It’s not over yet; this decision is likely to be appealed to the California Supreme Court.
In 1984 Parsons Corp. was hired by the Los Angeles Metropolitan Transit Authority (MTA) to manage construction of 16.4 miles of subway line at a cost of $365 million. The Red Line project was completed in 2000; on-time and with minimal change orders, according to Parsons.
However, as May B. Powers reports in the March 12, 2018, edition of ENR, whistle-blower suits began in 1994 that have continued to this day making this case the longest running whistle-blower litigation in U. S. history.
“The seemingly unending legal battle began in 1994, when a former Parsons financial manager, Martin Gerlinger, filed state and federal whistle-blower suits, alleging the overbilling and false claims. MTA joined the litigation in 1996. There were 100 days of trial.”
Eventually, in 2014, a judgment was rendered in favor of MTA for $93 million “which included about $30 million for improperly billed overhead charges by contractors and $25 million for unauthorized subcontractor costs.” This decision was reversed on February 26 of this year by a California Appeals Court panel that ruled the trial court did not understand “’the plain meaning’” of the contract documents.
Parson hailed this ruling as a vindication of their innocence. Gerlinger’s attorney, Louis J. Cohen, stated his client and the MTA would appeal to the California Supreme Court.
The real losers in this case, if the California Appeals Court decision is not reversed, are the residents of the City of Los Angeles which has spent “tens of millions of taxpayer dollars” on this lawsuit.
There are construction management systems that allow, in fact require, all parties involved in a construction project to meet on a regular basis to review and approve on-going work progress and costs. These systems are designed to prevent disagreements like those that have arisen in the Parsons/MTA suit. The systems work if all parties are diligent in compiling and analyzing on-going construction data to protect their respective interests.
It is unclear whether these systems were in place for the LA subway project, but 24 years of litigation suggest they were not.
Source—
Court Ruling Turns Long-Running project Contract Dispute in Parson’s Team’s Favor, Mary B. Powers, ENR, March 12, 2018.