©2001 Office of the Inspector General, Commonwealth of Massachusetts. All rights reserved.
Introduction
This report is based on this Office's initial review of Central Artery/Tunnel (CA/T) Project (commonly known as the Big Dig) internal documents and internal Federal Highway Administration (FHWA) documents relating to the $1.4 billion Big Dig cost overrun announced by Big Dig officials in February 2000. In October 2000, Big Dig officials announced a revised estimate for the overrun of $2.5 billion.1 Staff from this Office reviewed more than 100,000 pages of documents related to the period 1994 to the present and internal FHWA documents related to a detailed budget review conducted in 1995 by FHWA officials. The comments and conclusions contained in this report are the result of a financial review of documents conducted by this Office. The completion of our review has been hindered because Big Dig officials have withheld documents under a claim of attorney-client privilege. In addition, public data and documents have reportedly been destroyed and other public documents have been reportedly removed from Massachusetts Turnpike Authority (Turnpike) offices in early 2000.
From interviews and a review of those public documents available to this Office, this Office is persuaded to call for an independent federal investigation by Congress into FHWA's role in downsizing the Big Dig cost estimate. This Office also calls for a re-examination of the FHWA-imposed funding cap that has harmed the citizens of Massachusetts by saddling them with billions of dollars in added debt.
Asked whether Big Dig management knew earlier than they have admitted about the approximately $2.5 billion cost overrun, a former Project Manager for Bechtel/Parsons Brinckerhoff (B/PB) said in a press interview in mid-2000: "Some day the story will come out . . . ." This report attempts to fill in many pieces of the previously undisclosed story about the Big Dig overrun. Among the key points in this report are the following:
Documents show that Big Dig officials knew about large cost overruns long before they submitted to Wall Street inaccurate bond disclosure documents now under investigation by the Securities and Exchange Commission (SEC).2 This is contrary to what Big Dig officials told Congress, the State Legislature, and regulatory agencies. Big Dig officials continue to represent that they did not begin to sense budget problems until late 1999 and did not verify the problem until after a so-called bottom-to-top review that concluded in early 2000. Documents refute this official explanation offered by Big Dig officials and the administration to justify their failure to disclose the overrun in bond disclosure documents published in December 1999.
Records show that on December 2, 1999 the Turnpike's top outside bond counsel/strategist sent a fax to a Big Dig official specifically identifying 12 components of a $1.35 billion budget overrun with the written warning: "these are hard figures, not worst case #s [numbers]." The attorney sent this fax following a day of meetings with top Big Dig officials, and on the night before the Governor and the Secretary for Administration and Finance met with key Wall Street bond analysts to establish the Commonwealth's bond rating for the upcoming bond sale. A detailed analysis dated November 28, 1999 by B/PB staff included the exact components of the $1.35 billion overrun later described by the Turnpike's outside counsel in his fax.
Records show that before this same December 1999 bond issuance, Big Dig officials weighed the "pros" and "cons" of disclosing the overrun to the State Treasurer or waiting until December 2001. Based on consideration of many explicitly described factors in their pro/con analysis -- marked "Confidential" -- Big Dig officials opted not to disclose the overrun at that time. Factors cited in the pro/con analysis included political considerations, the negative reaction of the State Legislature, and avoidance of "brutal press scrutiny." The pro/con analysis also explicitly acknowledged the fiduciary obligation of Big Dig officials to make disclosure under bond disclosure rules.
Records also indicate that Big Dig officials and the administration knew about large cost overruns before they submitted inaccurate bond disclosure documents for bond issues between 1996 and 1999, and not just the one in 1999 currently under SEC investigation.
This Office's investigation has determined that thousands of pages of documents are missing. When asked by an investigator from this Office about the whereabouts of the missing documents, the Turnpike Chairman stated that after his arrival at the Turnpike, in April 2000, file cabinets had been emptied and computer hard drives had been "sand blasted so data could never be recovered from them, and so that the computers wouldn't even turn on." According to the Communications Security Systems Directorate of the U.S. Army, computer hard drives are "sand blasted" for data security reasons as follows: "[the] equipment is taken completely apart and the hard drive disk is literally sandblasted with a sandblaster so as to render the disk permanently unreadable."
The Chairman also informed an investigator from this Office that after the Chairman's arrival at the Turnpike, a former MassHighway staff person was caught on video surveillance tapes removing boxes of material from Turnpike offices at Ten Park Plaza in Boston. This removal of material occurred during four trespasses or break-ins over a three-day period. The purpose of the trespass was presumably to remove files from Turnpike offices.
Records and interviews reveal a Big Dig cost history at odds with publicly disclosed information. Most significantly, records show that B/PB presented Big Dig officials with an excruciatingly detailed total cost forecast of $13.79 billion in November 1994, a figure close to the $13.8 billion revised estimate announced by Big Dig officials in October 2000. Under its contract with the Commonwealth, B/PB must provide a detailed estimate of Project costs. B/PB has been paid more than $50 million to-date for its forecasting, estimating, and cost tracking services.
Records show that B/PB arrived at this November 1994 $13.79 billion forecast following a review prompted by senior B/PB management. B/PB documents show that the Board of Control that oversees the joint venture of B/PB established a senior management review team in December 1993 after B/PB managers warned top corporate officers that, according to their calculations, the Big Dig could exceed publicly reported amounts by $4 billion or more - nearly doubling the estimate reported in 1992.3 The resulting management review, issued in February 1994, pointed out that:
[D]ifferences existed between the official MHD [MassHighway] cost which, had been announced to the public, but which may not correspond to the latest Project cost estimate provided to MHD by B/PB. . .this could lead to a misunderstanding within the Project as to what the current target budget is, and at worst, could lead to public misunderstanding and skepticism as to the credibility of cost and schedule information available to the public.
The report recommended that B/PB management undertake a comprehensive, in-depth review of all capital cost estimates.
Records and testimony also indicate that Bechtel Corporation's president and a key senior partner flew to Boston for a December 1, 1994 meeting to ensure that the Governor and his advisors "were hearing the real numbers that B/PB had forecast." According to an interview with B/PB's former Project Manager who briefed the Bechtel officials at the Boston Harbor Hotel immediately before their meeting with the Governor, B/PB's forecast then exceeded $14 billion. In a June 2000 news article, the former Governor stated that Bechtel officials warned him about soaring costs. Internal B/PB documents show that B/PB officials worried about the reputations of B/PB and the Commonwealth in light of the multi-billion dollar discrepancy between what B/PB told the client and what the client told the public and the press about costs. Shortly after this meeting, the tensions that existed between B/PB and Big Dig officials regarding public disclosure led Big Dig officials to ask that the Project Manager be replaced. The Secretary of Transportation and Construction stated: "We need a manager who exhibits a can-do attitude both publicly and privately." The B/PB Manager, who was replaced, told this Office recently: "I know I can sleep well at night but I don't know if others can."
Records indicate that in 1992, the Governor appointed the Lieutenant Governor to serve as the head of the Governor's Big Dig Oversight Task Force and the Lieutenant Governor therefore likely knew of B/PB's December 1994 disclosure and B/PB's concerns about the public disclosure of costs. According to press accounts from 1993 to 1995:
Weld and his top aides are suddenly waking up to the fact that his administration's handling of the $6 billion Central Artery/Third Harbor Tunnel Project could make or break the Republican governor, both in Massachusetts and on the national scene. Weld staff members, worried that the governor's inner circle is not on top of the Project, have set up a schedule for regular briefings at which Lt. Gov. Paul Cellucci will preside. (Boston Globe 10/22/92)
So concerned were Weld administration officials about securing Artery and Tunnel Project funding, a source said, that Lt. Governor Paul Cellucci has begun holding weekly meetings on the subject. (Boston Globe 4/5/93)
Weld has put Cellucci in charge of the administration's. . . transportation task force, which focuses on the Artery-Tunnel Project . . . . (Boston Globe 7/11/93).
[Cellucci heads up a number of administration efforts and he] heads up an Artery/Tunnel Project oversight effort. (Boston Globe 5/15/95).
Anxious to avoid the sticker shock effect of B/PB's estimate, Big Dig officials undertook a nine-month initiative between June 1994 and March 1995 to decrease B/PB's total cost estimate from $13.8 billion to $8 billion. At this time, the Secretary of Transportation and Construction publicly announced that the on-time and on-budget figure would not exceed $8 billion. Documents cite a directive from Big Dig officials telling B/PB to "hit the target" of $7.98 billion. To hit the target, state, B/PB, and local FHWA officials began an extensive cost reduction initiative that consisted of the following:
Cumulatively, these deductions had the effect of reducing the final cost estimate by approximately $6 billion dollars, from $13.8 billion to $8 billion.
B/PB managers insisted that local FHWA officials be told about all deductions, assumptions and exclusions that had been used to reduce B/PB's cost projection. Records show that B/PB and Big Dig officials did so. A key local FHWA official recently confirmed in an interview with this Office that B/PB and Big Dig officials made local FHWA officials aware of such assumptions and exclusions in detail. Records confirm that in 1995, local FHWA officials knew about all the assumptions that had been used to reduce the total cost estimate. When asked if he felt deceived by the announcement of the overrun in February 2000, the local FHWA official told this Office that "through regular Project reporting we were shown the assumptions" and that he did not feel deceived.
To review the state's Cost and Schedule Update - Revision 6 (CSU-Rev.6) budget of $8 billion in 1995, FHWA assembled an eight-member team of agency specialists. This team published a report that concluded that the Big Dig had prepared a well-documented and reasonable CSU-Rev.6 budget.6 This Office's review of the report and FHWA back-up material shows that local FHWA officials knew about the "assumptions" cited previously. FHWA records did not include B/PB's original $14 billion estimate but they did identify all exclusions, deductions and other accounting assumptions.
As a result of their 1995 review, local FHWA officials directed Big Dig officials to add back: approximately $1 billion in exclusions to the CSU-Rev.6 estimate; $315 million in future escalation; $255 million for an air rights credit;7 $90 million as a 10 percent design contingency; and to raise the change order estimate from seven percent to 10 percent. These add-backs raised the estimate from $8 billion to $10.4 billion. Aside from these changes, however, local FHWA officials allowed the other exclusions, deductions, and accounting assumptions to remain.
Once local FHWA officials learned of, modified, and sanctioned the use of these multi-billion dollar accounting assumptions during the 1994-1995 CSU-Rev.6 budget review process, the accounting assumptions became a permanent, tacit feature of the budget. In February 1995, the Project Director stated: "There is not one action taken by Massachusetts and identified [by the General Accounting Office (GAO)] that was not taken without the review and approval of the FHWA." Big Dig officials never again expressly spelled out these accounting assumptions in subsequent Finance Plans because, according to Big Dig officials, all cognizant federal agencies had already acknowledged the use of these assumptions. The record bears out this conclusion. According to records and statements, local FHWA officials knew that the assumptions continued to underlay the definition of total costs for to-go contracts. Local FHWA officials did not question these assumptions despite the historical results of post-1994 contract awards disproving the validity of these assumptions. FHWA officials here and in Washington, D.C. reviewed all Finance Plans issued after December 1994 and had 15 local staff assigned to the Big Dig.
Local FHWA officials knew that the to-go assumptions had failed to live up to expectations because FHWA officials literally signed off on all contract awards and post-award contract change orders as part of its oversight responsibility. For example, although B/PB's estimate had been fully documented by hundreds of pages of detailed back-up cost data during the CSU-Rev.6 review, local FHWA officials knowingly agreed to downsize B/PB's cost estimates on four future construction contracts by $553 million. When the Big Dig awarded the four contracts shortly thereafter - for almost exactly the cost estimated by B/PB - the results should have demonstrated to local FHWA officials the fallacy of the CSU-Rev.6 assumptions. But instead of requiring Big Dig officials to stop using the assumptions altogether, local FHWA officials allowed Big Dig officials to continue using the to-go assumptions for remaining contracts. Local FHWA officials informed this Office that they knew the assumptions continued to be used for to-go contracts.
While FHWA required Big Dig officials to include actual bid results for awarded contracts in the total cost figure, it never stopped Big Dig officials from continuing to use the minimizing accounting assumptions on to-go contracts. The record also shows that FHWA knew that the total cost figure did not include exclusions such as management costs after 2002. In fact, in January 1996, the FHWA Administrator (and future U.S. Secretary of Transportation) told Big Dig officials to add these management costs back into the total cost figure. The remaining assumptions shrunk the CSU-Rev.6 budget by $3 billion dollars from B/PB's 1995 official estimate. By 1999, following the award of billions of dollars in contracts, the assumptions still affected remaining contracts by $2 billion.
Put another way, once local FHWA officials gave their approval to the use of these accounting assumptions in 1995, they became part of the "semantic" definition of the Big Dig's total cost. The accounting assumptions became a multi-billion dollar minimizing factor for every cost estimate that followed.
This Office reviewed the March 2000 FHWA Task Force Report concerning the causes of the overrun; the report ultimately led to the FHWA imposing a $8.55 billion administrative funding cap on the Big Dig. FHWA took this action with the acquiescence of the State's elected officials and the Turnpike Chairman.
One of the conclusions of the Task Force report is that local FHWA officials failed to adequately perform their duties because they acted more as partners with Big Dig officials than overseers. This Office concurs with this conclusion, but disagrees strongly with the other opinions of the Task Force and FHWA officials that Big Dig officials committed a "breach of faith," "tarnished" the federal-state partnership, and demonstrated disrespect for the federal oversight process by failing to make full disclosure to FHWA officials about the overrun. The U.S. Secretary of Transportation stated in March 2000: "This stands as one of the most flagrant breaches of the integrity of the Federal/State partnership in the history of the Federal-aid highway program."
This Office concludes that this finding is inaccurate. This Office concludes that local FHWA officials performed an extensive review of Big Dig costs in early 1995. As stated earlier, according to FHWA documents, a FHWA team with substantial engineering, finance, and administrative experience in FHWA contract administration issued a report in May 1995 accepting the CSU-Rev.6 budget. The team's report stated: "Emphasis was directed to the engineering aspects of the estimate development. But attention was necessarily focused on the basis, assumptions and exclusions that are relevant." This report, and its back-up material, shows that FHWA officials knew in 1995 that the cost estimate included more than two hundred minimizing assumptions. As partners in the process, local FHWA officials had little incentive to question the assumptions.
When asked by this Office, a senior FHWA staff person who participated in the 1995 review of CSU-Rev.6 stated that he had informed members of the March 2000 FHWA Task Force about the 1995 review. He further stated that he did not feel deceived when Big Dig officials announced the budget shortfall. Moreover, the FHWA Division Administrator for Massachusetts stated in February 2000 press reports that FHWA had not been "kept in the dark" and always had access to data and Big Dig officials.
This Office concludes that the FHWA Task Force omitted a significant aspect of the story when it conducted its investigation. Specifically, it failed to investigate, or chose to gloss over, the role of FHWA officials themselves in the overrun scandal. Records clearly show that Big Dig officials did not keep FHWA officials in the dark before 1998, as the Task Force concluded. Local FHWA officials remained aware of and condoned the low cost estimates beginning in 1995 thereby assisting Big Dig officials soften the sticker shock effect of the budget for public relations purposes. This Office concludes that the FHWA Task Force should have disclosed to Congress what it knew about FHWA's 1995 review of CSU-Rev.6. Instead, the Task Force stated that: "Prior to the enactment of TEA-21 [Transportation Equity Act for the 21st Century] in 1998, the role of the FHWA did not include a review of the aggregate construction cost of projects." Most significantly, this Office concludes that the Task Force failed to tell Congress and the public about the set of disclosures made by Big Dig officials to local FHWA officials in 1994-1995.
This Office calls for a re-examination of the funding cap that has harmed the citizens of Massachusetts by saddling them with billions of dollars in additional debt. According to a recent assessment by Moody's Investor Services: "The Commonwealth's credit strengths are tempered somewhat by a heavy debt load. Debt levels rank third highest among the 50 states . . . Debt burden will remain high, given continued large capital commitments and construction risks associated with the Central Artery Project."
In November 1999, the U.S. Department of Transportation's Inspector General (DOTIG) issued a draft report estimating that the cost of the Big Dig could be as high as $12.7 billion - a figure approximately $1.4 billion less than the currently-announced $14.1 billion figure. In 1999, the Project Director wrote a now-infamous letter responding to the DOTIG. The letter stated that the DOTIG's report contained "factual errors, misstatements and misleading calculations." The letter also stated that the report espoused "a backward looking management technique that is unworkable and shows a fundamental lack of understanding of how a multi-billion megaproject needs to be managed." But the most telling line of his letter states:
Needless to say, it is surprising that you now choose to critique the Project's finance plan methodology and the cost/funding assumptions after all other cognizant federal agencies have acknowledged and relied on them for several years. [Emphasis added in bold].
In an April 2000 press release, Big Dig officials also stated that the "budget has consistently followed accounting practices accepted by FHWA" and that all costs had been clearly shown in the Finance Plans and in the Project Management Monthly Reports. In light of the overwhelming documentary evidence, this Office concludes that the Director's rebuttal - while universally derided at the time by federal investigative agencies - remained well-founded to the extent that the record clearly shows that FHWA officials and the GAO did in fact know of and authorized use of the Project's finance plan methodology and the cost/funding assumptions - that is, the accounting assumptions - beginning in 1995. For example, GAO reported as early as June 1995 that actual budget growth remained higher than planned and that zero cost growth for design had been assumed for construction contracts.8 In 1996, GAO began reporting that costs could increase significantly if the accounting assumptions in CSU-Rev.6 failed to meet expectations. In 1996 and 1997, GAO reported that some of the failed assumptions could increase costs as high as $12.8 billion. This is nearly the figure offered by the DOTIG in its November 1999 report. GAO also reported that cost growth continued to far exceed CSU-Rev.6 growth estimates. Clearly, GAO and FHWA remained aware of a looming budget crisis.9
Big Dig officials failed to inform the State Legislature of the true cost of the Big Dig. The Legislature established a reporting requirement in 1997: "We believe this bill answers the challenge set forth by the Federal Highway Administration to implement a strategy for payment of the Commonwealth's share of future CA/T Project costs. . ." M.G.L. Chapter 3, Section 17 of the Acts of 1997 states:
The secretary of the executive office of transportation and construction and the chairman of the authority shall submit a report to the joint committee on transportation and the house and senate committees on ways and means. . . every six months. . . which shall include, but not be limited to, the status and schedule of the construction of the central artery tunnel project; an analysis of the commonwealth's ability to fund the state's share of the central artery tunnel project; the amount of federal funds available for the central artery tunnel project and the statewide program, so-called; the effect of this chapter in meeting the operation, administration and financial needs of such central artery tunnel project and statewide program; the financial status of the turnpike, including all revenues generated and the cost of maintenance and operation and any special legislation, recommendations or resources required to meet the needs of the metropolitan highway system, the turnpike and the statewide program.
Big Dig officials could not have prepared these mandated reports without B/PB's assistance. Therefore, Big Dig officials included these reports as a contract deliverable for B/PB under its contract with the Commonwealth. B/PB prepared the information in the semi-annual Finance Plans pursuant to the Legislative mandate.
Big Dig officials have stated publicly that the discovery of the overrun in late 1999 resulted from a bottom-to-top review of costs and they were as shocked as the public by the discovery of a significant cost overrun. However, the evidence clearly shows that Big Dig officials knew about the overrun long-before the budget crisis of late 1999.
By early 1999 Big Dig officials knew that they faced a serious cash-flow crisis. When a new Project Director took charge in January 1999, B/PB officials immediately presented him with a highly confidential document entitled "Estimate Evolution Chart." In this document, B/PB detailed the history of its cost estimates. The earliest estimate described on the chart is one B/PB had presented to Big Dig officials in December 1994 for $13.25 billion, excluding change orders of more than 11 percent. Related documents explained that B/PB estimated that change orders in excess of 11 percent at that time would be $526 million. Thus, according to the Estimate Evolution Chart and back-up materials, B/PB demonstrated that it had presented an estimate of almost $13.8 billion in December 1994. Later, B/PB also presented to the Director a table of "key budget development assumptions" that had been imposed on them by Big Dig officials in 1995 for the CSU-Rev.6 budget. This table showed how the assumptions had been proven wrong and explained their net budget effect, which by 1999 had become more than $2.1 billion.
A June 1999 draft letter written by the Project Director to his predecessor, details his reaction to B/PB's briefings:
I can't tell you how disappointed I am. Many of the cost exposures go back to unrealistic assumptions made during the development of the Rev.6 Project Master Schedule of 1994. You had four years to work with the Chairman to find additional revenue sources or introduce reasonable options to reduce the scope of the project. That opportunity has now virtually been eliminated. I will continue to work to contain project costs but we have been left a tool bag10 that is virtually empty.
In another document, he details the adverse effects of the inaccurate accounting assumptions: "In summary, we are facing forward-looking challenges that could exceed $1.3 billion." He concludes: "I will continue to watch for my retirement date when I can leave the problems of the project to others as my predecessor did to me."
Between 1995 and the beginning of 1999, B/PB and Big Dig officials followed a very consistent pattern in their financial reporting. Each month they reported overruns on bid results and likely increases in yet-to-be-awarded contracts in the Project Management Monthly (PMM) report. By 1999, for example, Big Dig officials had disclosed $1 billion in actual overruns and $750 million in likely over-runs. Month after month, the total cost figure stayed about the same at $10.8 billion in the PMM reports because Big Dig officials used disclosed offsets, like expected insurance rebates and estimated future savings from announced cost-savings initiatives, to balance the bottom line. The bottom line remained balanced at $10.8 billion even with the aforesaid billion-dollar increase in contracts.
Big Dig officials did not disclose in the PMM reports, however, that the accounting assumptions still underpinned all to-go contract costs. By 1999, these assumptions no longer had the $3 billion impact they had in 1995 because the accounting assumptions applied only to to-go contracts and by 1999 many contracts had already been completed or awarded. But by 1999, the effect of the accounting assumptions still added up to a huge sum. Interestingly, the cost offsets disclosed in the PMM reports did not conform to the accounting assumptions applied to to-go costs. For example, when adding right-of-way costs to the budget, Big Dig officials used the initial state payment (pro-tanto). But when taking a credit for the future sale of 185 Kneeland Street (state property), officials used a full market value estimate for Boston office space as provided by a real estate firm.
By 1999, the cumulative effect of these accounting assumptions - including excluded management costs and land-taking costs -- added up to nearly $2 billion in costs not shown in the PMM reports. In effect, the real baseline for costs starting in late 1994 had been $14 billion. The application of credits and offsets to increasing costs between 1995 and 1999 merely prevented costs from burgeoning beyond the $14 billion estimate.
Conclusion
Measured against B/PB's $13.78 billion 1994 estimate, the Big Dig, ironically, has been constructed on time and on budget. B/PB has been paid almost $3 million in incentive fees for maintaining the Project on-time and on-budget based on the old "official" estimate of $10.8 billion. This Office concludes that the most recent Chairman and top Big Dig officials have long been aware of the facts presented in this report. This Office derived the findings for this report from Big Dig records. Documents indicate that B/PB has consistently made detailed disclosures to successive Big Dig managers. Based on these records and the disclosure of these facts in 1994 to the former Governor and his chief advisors, this Office concludes that the current Governor and his appointees have not disclosed the real Big Dig budget story to federal investigators, Congress, the State Treasurer, and the State Legislature.
There is also a continuing failure to disclose by federal authorities about the role played by local FHWA officials in establishing the 1995 Big Dig budget. Internal FHWA records reveal that local FHWA officials assisted in downsizing the 1995 Big Dig budget through the application of billions of dollars worth of accounting assumptions. Based on the evidence, this Office concurs with the response of the former Project Director to a November 1999 DOTIG report:
Needless to say, it is surprising that you now choose to critique the Project's finance plan methodology and the cost/funding assumptions after all the other cognizant federal agencies have acknowledged and relied on them for several years.
This Office's review of internal FHWA records indicated that local FHWA officials acknowledged and relied on the cost assumptions and finance plan methodology that semantically defined the Big Dig total cost estimate.
In 1995, FHWA conducted an in-depth, multi-disciplinary review of the publicly reported Big Dig budget. Through this review, FHWA gave a seal of approval to hundreds of exclusions, deductions, and accounting assumptions used in the 1995 budget estimate. However, the March 2000 FHWA Task Force report failed to address the role that local FHWA officials played in affirming the downsized 1995 budget. When the Task Force conducted its investigation, it concluded that: "Prior to the enactment of TEA-21 in 1998, the role of FHWA did not include a review of the aggregate construction cost of projects." A local FHWA official informed this Office that he told the Task Force about the 1995 FHWA Big Dig budget review entitled Process Review on Cost Estimate Rev# 6. The Process Review concluded, after a two-month multi-part review, that:
FHWA review of this documentation determined that the total dollars as presented in the Rev 6 estimate for Design and Construction contracts is an accurate and reasonable depiction of total cost.
Since the FHWA Review Team made this conclusion, this Office was surprised to find in local FHWA documents that state officials had disclosed more than 218 exclusions and assumptions with a multi-billion dollar impact during this 1995 review. Based on this discovery, this Office concludes that local FHWA officials assisted state officials in the public relations downsizing of the Big Dig cost estimate and that FHWA was cognizant of the cost/funding assumptions that were built into the 1995 Big Dig cost estimate.
This Office believes that local FHWA officials bear great responsibility for the fiscal policies that led to the overrun. For this reason, this Office believes that the FHWA funding cap is an injustice that serves to divert blame away from local FHWA officials. As a result, FHWA should eliminate the Big Dig funding cap. When the State Legislature adopted Chapter 3 of the Acts of 1997 establishing a state funding mechanism for potential Big Dig budget overruns it did so in the absence of critical information. The Legislature was not told that the cost estimates in the federally accepted Finance Plans included assumptions that excluded billions of dollars. Therefore, the Legislature agreed to fund a potential Big Dig shortfall based upon incomplete and inherently erroneous information.
ENDNOTES
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©2001 Office of the Inspector General, Commonwealth of Massachusetts. All rights reserved.
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