Maryland will manage Purple Line construction if partnership falls through, state officials say

Maryland transit officials are preparing to manage Purple Line construction if a public-private partnership on the $2 billion project dissolves amid feuds over hundreds of millions in cost overruns, according to a letter sent Wednesday to the project's subcontractors.

The letter to 171 companies involved in designing and building the light-rail line said the state “intends to exercise its step-in rights” to take over managing their contracts if no deal on the cost overruns is reached with the private consortium now managing the project. That would keep construction going “pending resolution of the parties’ disputes” while the state “pursues its rights and remedies” against the consortium, the letter said.

In another sign that the 36-year partnership is at increasing risk of crumbling, the consortium recently said its construction contractor has started buttoning up construction sites in preparation for quitting over the unpaid expenses. A metal grate can be seen covering an enormous hole where a Purple Line elevator shaft was being blasted and built in downtown Bethesda.

The Maryland Transit Administration and private consortium have until Aug. 22 to agree on who will pay what the consortium says are $755 million in overruns related to 2½ years of delays. Unless the state pays the additional expenses, the consortium has said it will terminate the $5.6 billion partnership — one of the first for a U.S. transit project — and its construction contractor will walk off the job.

Both sides could still reach a deal. However, the negotiations don't appear promising, as both the state and private consortium have recently spelled out how they are proceeding if no agreement is reached.

Taking over the subcontractors’ contracts would require the state to manage a highly complex project spanning 16 miles of densely populated Montgomery and Prince George's counties. Without the private financing, the state also would have to find a new way to structure about $1 billion of debt to pay for the remaining construction. That doesn't include the $755 million in reported cost overruns.

The Maryland Transit Administration declined to provide anyone for an interview Wednesday. However, Erin Henson, spokeswoman for the Maryland Department of Transportation, said the state had not yet taken over any contracts.

“Our focus is on ensuring the Purple Line gets completed,” Henson said in an email. “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.”

A spokeswoman for the construction contractor, Purple Line Transit Constructors, referred questions to the consortium and the state.