Under Deal, Cost Will Grow Until Federal Review Is Done

Starting tomorrow, the estimated cost of the proposed Metrorail extension to Dulles International Airport, currently $2.7 billion, will go up between $3 million and $6 million a month.

The cost escalation is part of the terms of the contract between Virginia and airport officials and a private construction consortium headed by Bechtel Inc. It is tied to the federal government's review of the project to determine whether it qualifies for $900 million in funding under the Federal Transit Administration's New Starts program. That review is not complete.

The agreement reached this spring guarantees the consortium, Dulles Transit Partners, daily increases beginning Aug. 1 in the fixed-price portion of the contract ($1.1 billion) until the Federal Transit Administration gives the go-ahead for work on the final design of the rail extension. The exact rate of increase is linked to a series of variables, including inflation in the cost of personnel and such construction materials as concrete and steel.

The Metropolitan Washington Airports Authority, which will oversee construction of the project, has asked the Federal Transit Administration for permission to spend certain state and local money budgeted for the project to cover the escalated costs. Wes Irvin, a spokesman for the federal agency, said that the permission, known as a "letter of no prejudice," is under review and that a decision could come as early as Friday.

Should federal transit officials approve the letter, the funds spent by the airports authority and the state could be charged against the eventual federal grant.

Virginia and Fairfax County officials said they had hoped to have federal clearance by tomorrow and expressed some impatience with the Federal Transit Administration.

"We're waiting for the feds, and the feds are not in any great hurry," said Fairfax County Executive Anthony H. Griffin.

Virginia Transportation Secretary Pierce R. Homer said that escalation clauses such as the one in the contract with Dulles Transit Partners have become commonplace in large construction projects but that time is of the essence.

"What I would say is that this clause represents the fact that time is money," he said. "We can mitigate those costs for a couple of months at a time, but what we need is an agreement with the federal government."

Federal transit officials have said on several occasions that delays at the state's end of the project made an Aug. 1 approval unlikely. The state, the airports authority and Dulles Transit Partners had set a goal of completing contract details by mid-February, but struggles to contain the cost of the project delayed a final accord until March 30.

The timetable for approval of final design is unclear. The Federal Transit Administration said it needs at least an additional two weeks to complete its "risk assessment," meaning its estimate of the project's overall cost and completion time. If those numbers exceed Dulles Transit Partner's, then the consortium, the state and the airports authority will have to revisit the project plans to prune costs. How long that would take is not clear. The project would then go back to the Federal Transit Administration for additional review.

The escalation clause was highlighted last week in a report by the Transportation Department's inspector general. The report concluded that the estimated cost of the Dulles extension's 11.6-mile first phase had grown so significantly over the past three years -- from $1.52 billion to $2.7 billion -- that it was in danger of not meeting guidelines for federal funding.