A 15-year-old change order legal battle between the Massachusetts Dept. of Transportation and a key construction joint venture on Boston's $14-billion Big Dig project is finally ending, with the state agreeing to a final $88.7-million settlement.
In what some observers say was a landmark case in New England, state officials last month agreed to pay the remainder of funds owed to the PKC construction team—led by contractor Tutor Perini and including Kiewit Corp. and Jay Cashman Inc.—and not to challenge a June state Superior Court ruling that had sided with the companies.
The payment, part of a Nov. 13 settlement agreement between PKC and the state, brings the total paid to the venture to about $183 million—including interest, says Joel Lewin, its Boston-based attorney. Its original claims had totalled $158 million.
A MassDOT staff-written document notes the added expense of continuing to defend its position and terms the likelihood of success as "low," according to a Nov. 21 report by State House News Service.
A state transportation board member estimated the added expense at more than $115 million, the report said.
According to one observer, political considerations in the November elections likely prompted state officials to wait until now to announce the decision to settle.
The Big Dig, formally known as the Central Artery/Tunnel project, involved rerouting interstates through the city and building new tunnel and bridge infrastructure; it began in 1991 and was completed in 2007.
PKC was awarded its contract in 1995.
The dispute litigation, which began in 1999, involved claims for state-imposed engineering changes on rail and highway tunneling work the team performed and to cover added costs caused by changed soil conditions.
A three-member Dispute Resolution Board awarded PKC several claims, but three were challenged by MassDOT, which contended that the arbitration board exceeded its authority.
State Superior and appellate courts agreed in rulings in 2010 and 2011, vacating the awards. But the issue of whether MassDOT's chief engineer had dispute decisionmaking authority was returned to the Superior Court to decide.
In that court's June decision, Justice Thomas Billings affirmed the dispute board's role as binding arbitrator and reinstated the awards to PKC.
Payment, including $3.45 million in withheld liquidated damages, must be made by Dec. 15 to avoid additional interest, says the settlement document.