Lowest Bidder on First Leg of Bullet-Train Has History of Cost Overruns and Litigation

Wednesday, April 17, 2013

A construction company with a long history of cost-overruns and expensive lawsuits in Los Angeles and the San Francisco Bay area belongs to a partnership that submitted the lowest bid to build the first leg of California’s $68 billion high-speed rail line.

An announcement of the winner is weeks away, but Tutor Perini/Zachry/Parsons $985 million bid was deemed the “best apparent value” based on price and technical expertise by the California High-Speed Rail Authority.

Tutor Perini/Zachry/Parsons’ bid to build the 28-mile Central Valley section between Madera and Fresno was about $100 million less than the next lowest bidder, Dragados/Samsung/Pulice. Three other companies came in with bids that were $278 million, $380 million and $552 million higher. The rail authority most recently projected that the leg would cost between $1.2 billion and $1.8 billion to build.

The consortium’s cheap winning price made up for it having the lowest technical-expertise score among the five bidders. The rail authority did not immediately release a breakdown on what the technical scores were based on. The winning consortium includes Tutor Perini Corp. of Sylmar, Zachry Construction Corp. of Texas and Parsons Corp. of Pasadena.

Tutor Perini Corp. has a history of bidding low and fighting hard for cost-overruns as a project progresses. While nine out of 10 public works projects historically go over budget (pdf), The Bay Citizen found that 11 Tutor Perini projects completed since 2000 cost, on average, 40% more than original bids. Local governments ended up spending $765 million more on the projects than originally anticipated. One project ended up 107% over bid.

A former San Francisco contract compliance officer, Kevin Williams, told The Bay Citizen last year that Tutor Perini’s $239 million low bid on a Chinatown subway station was typical: “Tutor is doing the same thing that he has always done: He bids super low, but the project ends up costing a lot more in the end. The reason that he is repeating this on the taxpayers’ dime is because he gets away with it.”

Tutor Perini has worked on the Bay Area Rapid Transit (BART) extension to the San Francisco International Airport, the airport’s international terminal and seismic retrofitting on Bay-Area bridges.

It also worked on L.A. subway projects, prompting David Casselman, a lawyer representing the Los Angeles transportation authority, to warn those doing business with Tutor Perini that, “They have had very good success with intimidating public agencies with litigation” and that anyone doing business with the company should know “full well that they're going to get into litigation.”

–Ken Broder      


To Learn More:

Bullet Train Bidder Had Overruns (by Christopher Cadelago, U-T San Diego)

Bid of Valley High-Speed Rail Hundreds of Millions below Estimates (by Tim Sheehan, Fresno Bee)

Front-Runner to Build SF Subway Station Has History of Cost Overruns (by Zusha Elinson, The Bay Citizen)

CHSRA Selects Tutor Perini-Zachry-Parsons Bid for Central Valley Section (California High-Speed Rail Blog)

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