $100 million cap on damages. All criminal as well as civil charges are dropped, plus Bechtel and Parsons Brinckerhoff aren't even barred from bidding for other government contracts.
Naturally the officials with their names on the agreement, like U.S. Attorney Michael J. Sullivan and Massachusetts Attorney General Martha Coakley, call it the best resolution they could possibly have achieved. And lets face it: to anyone outside Congress, north of $400 million is a lot of money. Some prominent figures, however, such as former Massachusetts Turnpike Authority board member and gubernatorial candidate Christy Mihos, think the companies got off far too easy. As Mihos told the Boston Globe, "The lesson learned is, (you) can pay your way out of anything." Current governor Deval Patrick supported barring B/PB from going after more public works projects, but Coakley said the final settlement total would have been less. State senator Bruce Tarr told the Globe he was worried about the cap, but he neverthless supported the agreement.
What do you think? Did Bechtel and Parsons Brinckerhoff get the message, or did they get a (relatively) free pass?