Bechtel and Parsons Brinckerhoff Reach Settlement on Big Dig

SAN FRANCISCO, CA -- (MARKET WIRE) -- Jan 23, 2008 -- Bechtel Infrastructure Corporation and Parsons Brinckerhoff today reached an agreement that settles claims by the Commonwealth of Massachusetts and the U.S. Attorney for the District of Massachusetts regarding our work as management consultant for the Boston Central Artery/Tunnel project, also known as the Big Dig.

John MacDonald, chairman of the Bechtel/Parsons Brinckerhoff (B/PB) joint venture, issued the following statement:

We have reached a full and final settlement of claims by the Commonwealth of Massachusetts and the U.S. Attorney for the District of Massachusetts. Protracted legal proceedings would have served no one well, and we believe that this resolution is in the interests of all concerned.

We have always said that we take responsibility for our work. We understand and acknowledge with this resolution that our performance did not meet our commitment to the public or our own expectations. Above all, we deeply regret the tragic death of Milena Del Valle in the I-90 tunnel.

Our companies have a long history of delivering safe, high-quality engineering and construction services. Our willingness to scrutinize our own performance and learn from experience has been a major factor in our success. Going forward, we will implement a number of specific measures to apply lessons learned to our future work, such as improving quality management systems, more-extensive and mandatory training for field engineers, and additional standardized specifications for design and construction.

The Boston Central Artery/Tunnel project remains one of this country's most remarkable infrastructure achievements. It will serve the people of Massachusetts well into the next century.

Under the terms of the agreement, Bechtel Infrastructure Corporation (BINFRA) will contribute $352 million toward the settlement, with Parsons Brinckerhoff (PB) contributing $47,230,500, which includes funds intended for future repairs and nonroutine maintenance of the Central Artery/Tunnel. Both BINFRA and PB will take specific actions to enhance their existing training, compliance, and quality assurance programs in order to improve long-term performance and ensure that future work benefits from lessons learned during the Central Artery/Tunnel project. The agreement also provides remedies in the unlikely event of a future major incident for which B/PB is liable.

Notes to Editors:

Roles and Responsibilities

--  To build the Central Artery/Tunnel, the Massachusetts Highway
    Department (MHD) and later Massachusetts Turnpike Authority (MTA) engaged
    38 different section design consultants and 142 construction contracts.
    MHD/MTA selected and awarded all of the design and construction contracts.
--  Section design consultants prepared, stamped, and were responsible for
    the final designs. Construction contractors were responsible for building
    the facilities and meeting all of the requirements of their respective
    contracts with MHD/MTA. B/PB was responsible for monitoring the
    contractors' compliance with terms and conditions of their respective
    construction contracts.
--  In 1999, just as construction activity was peaking, the MTA converted
    from a traditional program management model to an integrated project
    organization, which led to the management shifting to MTA. Although adopted
    for the stated purpose of streamlining the management structure and
    trimming costs, it also had the effect of blurring accountability and
    responsibilities, and discouraging proactive project management.
--  Describing the functional effect of the IPO, a National Academy of
    Engineers report stated: "...during the transition to the IPO structure in
    1997-1999, the best-qualified person available for a particular managerial
    position was selected regardless of organizational affiliation (the
    position of project director, who reports to the chairman of the MTA was
    reserved for an MTA employee). In effect, B/PB is no longer in the role of
    a project Management Consultant but supplies highly qualified people to
    augment the staff of the MTA."
    

I-90 Connector Tunnel Ceiling Panels

--  The most comprehensive expert review of the tunnel ceiling-panel
    collapse was conducted by the National Transportation Safety Board (NTSB),
    which released its findings on July 10, 2007. In addition to noting B/PB
    actions that contributed to the ceiling-panel collapse, the NTSB singled
    out Powers Fasteners, the company that packaged, marketed, and distributed
    the epoxy; the MTA; Gannett Fleming, the section design consultant; and
    Modern Continental, the construction contractor. Power Fasteners has since
    been indicted by the Commonwealth of Massachusetts for involuntary
    manslaughter.
--  The NTSB faulted Powers Fasteners for failing to provide the Central
    Artery/Tunnel project with sufficiently complete, accurate, and detailed
    information about the suitability of the company's Power-Fast Fast Set
    epoxy for sustaining long-term tensile loads and for failing to determine
    that the anchor displacement was due to the use of this epoxy, which was
    known by the company to have poor long-term load characteristics.
--  The NTSB faulted MTA for failing to implement a timely tunnel
    inspection program that would likely have revealed the ongoing anchor creep
    in time to correct the deficiencies before an accident occurred.
--  The NTSB faulted B/PB, along with the section designer, for failing to
    identify potential long-term creep in the anchor adhesive and to account
    for possible anchor creep in the design, specifications, and approval
    process for the epoxy anchors used in that portion of the tunnel. It also
    faulted B/PB, along with the construction contractor, for failing to
    continue to monitor anchor performance in light of earlier anchor
    displacement.
--  The NTSB also noted a general lack of understanding and knowledge in
    the construction community about creep in adhesive anchoring systems.
--  Bruce A. Magladry, director of the National Transportation Safety
    Board's Office of Highway Safety, said of his investigation of the ceiling
    collapse, "There's no malice we find in the efforts of any of the people
    involved in this construction project. These are conscientious people,
    trying to do a job."
    

Slurry Wall Construction

--  Most of the tunnel walls on the I-93 mainline tunnel contracts were
    slurry walls. (Slurry, a viscous liquid containing bentonite clay, holds
    excavations open prior to the placement of concrete and is not part of the
    final concrete wall.) Approximately 230 concrete slurry wall panels were
    constructed on C17A1, one of the Central Artery/Tunnel's mainline tunnel
    contracts.
    
--  While the slurry was found to be out of specification in a number of
    instances, the deviations from the specified tolerances were slight, and in
    many cases the "out-of-spec" slurry on C17A1 would have met the slurry
    tolerances for other sections of the Central Artery/Tunnel.
    

Slurry Wall Breach

--  In September 2004, a breach occurred in I-93 northbound tunnel wall,
    in one of the deepest areas of the tunnel. The breach was unrelated to the
    "out-of-spec" slurry.
--  This wall breach resulted from a series of construction contractor
    errors, compounded by inadequate oversight. B/PB missed an opportunity to
    direct the contractor to correct the specific wall problem ahead of time.
--  B/PB publicly acknowledged its responsibility at the time, and the
    tunnel wall was repaired at no cost to the state.
--  To minimize the possibility that similar problems might arise
    elsewhere, project teams conducted physical inspections of approximately
    1,600 tunnel wall panels. Of these, only one additional panel required
    major repair. These inspections and repairs were carried out at the expense
    of the contractor and B/PB.
    

Oversight of Time and Materials Billing

--  Part of B/PB's contractual obligations after October 1, 2001 included
    providing qualified personnel to staff the project's Claims and Changes
    Department. These personnel worked under the management, supervision, and
    direction of MTA. The Claims and Changes Department was responsible for
    reviewing contractors' claims for payment for time and materials (T&M)
    expenses and approving the claims for payment.
--  Contractors submitted T&M slips to the department, as well as
    spreadsheets summarizing the information contained on the T&M slips, to
    support their claims for payment.
--  A small number of contractors, seeking to increase their  payments,
        submitted  T&M  slips  that  recorded  apprentice  workers  as  journeymen  workers,
        which  B/PB  failed  to  catch.
--    Three  employees  of  one  Central  Artery/Tunnel  contractor  have  pleaded
        guilty  to  federal  criminal  charges  for  falsely  categorizing  apprentice
        workers  as  journeymen.
        

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