No government boondoggle in the history of man comes close to the cost of the Black Hole of Boston. Insight has learned that, for years now, key Massachusetts officials and a world-famous engineering-construction firm are alleged to have labored industriously to hide from the American people the true cost of building a gargantuan highway-construction project through the heart of the city. The scandal is so enormous, insiders say, that it is likely to make this capital of political liberalism a national laughingstock by the time the Democratic National Convention meets here in 2004.

With a corruption-fighting Republican governor about to take office, Big Dig and government officials responsible for auditing the project are in bunker mode, with their propaganda machine on highest alert. Of course political dishonesty has been part of the national polity since the memory of man runneth not to the contrary, and it hardly is surprising when estimates of the cost of public works prove to have been overstated. But Insight has learned the eventual cost of the Big Dig is likely to be 500 percent higher than the $2.56 billion estimate that received federal approval in 1985. Its projected price tag now is at least $14.6 billion.

One local writer calls it the "Big Lie." Another suggests the politicians themselves, the enablers of this mess, give it another name, such as the U.S Government's Enron or the Big Deception. Picture King Henry VIII eating voraciously in front of a table groaning with food and you get the idea. It is the ultimate case study, critics charge, of how elected officials, designers and engineers will deceive the public and one another to keep feeding on federal money. And, incredibly, the project already is more than 40 years old. The planning began in the 1960s, construction in 1991, and it is scheduled to be mostly finished in 2005.

So what is it, a borehole through the earth's magma all the way to China? Not on your life. Boston's Big Dig is a road and renewal project designed to replace an elevated highway that runs through the heart of the historic old city founded in 1630, and connecting its north and south shores and Logan International Airport across Boston Harbor. It repeatedly is described as the largest public construction project in U.S. history, whatever that means. To achieve this the engineers are engaged in constructing a highway tunnel directly underneath and parallel to the elevated highway, the city's main artery, while keeping it continuously open.

Through the use of slurry walls, where liquid is poured into a hole to harden, engineers have managed to support the elevated highway while cutting away its support beams to remove the dirt underneath. The designers and engineers of the joint venture -- called B/PB -- are San Francisco's Bechtel Corp. and New York City's Parsons Brinckerhoff Quade & Douglas Inc.

And some of the wonders they have performed are, well, wonderful. As the downtown innards of the city have been dug out, and a third tunnel constructed under Boston Harbor, traffic flow continually has improved as construction progresses. While drivers often find they must follow new paths to their destinations, which temporarily angers them, most say that once they learn the new route they find it easier and with less traffic. Even Boston's notoriously cranky cabbies say overall traffic flow has improved, especially since the opening of the harbor tunnel, albeit peppered with a few spots of increased congestion. Boston is open for business and functioning well.

Also important, this gargantuan project claimed very few buildings in the historic metropolis. No private homes were razed, as construction was staged from parking lots and unused lands adjacent to railroad tracks.

But as astonishing as the engineering and construction of the Big Dig appear to be, the history of its financial management leaves observers slack-jawed. Politically sophisticated Boston, sated in lore of theft from such public-works boondoggles as the Boston Common Garage, can't believe that even the Washington clout of Democratic Sens. Edward Kennedy and John Kerry can keep such sums moving from the federal purse into the local black hole.

Not that it has gone unnoticed. The spending in Massachusetts is "out of control," roared Rep. Frank R. Wolf (R-Va.), a member of the House Appropriations Committee who helped cap the federal government's share of the costs at about $8.5 billion in June 2001. Wolf's efforts were highly warranted, but simultaneously disdained in Massachusetts. "The spending was just terrible," he says. "This can be used as an example of how not to build a project."

Christy Mihos, a fiscally conservative member of the Massachusetts Turnpike Authority (MTA), and A. Joseph DeNucci, the longtime elected auditor of Massachusetts, agree that billions have been wasted on the project. A report of the U.S. Senate Governmental Affairs Committee called the Big Dig one of the worst cases of government mismanagement in recent history. "Bechtel, the project management and others have not made cost containment and prudent financing a top priority," DeNucci says.

How bad could it be? As soon as Insight began investigating this story our reporter was inundated with allegations of extreme corruption involving several layers of the Big Dig construction and government hierarchy. The indignant charges came from every direction, and some of them seemed too fantastic to believe. But the research also was hindered by strong resistance from Big Dig and government officials. Bechtel spokesman Andrew Pavin hung up on an Insight reporter, and Federal Highway Works Administration (FHWA) employees Carl Gottschall and William N. Outlaw refused to respond to questions. Nor would Big Dig officials provide documents they are required by law to make available.

The bodies here may be buried as deeply as Jimmy Hoffa, but the Massachusetts attorney general and the Securities and Exchange Commission have subpoena power and are investigating. Indeed, according to Holly Sutherland, a Big Dig spokeswoman, "We are being investigated by everybody." And according to a March 2001 report issued by the Massachusetts Inspector General (IG), and all but ignored by the Boston-proud local media, "Big Dig officials have withheld documents under a claim of attorney-client privilege, and public data and documents have reportedly been destroyed and other public documents have been reportedly removed from Massachusetts Turnpike Authority offices in early 2000. Thousands of pages of documents are missing. File cabinets had been emptied and computer hard drives had been sandblasted so data could never be recovered from them."

As if the alleged destruction of documents on this multibillion-dollar project were not enough to send an army of federal auditors and law-enforcement authorities to Boston armed with subpoenas and search warrants, Mihos of the MTA recently went public on national television to warn of fraud and corruption on the project. The price tag of the Big Dig now is higher than the gross national product of Bolivia and the cost of the Alaska pipeline, twice that of the construction of the Panama Canal and 23 times more than what it cost to build the Hoover Dam -- in today's dollars! If the cost estimate holds (an unlikely prospect, according to insiders), it will come in at just under the $16 billion required to build the 32-mile Chunnel under the English Channel to link the United Kingdom with France.

Then there is the problem of Bechtel, an international engineering and construction company founded in 1898, which has been paid about $2 billion so far for its role in the project. Bechtel, which manages the Big Dig, has taken care to be politically connected at the highest levels and has been involved with many projects in the United States and throughout the world, especially in the Middle East. Two former top Bechtel executives, Caspar Weinberger and George Shultz, served in president Ronald Reagan's Cabinet during the time this project received its most important congressional funding. During that period Bechtel was struggling to reverse a significant decline in its worldwide business.

Although for years B/PB and Big Dig officials kept authorizing increases in the cost of the project, both covertly and overtly, those responsible for oversight expressed astonishment at the contents of a report, dated Feb. 10, 2000, issued by the U.S. Department of Transportation Office of Inspector General and at a subsequent report by the Massachusetts IG. Since 1997, everyone connected with the project had been saying publicly that it would cost $10.8 billion, a great deal more than the original estimate, but said to be well worth it. Worse, the estimated cost was raised overnight to a horrific $12.2 billion, and auditors for the Big Dig admitted it had laid out $14.1 billion by October 2000. Washington and Massachusetts exploded in anger.

The Massachusetts IG report states that "officials knew about large cost overruns long before they submitted to Wall Street inaccurate bond-disclosure documents" to finance that part of the project not being paid for by the federal taxpayer. It also states that Bechtel officials privately told then-governor of Massachusetts William Weld of the higher costs as early as Dec. 1, 1994. Neither Bechtel nor Weld disclosed this fact publicly. Deceiving the public is bad enough, but lying to Wall Street is a crime.

The Massachusetts IG report says Weld and two other Republican governors knew of the higher cost estimates, which the report puts at $18 billion allowing for inflation -- significantly higher than the $14.6 billion to which Big Dig officials now admit. The report also states that internal B/PB documents say the real numbers were not released for fear of potential "brutal press scrutiny."

According to the Massachusetts IG report, Big Dig officials fully informed the local office of the FHWA of the project's true cost and undertook a nine-month initiative between June 1994 and March 1995 to decrease B/PB's total cost estimate from $13.8 billion to $8 billion. They did this arbitrarily by reducing contract estimates, excluding all money for management after 2002, and eliminating more than $1 billion defined as "nonproject costs." They also started using 1988 (instead of current) dollars and other devices, none of which was made public by the FHWA.

So here were well-documented allegations by the IG of the commonwealth of Massachusetts that three governors, B/PB and the FHWA knew about and hid the true cost of the project for years, not to mention the likelihood that full details also were in the hands of the state and company auditors who calculated these increased costs. Investigators tell Insight it is likely that every high-level Big Dig official and political manager knew about all of this, though many now deny it.

Then there is the question of why this project has been so expensive. Local observers are quick to place the blame on what one called the sometimes bubble-headed project management of Bechtel, one of the planet's largest engineering-construction firms. Others blame sloppy oversight. Whatever the cause, on construction contract after construction contract, say those who have seen the internal documents, officials continually paid far more than the contract estimate. Contractors would begin work, announce they had found conditions more difficult than expected and ask for more money through a process called "claims and changes." According to Bechtel's Pavin, engineers had not provided complete information to contractors, sometimes not taking enough bore samples, for example, skewing evaluations at every level of design and construction.

Of course, in a port city almost 400 years old, in which ground often has been filled and reclaimed, contractors are likely to find unmapped underground surprises that add to excavation costs. But they should not, according to many, find unknown conditions to the extent that Bechtel and others claimed.

One of the most egregious claims and changes that was at least in part a Bechtel responsibility involves a tunnel underneath a small body of seawater called Fort Point Channel. Obtaining exact information about this cost overrun, and almost everything else important to independent evaluation of this project, proved an exercise in frustration as Big Dig press representatives Sean O'Neill, Robert Bliss and Sutherland responded to Insight with the litany, "I will get back to you on that," which they rarely did. This game of dodge 'em went on for a month-and-a-half.

But according to published reports, at least some of the surprises developed because Bechtel ignored warnings from another engineering firm for about a year that the soil was softer than Bechtel anticipated, causing cost overruns estimated to be as much a half-billion dollars.

Persistent readers determined to know the exact figure are welcome to call Big Dig headquarters themselves at (617) 951-6000, whistle-blowers urged.

Another example of B/PB problems involves the mesmerizingly beautiful bridge that crosses the Charles River from Cambridge into Boston. According to published reports, for two years its prominent Swiss architect, Christian Menn, wrote letters informing Big Dig officials about possible construction problems he identified from photographs. But B/PB says no one there noticed these safety problems -- not the design firm, contractor, consultants or inspectors -- until a device called a borescope came along. At that point, work on the bridge stopped, and Menn says that B/PB ignored his repair solution that would have cost perhaps $100,000 in favor of an alternative that cost three times as much. Big Dig officials respond mysteriously that taxpayers will not have to pay for the repair.

Then there is a Boston engineer named Dimiter Gorchev who is glad to sit for hours and explain how Bechtel wasted large sums of money on a ventilation system. And Mihos of the MTA says that he has been told by engineers and builders that "Bechtel overbuilt everything. They overengineered and overdesigned everything. It is a crime." Of course, even among top professionals these things can be a matter of opinion.

The problem, says a Big Dig insider who talked to Insight on condition of anonymity, is that with all these million-dollar construction contracts being renegotiated with the Massachusetts Highway Department (MHD) through claims and changes, the "Big Dig started paying off contractors without really knowing what they were paying for." At one point in 2000, "the MHD had about 3,500 outstanding issues with contractors that came to $1.28 billion." This was because contracts went out with designs "substantially incomplete," and B/PB "often made changes to contracts after bidding, or when the work was in progress, because the original design frequently did not work. They also occasionally moved portions of one contract to another."

According to the source, many times walls would be completed, and then they would "realize that" they did not include in the contract a request for pipes to be placed in the walls. So holes would have to be drilled in a newly finished wall to put in the pipes.

Contracts sometimes almost doubled in cost, the source says. "Claims often were negotiated with the contractor, so the discipline and economic benefit to the public of the competitive bid is lost." Because the MHD got bogged down in contractor requests for more money, and contractors needed to be paid, the Big Dig started paying too many of what are called "global settlements," one insider critic says.

A global settlement occurs when requests by contractors for additional money are grouped together and treated as one. A percentage of the total is then paid to the contractors, rather than figuring out what each contract deserves.

"There was sometimes inadequate documentation to justify the amounts which Bechtel proposed to pay, even after the accountants went back into the contractor's files and attempted to backfill with information and documentation," says yet another source, "which resulted in sometimes arbitrarily determining amounts to be paid. When the amounts proposed to be paid by Bechtel in global settlements were audited, it was not supported by the accountants. The claims-and-changes process was poorly managed and got out of control. The fact that they were proposing global settlements at all in the middle of the project, which is rare, and not at the end, points to mismanagement."

In turn, many worry it may encourage contractors to inflate their claims and changes because they know payment will be based on a percentage rather than the actual amount, and their documentation, or lack thereof, for determining how much extra pay should be awarded will be overlooked to some extent, says a contract supervisor. Once the contractors learn that global settlements are the order of the day they tend to give a low initial price just to get their foot in the door because they know that later there will be extra work in the contract on which the builder will not have to bid. Under the ground rules, the Big Dig cannot put out to bid a contract that is partly completed; it must go with the contractor who started it.

"Bechtel and the Big Dig got bogged down with contractor claims, resulting in many global settlements, which developed into a very cozy relationship between Bechtel and the contractors," says another experienced observer of such projects. William Edwards, a budget manager for B/PB, admits to $2 billion being paid in contractor overruns.

Massachusetts has a consumer-protection law that prohibits contractors from charging more than 10 percent of the original estimate. It has been ignored in this project.

Meanwhile, any casual observer of the project who occasionally walks by a Big Dig construction site must wonder on what basis these firms are being paid, as workers frequently are seen standing around without purpose or direction. In fact, another name for the project among locals is the Big Stand Around.

On Sept. 6, a date arbitrarily chosen, Insight watched a Big Dig work site with watch in hand, arriving during the lunch break at 12:15 p.m. From the moment the break ended at 12:30, Insight's reporter saw 23 men idling until 1:30, when eight workers appeared to be both talking about work and socializing until 1:50. During this period, two men were cleaning concrete barriers for perhaps 10 minutes, and no one helped them. This might have gone on all afternoon, but the Insight reporter had to leave the site for an appointment.

And because the construction unions bulldozed a projectwide labor agreement with elected officials, ensuring union wages for all, even the lowest-paid Big Dig construction workers -- the laborers -- earn a minimum of $34.50 hourly with benefits. Kyle Meleski, a spokesman for a local builder's organization, says if the Big Dig simply got rid of its project labor agreement it would mean a savings of 10 to 15 percent.

Readers outside of Massachusetts might find another Big Dig boondoggle downright humorous if it weren't for the fact that federal taxes are paying for it. The Bay State is the only state in the nation that does not allow civilian flaggers to direct traffic around construction sites, instead requiring that such work be done by police officers who earn at least $29 hourly. Traffic details also require padding police overtime or private duty. During the Friday afternoon this reporter carried a stopwatch on the Big Dig site he saw one police officer directing traffic onto a dirt road over which only one vehicle crossed. Other than standing by the entrance, the officer worked a grand total of 30 seconds after coming back late from lunch. Again, the unions were increasing Big Dig costs. All told, the cops got $50 million from working the Big Dig, according to Sutherland, on top of their normal salaries and other paid details.

Projects of this size in major cities are not likely to be models of efficiency, but there is little doubt among those monitoring and auditing the Big Dig that a great deal of this waste and trouble resulted from very poor planning. For instance, because the project designs were not firmly vetted before construction began, a bridge crossing the Charles River was redesigned midconstruction. The Environmental Impact Statement approved by the administration of then-governor Mike Dukakis was reopened by his successor under pressure from community activists and real-estate interests. This resulted in a four-year delay and a new bridge design. That in turn necessitated construction delays and design changes on other parts of the Big Dig, increasing the total cost by no less than $3 billion, says B/PB budget manager Edwards. And the difference in cost just for the bridges alone, excluding everything else, was only a small part of it.

Then there was the problem of mitigation. In this case, mitigation was a result of concern about fish in Boston Harbor that local ecologists thought might be vulnerable to underwater blasting. And so, according to published reports, the masters of the Big Dig spent another $1 million of taxpayer money to devise a "fish-startling" system to scare away any sensitive finny friends before each blast. In another case, mitigation meant buying $1.4 million worth of soundproof windows and an air-conditioning system for artists and sculptors who live near a construction site. And mitigation meant spending $250,000 to buy the Boston Fire Department a new fire boat for reasons unimaginable. It also required building a $750,000 memorial for the city of Boston. And paying Harvard University, one of the wealthiest schools in the world, $270,000 to produce an official history of the Big Dig.

According to locals with whom Insight spoke, mitigation in this context means mollifying communities, institutions or activist groups that feel (or claim to feel) themselves adversely affected by construction or see an opportunity to turn a complaint into a benefit. The idea is that if a particular venue does not want a bridge in the neighborhood, or organizes to complain about the noise or has the clout to make official trouble, you build them a park or buy them a fire boat so they won't slow or stop the project. This sort of thing added another $3 billion to the final bill, Edwards says.

Massachusetts yielded to virtually every complaint. In addition, it seems once the state's liberal politicians learned the federal government would be paying about 90 percent of Big Dig costs, they saw an opportunity to get Washington to pay to improve Boston's neighborhoods at the country's expense. Or, as a former high-level Big Dig official put it to Insight: "Many elected officials and neighborhood groups saw the Big Dig as an opportunity to feed at the trough of the federal government."

Bechtel was hired to oversee and manage this project. Virtually every major U.S. construction project has what is called an owner's representative, a company engaged to look out for the interest of the owner -- in this case the American people through their federal government -- and to scrutinize, monitor and audit the manager, in this case Bechtel. But this project never had any independent oversight until very recently. Pavin of Bechtel says his company is the owner's rep, and it would be a waste of tax money to hire yet another firm to watch the watcher.

A waste of money? Boston's Big Dig watchers wonder why Bechtel would care how much more money is spent by the government. Could it be the company just didn't want anyone watching it? Certainly the state employees at the MHD did not want more oversight, critics say, since they quickly became a significant part of the problem. And was it Bechtel's political clout or something else that prevented Massachusetts from engaging an owner's rep to audit the managers?

Meanwhile, some of those who have sought more oversight of Bechtel have been attacked viciously by the lame-duck governor, Republican Jane Swift. Both Mihos and Jordan Levy, another fiscally conservative member of the MTA, were fired by Swift, they say, after trying to get Bechtel to return some Big Dig monies to the government. They also had been attempting to obtain an impartial group to provide oversight, and helped institute a recently implemented policy of additional oversight of contractor claims and changes that has saved upward of $1 million.

Both Mihos and Levy took their discharge to the Massachusetts Supreme Court, which decided the governor had no right to cashier the pair. To ensure Swift had enough Bechtel supporters on the MTA to outvote these Bechtel critics, say the pair, she packed the board, increasing it from three to five. Swift then appointed Matthew J. Amorello as chairman. Mihos and Levy charge that as the former commissioner of the MHD, Amorello did not sufficiently scrutinize the claims-and-changes process. According to newspaper reports, meetings of the MTA have in recent months become battlegrounds between Amorello and the two project critics.

As the commonwealth of Massachusetts groans under this scandal, Auditor DeNucci says the local media have been unwilling to publicize problems lest the publicity add to the delays. And some have gone so far as to attack officials who criticize the project. Asked about the growing scandal, a spokesman for Sen. Kennedy tells Insight, "The senator won't go near that."

John Pike is a free-lance writer for Insight.

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