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MD Board Approves $250M Purple Line Settlement

Monday, January 11, 2021

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The Maryland Board of Public Works, comprised of Gov. Larry Hogan, Comptroller Peter Franchot and Treasurer Nancy K. Kopp, has unanimously approved the $250 million legal settlement to resume construction of its light-rail Purple Line project.

Major construction on the project is expected to continue within nine months.

“We are going to see the Purple Line a little late but still working to unite the suburbs,” Kopp said. “It’s just going to have a tremendous and positive impact on the communities and on the economy.”

Purple Line Saga

According to Maryland Department of Transportation and the Maryland Transit Administration, the Purple Line is a 16-mile light rail project that will run from Bethesda, in Montgomery County, to New Carrollton, in Prince George's County, eventually providing a direct connection for Metrorail Red, Green and Orange Lines; at Bethesda, Silver Spring, College Park and New Carrollton. The project will also connect with MARC, Amtrak and local bus options. The Purple Line will be powered by a catenary system.

Owned by MDOT and the MTA, plans began with assessments in 2002-08, followed by a draft environmental impact study and light rail being selected as transportation. The FTA issued the final record of decision in 2014, followed by Purple Line Transit Constructors—a partnership consisting of Fluor (Irving, Texas), Lane Construction Corp. (Cheshire, Connecticut) and Traylor Bros Inc. (Evansville, Indiana)—being chosen in 2016 to assist with the project.

Through the public-private partnership, PLTC agreed to work on the design, build and operate, as well as maintain the system for 35 years. Other teams collaborating on the project at the time included: the Washington Metropolitan Area Transit Authority, Montgomery and Prince George's counties, the Maryland-National Capital Park and Planning Commission, Maryland Department of Transportation State Highway Administration and local municipalities.

In March 2019, a judge cleared a lawsuit that might have brought construction to a halt. A few months later, in September, officials announced noted that the line would open in phases, starting in Prince George’s County, where the first stations would open. At the time, trains were being built in New York and planned to arrive for testing in 2021.

By October, WTOP News reported that issues with concrete at a Maryland Metro entrance shaft, labeled defective by the state, were just one of many issues plaguing the project after the outlet had requested documentation on the project.

According to the documents, in 2016 and 2017, more than one instance of 47 oversight reports where contractors were traversing private property without necessary permission and traffic safety issues. While more minor issues were easily resolved, there were also instances where construction was commenced without the proper approvals, such as in July 2018, when designs were returned with a request for revisions, but construction still began two weeks later.

In December, problems identified with the concrete included: cracks in approach slabs, concrete out of tolerance, pockmarks and footprints. The sidewalk has issues with “honeycombed sections, voids and does not meet the minimum cover requirements for welded wire reinforcement,” according to the report.

By October 2020, corrective work was slated for completion by the summer, with the interior build-out commencing by the end of 2021. At the same time, project officials expected the project to reach completion in April 2023, though those involved with the project emphasized that they were still aiming for the end of 2022.

Regarding PLTC leaving the project, Washington Business Journal reported that the state's transportation agencies said in a statement that the Purple Line has experienced delays "in conjunction with litigation" since 2016 and have been "actively engaged in discussions to mitigate the impacts of litigation and change order requests on both the project schedule and costs."

In April, PLTC requested an additional $187.7 million and five extra months to complete work regarding a required “crash wall” slated to go between a portion of the Purple Line and CSX freight tracks.

The following month, PLTC announced that it planned to withdraw from the project as a result of a three-year ongoing dispute with MDOT and the MTA over extensive delays and cost overruns. However, PLTC reported that its other consortium, Purple Line Transit Partners (Meridiam, Fluor and Star America Infrastructure Partners) had agreed to take over the project.

According to reports, PLTP also held a public-private partnership with the state of Maryland for a larger design-build and operating contract, worth $5.6 billion. In its release, PLTC said it would be exercising a clause in the design-build agreement which allowed for withdrawal if total project delays reached 365 days. However, according to the Washington Post, the project was already approaching 1,000 days’ worth of delays from various legal battles, right-of-way acquisition and design changes.

In June, the PLTP formally notified state transportation agencies that it intended to terminate the partnership in 60 days, citing more than $800 million in cost overruns. Two months later in August, Baltimore Circuit Court Judge Jeffrey M. Geller filed a temporary restraining order that prevented PLTP from walking off the project.

At the beginning of September, Geller ruled that the joint venture could quit over the cost overrun dispute, though transit officials could attempt to salvage the partnership. By the end of the month, construction came to a halt, as PLTP proceeded with its decision to depart from the endeavor.

Following the court’s decision, Maryland transportation officials planned to take over day-to-day management of the project but were still making efforts to come to a settlement with PLTP. Should the JV stick with its plans to leave, state officials estimated the decision would add another one to two years of delays to the project, which is already two and a half years behind schedule.

In November, MDOT announced that it had agreed to pay an additional $250 million to the remaining companies that have agreed to manage construction of the delayed and cost disputed Purple Line project in an effort to salvage the 36-year, $5.6 billion PLTP partnership.

The settlement amount was reported to cover what PLTP and its associated construction team spent on a lawsuit filed by project opponents and the state’s delay in providing right of way.

Originally made up of primary construction contractor Fluor, and infrastructure investors Meridiam and Star America, despite the settlement, Flour announced that it would still be leaving the partnership, having quit last month over delays and cost escalations.

According to The Washington Post, the deal revived one of Hogan’s signature transportation projects and a public-private partnership that imploded in September following three years of cost disputes.

Until a new design-build contractor replaces Flour, MDOT said at the time that it would oversee subcontractors on a variety of work to keep the project moving, such as paving, moving utility lines and manufacturing light-rail vehicles, among others.

The settlement was sent to the state’s Board of Public Works in December.

Moving Forward

In wake of the Board’s recent approval, the firms plan to hire a new construction contractor within the year, however, Maryland Transportation Secretary Gregory I. Slater said the decision is expected to be reached closer to six months-time.

After a contractor is named, Slater predicts that it would take another three months or more to refinance the remaining work—the project is about 40%complete—before major construction could resume.

PLTP is making additional efforts as a means to keep costs low and prevent further delays. Some of the efforts include exploring ways to expedite the remaining work and reducing its internal rate of return from the project by 20%.

According to The Post, it is still unclear whether or not a new contractor will cost the state more to officially complete the project—previous construction firms were building for $2 billion—but Slater suspects the project could benefit from a “competitive bid environment.”

“We’ve received a tremendous amount of interest from potential bidders,” he said.

At any rate, the state plans to pay off any additional construction costs over the 30 years of the line’s operation, which have been estimated to cost about $140 million annually. With the $250 million settlement, the Purple Line partnership is now valued at $5.84 billion and is one of the nation’s first transit projects to rely on private financing.

A revised completion date for the project is also expected to be announced as part of the new construction contract. Originally, the light rail was scheduled to open to the public by March of next year, however, the previous contractor reported that it wouldn’t be able to carry passengers until late 2024.

Regarding Flour, the prior contractor and its construction partners received $100 million before the end of 2020, with the state intending to pay the remaining $150 million within 12 months, after the contractor has been replaced and a new agreement is signed between it, the state and PLTP.

As part of the settlement, Meridiam and Star America have agreed to spend up to an additional $50 million to keep construction moving until a new contractor is on board.

“Working hand in hand with the state, we will begin the effort without delay in order to deliver the Purple Line to the people of Maryland as soon and efficiently as possible,” Jane Garvey, chairwoman of Meridiam North America and PLTP’s board said in an emailed statment. “The hard work invested by both sides in building a pathway forward is a strong illustration of the deepened mutual trust and strength of our partnership.”


Tagged categories: Contractors; Department of Transportation (DOT); NA; North America; Ongoing projects; Program/Project Management; Project Management; Rail; Transportation

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