When CATS CEO Ron Tober dropped a memo the other week on the status of the South corridor light rail line much context and backstory was left out.
Recall that Tober both ruled out a pre-transit tax vote opening of any part of the South corridor light rail line and promised to hold project contractor Archer Western responsible for any slippage of the late November target date.
What was left out is that lawsuits are already flying over the project and violations of federal construction guidelines are all but certain. To understand what is really going on with taxpayer dollars down along South Blvd. involves going to court documents filed in recent weeks.
Let’s start with Archer Western suing Gira Steel in U.S. District Court in May over $1.3 million in work on the South Blvd line and to remove Gira as a subcontractor from the project.
Specifically Archer claimed that Gira used Canadian steel to build parts of the South line in violation of strict federal “buy American” rules. As the $463 million project received almost $200 million in Federal Transit Administration funding, it is bound by those rules. In theory, the FTA could demand money back that was spent on foreign steel and cause further delays in a project that is already over a year behind its original schedule.
Archer says that when CATS found out about the Canadian steel in January, it dinged Archer for the cost of the work already done, about $296,000. Archer and CATS then set about trying to determine how much foreign steel was in the project and if it would require a “tear out” of existing work in order to comply with FTA rules.
CATS copped to part of this back in June. What was not acknowledged that the FTA also began its own steel audit of the entire project the results of which are still unknown.
Archer also claims that during a March visit to the Gira facility in South Carolina, a CATS consultant made the “shocking discovery” that Gira had no U.S. replacement steel for the project. After that visit, Archer demanded that Gira quickly deliver steel for the Tyvola station, which was then installed. After that delivery in late March, Archer refused to accept more steel and effectively moved to replace Gira.
Gira responded in its own court filing several days after Archer filed suit. It argued that Archer, and presumably by extension CATS, knew that Gira was using Canadian steel and that Archer told to continue doing so while trying to line up American steel. The subcontractor also claims that Archer never specified that American steel was required for the project going all the way back to August 2006 purchase orders for the steel. As a result, Gira says it used a mix of American and Canadian steel on the parts of the project — mostly kiosks and shelters — it began delivery on in the fall of 2006.
Gira also notes that a CATS consultant also visited in January, as well as in March, and asked for information on where the steel was produced. The mill certifications provided showed most of the steel was American, but some was Canadian. Archer Western was sent this information as well, Gira says, and knew it was accepting and paying for Canadian steel.
To back that up Gira produced a February 22 email from Archer Western project engineer Chris Lamm. In it Lamm tells Gira to continue to use Canadian steel until American steel can be found.
“Per our conversation this morning, send all the associate steel for East/West shelters and kiosk tomorrow, continue adjusting the plates for stonewall station and continue with the 31 legs you have already fabricated. It is also requested that you find American steel for the balance of what Gira has not fabricated and revise your fabrication schedule,” the email explains.
Archer responded that Lamm was merely trying to mitigate the supply problem, not accept Canadian steel for the project.
And there things sit as in late July, the same day Tober sent his fist-shaking letter to Archer, both Archer and Gira asked the court to put the case on hold until January 2008, or until the South line project is finished.
Except that we still do not know how much Canadian steel has been used in the project. In fact, at one point Archer hints that steel from an unnamed third country was also used. Without knowing that, it is impossible to say how much money the FTA might demand back from CATS. CATS, of course, will say that should come out of Archer’s cut, and Archer then turns to a subcontractor like Gira.
Round and round we go with the only sure thing is that lawyers will get paid and that taxpayers will ultimately foot the bill for any added costs or delays. That is why it is so nonsensical for CATS and the city to pretend that it is possible to recover any money from contractors on this project.
First, CATS has signed off on all aspects of the project — or had an absolute responsibility to do so. Second, Archer will always pass responsibility onto its subs. And if the city wants to start suing subcontractors right and left — good luck with that.
We are left a familiar spot, with CATS spending vast sums of public money while the public has little or no visibility on how that money is being spent. Except to know that if CATS comes up short, the public will be asked for more.
We need a new plan. And a state audit.
