- B/PB Told the Governor
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."
- Disclosure Occurred Under the Lieutenant Governor's Watch
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).
- The Beginning of the Cover-Up
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:
- Reducing every B/PB "to-go"4 contract estimate across the board - including material, labor and overhead - by a 13 percent "market discount" despite the recommendation of B/PB officials by letter from the home office in San Francisco not to do so.
- Reducing the post-contract award Potential Change Allowance (PCA) from 26 percent to seven percent - a 19 percent discount for every to-go estimate. B/PB refused to reduce the PCA estimate until Big Dig officials asked for permission from local FHWA officials to use the lower estimate and for B/PB to stop tracking PCA percentages.
- Reducing every to-go contract estimate by eliminating the 18 percent contingency allowance for construction growth during design.
- Excluding all management costs from the estimate after the year 2002.
- Excluding eminent domain costs (right-of-way) above the initial state payment (or pro tanto).5
- Excluding more than $1 billion in costs defined as "non-Project costs."
- Stating all estimates in 1994 dollars and excluded to-go escalation (inflation costs) from the total cost. Later, they insisted that the budget exclude all escalation since 1988.
- Applying a myriad of other deductions and assumptions to the official cost estimate.
- Cumulatively, these deductions had the effect of reducing the final cost estimate by approximately $6 billion dollars, from $13.8 billion to $8 billion.
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