2020 | Transportation

Maryland will take over Purple Line project if agreement with consortium isn’t reached

State’s letter requests contractors to reverse termination of its subcontracts

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This story was updated at 2:13 p.m. on Aug. 6, 2020, to include comments from a MDOT spokeswoman. It was also updated at 11:46 a.m. on Aug. 7, 2020, to include comments from a PLTP spokesman.

The future of the Purple Line continues to be hazy as the state has now told the project’s contractors that it is preparing to take over the $2 billion project if negotiations aren’t resolved.

Vernon Hartsock, acting Purple Line project director for the Maryland Department of Transportation, wrote Monday in a letter to Purple Line Transit Partners (PLTP) — the consortium involved in the public-private partnership — that the state would exercise its step-in rights to manage the project contracts.

The Washington Post first reported the news.

The Purple Line — a 16-mile light-rail line under construction — will stretch from Bethesda to New Carrollton in Prince George’s County.

Purple Line Transit Constructors (PLTC), the construction firms under the PLTP umbrella group, told the Maryland Transit Administration on July 28 that it would start terminating its contracts with subcontractors, equipment supplies, material suppliers and other vendors starting on Monday. PLTC is also preparing to leave the project, according to the state’s letter.

The deadline for the parties to reach a consensus on cost overruns and delays is Aug. 22.
The project is roughly $519 million over budget, which is the total in claims that have been submitted and are being negotiated, Kevin Quinn, administrator of the MTA told the Montgomery County Council on May 21.

In a letter to the state on July 29, PLTP wrote that it would begin terminating any subcontracts that the state does not “elect for assignment” starting on Aug. 4.

Peter van der Waart, CEO and project manager for PLTP, also wrote that the state met with the consortium once to discuss issues regarding a transition plan on July 29.

The state has “provided minimal feedback regarding the transition plan and no feedback regarding the work plan,” he wrote.

PLTP began preparing to leave the project, starting with minor cleanup on July 22. The demobilization efforts will increase on July 27 and will continue to “increase through the upcoming weeks,” according to the letter.

“PLTP remains committed to meeting and cooperating with the [state] to ensure the orderly transition and demobilization of the work,” van der Waart wrote.

In its letter to the contractors on Monday, MTA requested the contractors to reverse termination of any subcontracts and “demobilization activities” related to the project.

MTA will assume management of the project contracts in order to keep the project moving, but is still committed to reaching an agreement, according to the letter.

“In light of the ongoing settlement discussions, MTA continues to believe that a fair and reasonable settlement is in the best interest of the parties, and thus remains open and committed to seeking such an alternative solution,” Hartsock wrote.

Erin Henson, a spokeswoman for MDOT, wrote in an email to Bethesda Beat Thursday afternoon that the department is focused on ensuring that the Purple Line is completed.

“Even as settlement discussions continue, the state has to protect its interests and be ready for any and all scenarios on how we deliver the project,” she said.

Henson said the state informed 171 project subcontractors and suppliers about its rights to manage the contracts.

“There are some form of discussions [with the contractors] almost daily,” she said. “These actions are more signs of timing than they are how the negotiations are progressing.”

John Undeland, a spokesman for PLTP, wrote in an email on Thursday that the consortium is still seeking an agreement.

“As stated in all correspondence exchanged between MTA and PLTP, active settlement discussions with the state are continuing and we remain convinced that a settlement is in all parties’ interest because it will deliver the Purple Line sooner and at a lower cost than any other alternative,” he wrote.

On Tuesday, the state informed bondholders that it might take over the project.

Quinn wrote in a letter that it had informed PLTP’s design-builder’s contractors and supplies of its rights to “step-in and manage those contracts.”

The recent action has followed years of disputes between the state and the project contractors over cost overruns and delays.

On May 1, PLTC notified the state that it would leave the job after the state refused to pay for extensive delays and added costs.

Since then, the state and contractors have met repeatedly to try to reach an agreement.

On June 24, PLTC filed a notice to lay off more than 700 employees working on the contract if there was no settlement by the August deadline.

Montgomery County has contributed $223 million for the project — $54 million directly toward the Purple Line and $169 million towards county-funded, supporting projects, including the Capital Crescent Trail, Silver Spring Green Trail and a new entrance to the Bethesda Metrorail Red Line station.

Hannah Henn, senior engineer for strategic innovation at the Montgomery County Department of Transportation, said in late June that the county has been billed $59 million for the county-funded projects, but no bills have come for any direct amount for Purple Line costs.

Briana Adhikusuma can be reached at briana.adhikusuma@bethesdamagazine.com.