Concrete company settles Big Dig charges with guilty plea and $125m

A company supplying 'off' concrete to the Massachusetts Turnpike's Big Dig is settling with the state of Massachusetts and the US for up to $125m but six fired staff are being prosecuted individually for criminal conspiracy and fraud. Aggregate Industries Inc (Aggregate) of Rockville MD was accused of sending over 5,000 truckloads of bad readymixed concrete to the Boston underground project - not as the joke would have it from driveway jobs in posh Montgomery County MD 500 miles (800km) to Boston but from local plants.

Aggregate which pled guilty to the charges of conspiracy to defraud will pay $8m in fines, and pay $42m in damages, which go into a fund to help pay for repairs to the botched project in downtown Boston. The fund is being set up to receive monies gotten out of other Big Dig malefactors as they settle or are punished in the courts.

In addition Aggregate will provide $75m for 30 years of insurance to cover structural maintenance costs  which may arise beyond the $50m. Also Aggregate agrees to divest itself of its largest plant in the Boston area and will pay for the costs of concrete testing for five years and fund an independent monitor of the settlement.

Aggregate does avoid debarment from participating in future US funded projects. 

Six "management level employees" now fired by the company will continue to be prosecuted individually for fraud, conspiracy to commit fraud and lies.

The settlement with Aggregate was announced jointly today by the US Attorney, Massachusetts Attorney-General, the FBI, state police and transportation department officials.

see http://www.oig.dot.gov/StreamFile?file=/data/pdfdocs/Aggregate_Plea_PRjuly27.pdf

The scam by Aggregate mostly involved adding water to setting concrete and applying falsified time stamps on delivery slips to pass off watered, setting concrete as fresh. The ASTM "Standard Specification for Ready Mixed Concrete" says that concrete should be poured within 90 minutes and before 300 revolutions of the mixer after water has been added to the cement, sand, gravel mix. The contract called for 10-9 concrete.

Adding water to setting concrete helps it flow but since the chemical setting processes cannot be reversed the result is a much weakened concrete.

The statement today says: "Aggregate mixed the leftover concrete (from other projects) with Big Dig project concrete, and then delivered this adulterated concrete to the project. The leftover loads... did not meet Big Dig project specifications. Aggregate concealed this fraud by falsifying concrete batch slips delivered to Big Dig inspectors... In most instances involving these 10-9 loads the concrete had exceeded the 90 minute time limit. In order to conceal the true age of the concrete... Aggregate employees added water as well as other ingredients to the 10-9 loads to make those loads appear freshly batched. Big Dig specifications prohibited the addition of water (like this)."

Aggregate was paid over $100m for 135k ten cubic yard loads of readymixed concrete of which at least 5,700 were off or watered, according to joint state and federal indictments.  The concrete went into the walls and roof slabs of the I-93 tunnel which is named after the now deceased Boston-based pol, US House of Representatives Speaker Thomas 'Tip' O'Neill.

O'Neill was the strongest sponsor of the Big Dig and managed to organize an override a veto of federal funds authorization by President Ronald Reagan who presciently opposed any federal grants for the project when it was begun in the early 1980s.

The concrete scam by Aggregate Industries was revealed by a whistleblower at the company. Turnpike project managers and supervisors missed it.

Aggregate Industries, a subsidiary of Holcim of Zurich Switzerland supplied only about one percent of the concrete used on the Big Dig job, so it is not believed the scheme left widespread structural problems. However poor concrete may have contributed to the widespread water leaks which plague the tunnels despite several years of grouting and other fixes.

US Attorney Michael Sullivan said the settlement with Aggregate is "one more step toward holding accountable those repsosible for the many problems in the Central Artery Tunnel (Big Dig) Project."

Bechtel Parsons Brinckerhoff are the larger fish still to be landed

The off-concrete is a penny-antsy scam compared to the claims of malpractice being pursued by the feds and the state against the joint venture project manager Bechtel and Parsons Brinckerhoff (B/PB) where a settlement in the high hundreds of millions is in negotiation. The Boston Globe reported recently that a B/PB settlement could be as much as $1 billion on the $15b project. A prosecution for criminal negligence is also under consideration against project management.

B/PB's shoddy engineering design, poor supervision and general mismanagement produced a tunnel project that is many billions over estimate, still fails to meet specifications for waterproofing, and has seen inexcusable wall and ceiling collapses. Also woeful has been the Massachusetts Turnpike's mismanagement of the project in employing the engineers on a send-us-the-bills basis.

Engineering Design News' editor John Dodge recently wrote: "The NTSB  (National Transportation Safety Board) has released an extensive set of photos that graphically depict mind-boggling negligence in Boston's Big Dig. Poor engineering, incompetence and perhaps worst, an utter lack of inspection over a known problem resulted in death, injury, runaway costs and endless inconvenience for drivers. Imagine driving over a bridge with visibly dangerous cracks in the girders - and doing nothing about them. That is the story of the Big Dig ceiling. " (http://www.designnews.com/article/CA6459740.html)

Bechtel and PB are both highly regarded international engineering companies with some of the world's greatest engineering talent. Trouble was they apparently didn't send it to the Boston job. That is because in a project based on an unlimited budget of government handouts, the more they messed up, and the longer the project took, the more they could bill. You send your dregs to jobs set up like that.

The project is a testament to the value of fixed price design-build, and even more for design-build-finance or toll concessions in which companies take full responsibility for their work and its consequences.

TOLLROADSnews 2007-07-26