The Phase 1 Contract: Read It and Weep

The Rail-to-Dulles Metro rail project is getting scarier and scarier. The likelihood of massive cost overruns increases with each passing day.

William T. Coleman, a senior partner of O’Melveny & Myers LLP, has written a devastating critique of the contract negotiated for the construction of Phase I of the Rail-to-Dulles extension of Metro heavy rail. The design-build contract was approved June 6 by the Metropolitan Washington Airports Authority (MWAA). Basing his analysis on a redacted version of the contract posted on the MWAA website, Coleman detailed his concerns in an unsolicited letter to Gerald Connolly, chairman of the Fairfax County board, dated June 14.

(I have obtained a copy of Coleman’s letter through a correspondent who informs me that it “was obtained through a FOIA request.” I have no knowledge of who might have filed that FOIA request or whose hands the letter might have passed through before reaching me.)

Writes Coleman:

The proposed DTP Design-Build contract which was negotiated by the Commonwealth and then the Metropolitan Washington Airports Authority (MWAA) without competition on a sole-source basis with Dulles Transit Partners (DTP) — a consortium of Bechtel and Washington Group International — is not an advantageous contract for the taxpayer, Virginia governmental entities and toll payers, who must pay for 100 % of the contract costs and for any other final design and construction work.

The proposed DTP Design-Build Contract … is full of non-standard provisions that will certainly drive the current Phase I Dulles Corridor Metrorail Project much higher than the current disclosed budget of $2.647 billion, including:

– Inappropriate secrecy provisions

– Award of the construction contract without a fixed price

– Award of the construction contract prior to final design approval, without right to bid competitively the approved final design without penalty

– A supposed “fixed price” portion of the contract which really is not a “fixed price,” instead by its written terms adjusting automatically to price changes of major construction items, i.e. steel and concrete

– Uncompetitive procurement procedures for future sub-contractor “allowance” work

– Award of utility relocation work under separate contract and without a fixed-price

– Loose provisions to control “differing site condition” costs

– “Concurrent Non-Project Activities” which are expected to be designed and built as part of the Project but have an unclear relationship to the proposed contract

– – Provisions allowing the contractor to cause the conditions for its own Change Orders and Delay Claims that would increase cost to the taxpayer

Coleman did not offer any recommendations. His stated purpose was simply to bring the flaws in the contract to Connolly’s attention so he “can make informed decisions and take appropriate actions as the project advances through the federal system.”

Update: Reader Becky Dale notes that a Washington Examiner editorial referred to the letter on Wednesday. No mention how the Examiner acquired the letter.

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13 responses to “The Phase 1 Contract: Read It and Weep”

  1. Larry Gross Avatar
    Larry Gross

    where is the funding for this project coming from?

  2. Toomanytaxes Avatar

    Around $450 M or so from the commercial real estate owners within the special taxing district. No more, and probably less than, $900 M from the federal government. The rest will come from Dulles Toll Road users and, most likely, ordinary residents of Fairfax County through real estate tax increases.

  3. Larry Gross Avatar
    Larry Gross

    Let me rephrase the question.

    Who is on the hook directly?

    Is it primarily the Dulles Toll Road?

    and then … if for some reason it fails to generate adequate revenues then.. I presume you meant that Fairfax and other jurisdictions have financial obligations?

    How much does the Dulles Toll Road generate right now annually in revenues?

    I figure most of us are waaayyyy behind.. and that one of the reasons why there is not much concern about the cost, overruns, public disclosure, secrecy, etc, is that the folks who will make money on this project have a good idea about where the money is coming from .. and they are pretty assured that they will get their money.

    Otherwise.. they’d bail …I would think… why would any company stick around when the costs are going South and the chances of making a profit going South also.

    Somebody “smells” money here.

  4. Anonymous Avatar

    I watched the Ken Burns show on the building of the Brooklyn Bridge last night and had to wonder, is there any chance in hell it could be built today? Corruption — delays and setbacks — deaths. No way the Luddites would let us do it today. America the Paralyzed.

  5. Anonymous Avatar

    Larry et all

    Most of the cost overruns will fall on Dulles Toll Road users

    For Phase 1 Fairfax County is on the hook for 16% of cost overruns

    Phase 2 is shaping up to be a disaster. There is no special tax district yet


  6. Groveton Avatar

    Why was this contract awarded on a sole source basis? Whoever made the award had to know that a sole source contract would raise questions and controversy. Is this incompetence or conspiracy or something else?

  7. Larry Gross Avatar
    Larry Gross

    I always thought stuff like this was done in rural areas where a perception of rubes falling off of turnip trucks would embolden those with dollar signs in their eyes but they steered away from the urban areas where more the more erudite held sway.


    I’m not encouraged. If this cabal can get away with doing this kind of business in Fairfax and environs, no where in Va is safe from those who would parasite off of other PPTA boondoggles.

    These guys must think.. that commuters will have no choice but to pay higher and higher tolls no matter how onerous they might become. Scary.

  8. Ray Hyde Avatar
    Ray Hyde

    “These guys must think.. that commuters will have no choice but to pay higher and higher tolls no matter how onerous they might become. Scary.”

    Or, they can go someplace else. Except, as Anonymous pointed out, the Luddites will probably prevent it.

  9. Anonymous Avatar

    If the public is dumb enough to buy off on a concept of operations as bad as Metro to Tysons, then they are dumb enough to deserve this contract.

  10. Anonymous Avatar

    Examiner had an editorial on this on Wednesday and refers to the letter they “obtained” so perhaps the FOIA request was made by the Examiner. Here’s the editorial.

    Becky Dale

  11. Anonymous Avatar

    10:29 said,”If the public is dumb enough to buy off on a concept of operations as bad as Metro to Tysons, then they are dumb enough to deserve this contract.”

    If Devolites Davis Wolf Connelly Moran are that dumb, let’s vote them out.

    Yes, they are the dumb ones, not us.

  12. Rtwng Extrmst Avatar
    Rtwng Extrmst

    Big Dig, Big Dig, Big Dig, Big Dig, Big Dig!!!!! Need I say it again?

  13. Anonymous Avatar

    Hi, the fellow from the Socialist Peoples Republic of Portland Oregon here (again) –

    In a word, duh! The vast majority of rail projects (would it be all recent rail projects) have run over budget and usually not by just a little bit. The ones built here in Portland (home of the over-hyped, but in reality a pathetic system – MAX) have ALL run over budget.

    I have yet to understand how and why the ‘people’ keep allowing governments to build these things. They move ONLY people, unlike freeways or the railways of old; which move people, services and goods.

    Sounds like y’all are in for some more taxes, enjoy.

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