business & economy
Also in this section:
Big Dig company makes news headlines, political problems
ACP downplays its relationship with Parsons Brinckerhoff
by Eric Jackson
Back in 1985, in a consortium along with Bechtel, the US-based construction and consulting firm Parsons Brinckerhoff was given the contract to manage the construction of a project to relieve Boston's traffic congestion by burying its interstate highways in tunnels below the city. Dubbed the "Big Dig," at the time the project's cost was estimated at $2.6 billion. Fast forward to 2006 --- years behind schedule, the Big Dig was finally inaugurated, with the costs having risen to $14.6 billion and Bechtel/Parsons Brinckerhoff still managing the project.
That, however, was not the end of the story. On July 10, only a few weeks after the project was opened, a 14-ton slab of concrete fell down from the roof of one of the Big Dig's tunnels onto a car, killing Costa Rican immigrant Milena Del Valle and injuring her Puerto Rican husband Ángel Del Valle. The scandals and recriminations that had all along plagued the highway project, with the cost overruns the most expensive in US history, reappeared with a vengeance.
Vengeance as shown in the September 19 Massachusetts gubernatorial primary, in which newcomer Deval Patrick humiliated the state's Attorney General Thomas Reilly, who had earlier in the year appeared in public opinion polls to be the prohibitive favorite for the nomination. Reilly, whose campaign had taken more than $35,000 from people connected with Parsons Brinckerhoff and other Big Dig contractors, and who despite Inspector General reports detailing tens of millions of dollars worth of cheating by Parsons Brinckerhoff and its consortium partner had let the statute of limitations run out the state's legal ability to seek compensation, fell behind when the Del Valles were crushed. His aspirations for higher office were flattened when, two days before the election, the Boston Globe ran a story about how Parsons Brinckerhoff and Bechtel's corruption weakened the ceiling that fell in on the unfortunate couple. Reilly finished in a distant third place.
The ceiling's designer, a company called Gannett Fleming, had recommended using four bolts to secure each ceiling hanger. But in a 1988 memo that the Boston Globe obtained, a Bechtel/Parsons Brinckerhoff manager insisted that "Unless I'm missing something, I don't see why [the ceiling designer] requires a 4 bolt anchor plate when a 2 bolt anchor plate would be sufficient." And how did Parsons Brinckerhoff and its partner "know" that only half as many bolts would suffice? Cutting costs on testing, they used the work of an obscure Portuguese institute that tried the bolts in pull tests conducted in solid rock --- even though the Big Dig bolts would be anchored in softer concrete --- using weights well below US industry standards. The ceiling designer caved in to Bechtel/Parsons Brinckerhoff's demands, the ceiling caved in on the Del Valles, and now a state grand jury is considering criminal charges and the FBI is conducting a federal investigation.
And it does not look good that the Panama Canal Authority (ACP) used Parsons Brinckerhoff to do the controversial $5.25 billion cost estimate for the proposed Panama Canal expansion project, and moreover the authority signed Parsons Brinckerhoff to a 10-year consulting contract just a few days after the roof fell in on the Del Valles.
The ACP and the "yes" campaign it leads have the advantage that these unseemly facts don't appear at all on the major television stations and just barely get mentioned on the opinion pages only of some of the dailies. However, for years the ACP avoided questions by Panamanian reporters by making their declarations to the foreign press, knowing that by way of the Internet their questionable press release claims would come back to Panama. Now they are finding that the international media can be a two-edged sword that can cut them as well, and that their almost total control of Panama's mainstream media has resulted in the proliferation of websites, radio shows and other novel communications media that exist precisely to be beyond such controls. Now the ACP is in denial and damage control mode. The problem is, its stories don't always match each other, and worse yet for them, sometimes don't match the information that they have published on their own website.
The damage control operation began with emails from Edelman, a US-based company with a $998,000 contract for the ACP's English-language "yes" campaign public relations. Edelman told The Panama News that "Parsons Brinckerhoff - ACP has actually not signed any contracts with any firm for the actual expansion project. If majority of the Panamanian people says "yes" to expansion, then and only then will ACP begin the bidding process for expansion contracts. The ACP has worked with Parsons Brinckerhoff (along with several international firms), in parts of the planning process for the expansion master plan. But to be absolutely clear, no one has been signed for the actual expansion itself."
Just like Edelman "refuted" a critical Council on Hemispheric Affairs report that centered on Panamanian government corruption as the main problem with the Torrijos - Alemán Zubieta Plan without actually mentioning the corruption issue, the publicists sidestepped the main point: Parsons Brinckerhoff, which managed a project that started off with a $2.6 billion price tag that has ended up costing more than $14.6 billion, is the author of a $5.25 billion cost estimate for the Panama Canal expansion that critics --- including former canal administrator Fernando Manfredo and former chief canal engineer Tomás Drohan --- say is flagrantly understated.
Then the ACP's Third Locks Information Center issued a statement insisting that "the Parsons Brinckerhoff International firm has not done design or engineering work for the ACP. Its functions and contract are limited to assisting the ACP in the area of management and direction of studies.... As a matter of clarification, the ACP has contracted the PB Consult company, which is a subsidiary of Parsons Brinckerhoff International and thus the consultants assigned to the ACP are not involved in the so-called Big Dig project." This semantic dodge might sound slightly more convincing were the signature of a representative of "Parsons Brinckerhoff International" not found at the bottom of the third locks cost study published on the ACP website.
Then, in an Internet exchange, ACP board of directors member Roberto Roy joined the fray. "First the ACP itself did its estimate. Then Parsons Brinckerhoff team did its." (Why, then, one cost estimate study document published on the ACP website instead of two? Roy didn't say.) "This company is not the other firm called PBS & J, which has recently been the subject of investigations related to project cost overruns and illegal contributions to electoral campaigns."
Parsons Brinckerhoff may not be the only company disgraced by cost overruns on a mega-project --- but unfortunately for the ACP, its consultant is disgraced by the Big Dig, the biggest US highway boondoggle of them all. It may not be under investigation for illegal campaign contributions --- it's just a matter of its managers' and lawyers' and political action committees' legal contributions becoming the kiss of death for American politicians known to take them.
The bottom line in the debate leading up to the October 22 referendum here is the bottom line --- is the $5.25 billion cost estimate credible, or is it not? Parsons Brinckerhoff's involvement in the formulation of that estimate becomes an issue not because Panamanian voters will be deciding whether or not it's a rogue company, but whether or not to believe the number it provided.
Still, it does help to examine Parsons Brinckerhoff as a detective would assess a criminal, paying particular attention to modus operandi. The Massachusetts Inspector General, in a report about how Bechtel/Parsons Brinckerhoff helped politicians conceal huge Big Dig cost overruns from voters, said that "they did so by applying a largely semantic series of exclusions, deductions, and accounting assumptions...." And the "no" campaign, pointing to the exclusion of financing costs, the bridge or tunnel connecting Colon's Costa Abajo across the proposed new canal entrance to the rest of Panama, a lot of dredging work and other items from their estimate, claims that they're doing it again here.
In a series of email exchanges apparently monitored by the ACP's campaign consultants, it was noted that on page 11 of the ACP-published PDF document whose heading was shown above --- the signature page --- the Parsons Brinckerhoff representative signed in the name of "Parsons Brinckerhoff International." Then, all of a sudden, there was no page 11 to this document on the ACP website anymore. Alas, they left this , title page up, from which The Panama News copied the above excerpt.
Also in this section: