SPOTLIGHT
US audit: Big Dig is 'bankrupt'
Report says Cellucci should oust managers
By Bob Hohler, Globe Staff, 04/09/00
WASHINGTON - Federal highway investigators have concluded that the Big Dig project should be viewed as "bankrupt,'' and that Governor Paul Cellucci should move rapidly to oust managers who misled government oversight authorities about the operation's overruns, according to a source familiar with the investigation.
The development indicates that the Big Dig chief, James J. Kerasiotes, and his top aides could be in imminent danger of losing their jobs. Cellucci and the Massachusetts congressional delegation are expected to be briefed on the findings on Tuesday.
Just as US Transportation Secretary Rodney E. Slater quickly transferred his regional Big Dig watchdog, Peter Markle, last month, after Kerasiotes startled federal officials by reporting a $1.4 billion cost overrun, Cellucci will be urged to act quickly to shake up the state management team, the source said of the findings by the 14-member federal task force.
The recommendations from the group's audit are included in a draft report that was delivered to Slater's staff. Slater, who is expected to study the report before making a final decision, wields heavy influence over the state, since the federal government is picking up more than 70 percent of the cost.
Slater now faces the dual pressures of convincing powerful watchdogs in Congress that he will be tough enough on Big Dig officials and of not throwing the project into calamity by calling for action that could halt its federal funding.
Branding the Big Dig "bankrupt,'' though it is backed by state, federal and Massachusetts Port Authority funds, would send a warning about the gravity of the state financing crisis that has been triggered by the overrun.
It could also raise concerns on Wall Street if Cellucci pursues his plan to borrow $1 billion to help cover the overrun. The Securities and Exchange Commission is investigating whether the state, in bond offerings last year, provided inaccurate financial information.
The draft report also recommends accepting Cellucci's new state oversight plan for the Big Dig, although the review team has called for rejecting the governor's financial proposal for completing the project.
The state has hired the accounting firm Deloitte & Touche to serve as an independent auditor of the Big Dig, monitoring the project's daily operations and its myriad contracts with private companies. The state auditor's office has also conducted numerous inquiries into the project.
In addition, the draft report calls for an investigation into whether state officials who may have mishandled the project should be barred from participating in any future federally funded programs.
The Boston Herald reported yesterday that Kerasiotes has asked federal officials not to consider the possibility of prohibiting him from taking part in federally subsidized projects in the future.
The source in Washington said the task-force report contains 25 to 30 recommendations, a number of which have been reported by the Globe.
The cost of the Big Dig, originally projected in 1985 as $2.5 billion, has ballooned to at least $12.2 billion and could increase to more than $13.1 billion, officials have said. Since Governor William F. Weld took office in 1991 with Cellucci as his lieutenant governor, the projected cost has increased from $5.8 billion.
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The Federal Highway Administration, which is under Slater's jurisdiction, is charged with monitoring the federal government's multibillion-dollar investment in the Big Dig, the nation's largest public works project.
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Under the Central Artery/Tunnel project, as the Big Dig is formally known, the Ted Williams Tunnel was built under Boston Harbor, and most of the Central Artery is being moved underground.
Although the project has long been the subject of controversy in Washington because of the cost to taxpayers, a firestorm has raged since early February, when Kerasiotes announced that the Big Dig's cost had risen from $10.8 billion to $12.2 billion.
Kerasiotes, who manages the Big Dig as chairman of the Massachusetts Turnpike Authority, had long assured federal officials that the cost would not exceed $10.8 billion.
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In addition, Kerasiotes announced the $1.4 billion overrun the day after Slater received the state's annual financial plan for the Big Dig, which continued to put the cost at $10.8 billion.
At the time, Big Dig officials defended the $10.8 billion figure in the financial plan, saying the document predated a comprehensive review that led to the $12.2 billion projection.
Last week, the Massachusetts House approved a plan to pay for the Big Dig overrun with $400 million in cash and $1.3 billion in car registration and driver's license fees that had been scheduled to be phased out.
Cellucci, describing his $1 billion borrowing plan as more fiscally sound, called the House action "lunacy.''
Meanwhile, pressure is expected to grow on Cellucci to take action against Kerasiotes and others in state government who were responsible for the Big Dig's finances.
The draft report cites Slater's precedent in transferring Markle, the federal regional highway administrator, out of his Cambridge office after Kerasiotes' disclosure of the $1.4 billion overrun took transportation officials in Washington by surprise.
Cellucci said last week that he would not decide Kerasiotes' fate until he had been briefed by Slater.
