Contractor Wants Another $400 Million for 405 Widening Project
Now that the 405 widening project is done, it's time to settle up on the bill. The project was initially budgeted at a cool $1 billion, which rose to $1.1 billion. But now the contractor, Kiewit, says it is owed another $400 million.
The Metropolitan Transportation Authority and Kiewit are at odds over that. Now the issue is going to court, and the gloves are coming off. In its complaint, first reported by the Daily News, Kiewit blames the MTA for "active negligence and active interference" that affected "virtually every aspect and area of the design and construction of the Project."
Some excerpts and the full complaint are after the jump.
Kiewit blames MTA for a "virtually unprecedented" expansion of the original scope of the project:
The financial impact to Kiewit has been staggering, the effect of which has been exacerbated by LACMTA's bad faith and negligent administration of the project...
Kiewit says that MTA was supposed to arrange 23 agreements with utilities and oil companies to relocate wires and pipelines. But in almost every case, that never happened, which had a "devastating" effect on the project:
As neither LACMTA nor Kiewit has any leverage with third parties... these parties are free to disregard LACMTA and Kiewit, and have no penalty for delaying the project. ... Kiewit has essentially been reduced to begging for cooperation from third parties, such as utility owners and local governments.
Kiewit claims that the scope of utility relocation work doubled during the course of the project. Kiewit also blamed MTA for failing to disclose the existence of a 12-foot by 12-foot drainage culvert that ran the length of Sepulveda Boulevard. That culvert had to be protected, which required elaborate redesigns.
The complaint also alleges that MTA subjected the contractor to a "bureaucratic quagmire," as project designs were routinely delayed and changed, occasionally after significant work had been done. Kiewit says it was forced to double its administrative staff from 150 employees to 300 workers.
The contract set up an arbitration panel, which is supposed to weigh in on conflicts like this. However, for the last several months Kiewit and MTA have been quarreling over whether Kiewit's complaints have been properly submitted. MTA has refused to arbitrate the contractor's claims in their current form.
Dave Sotero, an MTA spokesman, said that the agency is still trying to negotiate with Kiewit to resolve the outstanding issues. He declined to respond to Kiewit's litany of allegations. "The specifics of the case will be decided by a judge," he said.
A federal inquiry into delays on the project found that the utility work was only the second most significant cause. The primary issue was the collapse of a retaining wall, which then had to be redesigned and rebuilt. That issue is subject to separate litigation.
Kiewit's spokesman, Bob Kula, said the firm was forced to sue just to bring MTA into arbitration.
"What's clear about this project is it was incredibly complex, and very challenging" Kula said. "No one expects to have significant challenges or disputes like there are in this case."
The full complaint:
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