Unless Maryland officials reach an agreement with the construction team, its departure would leave the umbrella group of companies managing the light-rail project scrambling to find new firms to complete it. Such a change would inject deep uncertainty into the state’s largest transportation project, which is already more than a year behind schedule.
The move also would mark a stunning breakdown of a public-private partnership that has drawn national attention as one of the most far-reaching of any U.S. transit project.
In a letter to the consortium Friday, Scott Risley, the construction team’s project manager, said it was terminating the design-build contract because of “extended” delays beyond its control. Delays caused by a lawsuit, problems obtaining land, last-minute changes in design requirements and difficulties in receiving state environmental approvals had added 21/2 years and $519 million to the project, Risley wrote.
Without financial compensation by the state, Risley wrote, the construction firms “would be forced to absorb hundreds of millions of dollars in additional costs that are [the state’s] responsibility. This is neither reasonable nor sustainable for PLTC.”
He added in a news release: “We did not make this decision lightly and did everything we could to work with [the state] to attempt to come to an agreeable framework for us to complete the project.”
Mike Ricci, a spokesman for Maryland Gov. Larry Hogan, responded by saying, “The Purple Line is one of the biggest transit projects in North America, and Governor Hogan remains fully committed to getting it done.”
The termination notice does not preclude further settlement talks to keep PLTC on the job. However, the move is likely to reverberate through, and potentially spook, the private sector and Wall Street as Hogan (R) touts public-private partnerships as a way to build expensive infrastructure with limited government funding. The state recently began soliciting companies for several such arrangements to finance and build $9 billion to $11 billion worth of express toll lanes on the Capital Beltway and Interstate 270.
Veronica Battisti, spokeswoman for the Maryland Transit Administration, declined to answer questions but emailed a statement saying the Purple Line project had had construction delays since 2016 due to the lawsuit.
She said the state has been “actively engaged in discussions” to mitigate the cost impacts of it and other potential delays. She said she couldn’t comment further “until a settlement agreement is reached.”
“We remain committed to continuing negotiations and focused on getting this key transit project completed and operational for the taxpayers of Maryland,” Battisti wrote.
Secretary of the Environment Ben Grumbles issued a statement saying: “We are working closely with [the Maryland Department of Transportation] to make this important transportation and environmental project a reality while also following all environmental, health and safety laws along the way.”
Technically, PLTC announced its intent to leave its partnership with the umbrella group, Purple Line Transit Partners, which holds the $5.6 billion Purple Line contract with the state. But the termination letter appears to be a highly public move in nearly three years of closed-door settlement talks with Maryland transit officials over who would pay for delay-related cost overruns.
Risley wrote that the construction team could meet with the umbrella group within the next two business days to finalize a transition plan, as required in the contract.
Hogan could respond by telling the companies to feel free to go or by sending his transportation officials back to the negotiating table to try to keep the construction team on board and avoid further delays.
Risley wrote that negotiations broke down in December, when the state refused to approve an “agreement in principle” reached after six months of “intense negotiations.” He said the companies had offered to complete the project without making a profit.
As of the end of 2019, the state had spent $1 billion on the Purple Line’s engineering, property acquisition and construction, according to a state budget document.
PLTC is led by three construction giants: Fluor, Lane Construction Corp., and Traylor Bros. It is the construction arm of Purple Line Transit Partners, the umbrella group — led by Fluor, Meridiam and Star America — that signed the 36-year public-private partnership with the state.
The construction team said it is exercising a clause in its design-build contract with the umbrella group that allows either party to terminate it if delays exceed 365 days. Purple Line delays have mounted to at least 976 days, according to the termination notice.
A spokesman for Purple Line Transit Partners declined to comment.
Maryland transit officials have said the Purple Line’s 21 stations in Prince George’s and Montgomery counties will open in two phases, in late 2022 and mid-2023. The line was initially scheduled to open in March 2022.
The Purple Line is designed to connect communities with Maryland’s spokes of the Metro system and improve transit service, particularly for low-income residents. Prince George’s and Montgomery officials have invested hundreds of millions in the project, hoping stations will revitalize and focus growth in older, auto-centric suburbs.
Montgomery County Council member Tom Hucker (D-District 5), whose Silver Spring district includes nine Purple Line stations, said he was still scouring the details of the termination notice.
“It's shocking,” Hucker said, “and only the latest drama in a dispute that’s been going on for years.”
Prince George’s County Council member Dannielle M. Glaros (D-District 3), whose district also includes nine Purple Line stations, said she is concerned about the number of roads that might remain ripped up and construction workers who would lose jobs.
“I’m pretty shocked and dismayed by the possibility of halting construction,” Glaros said. “We’re incredibly far along. The thought of having roads closed for long periods of time because the work is incomplete is incredibly troubling.”
Efforts to build the Washington region’s first direct suburb-to-suburb rail line have been plagued by delays and cost overruns since before the bulldozers revved up.
While disputes between governments and contractors are common in large infrastructure projects, experts say, it’s unusual for such deep disagreements to take root so early. PLTP and the state haven’t agreed on a schedule since before construction started in August 2017. Project officials for both the state and private consortium have said the cost disputes could end up in a legal battle.
An ultimately unsuccessful lawsuit by environmental activists stalled the start of construction by a year. The state fell behind deadlines set for acquiring and turning over property needed along the alignment and lagged in providing environmental approvals, the contractor said.
State officials have countered that the contractor was slow to complete designs, could do more to accelerate work, and has blamed too many delays and costs on the lawsuit. They also have accused the contractor of trying to position itself to make more money via cost overruns.
Most recently, PLTP told the state it would need an additional five months and $187.8 million because CSX Transportation had changed the design requirements for a “crash wall” near its tracks in Silver Spring.
PLTP also recently told the state it might need to file a “force majeure” claim because of the novel coronavirus pandemic. Such claims typically argue that a contract can’t be followed because of an “act of God.” Some Purple Line crews had to self-quarantine in early April after a utility inspector on the project tested positive for the virus.