Legal Commentary

Stimulating Another ?Big Dig??

By Ilya Somin

If you grew up in Massachusetts, as I did, you may have heard of the notorious inefficiency and fraud surrounding the ?Big Dig,? a massive federally funded construction project that took decades to complete after innumerable delays and cost overruns. Today, many of the New England firms that committed fraud and other abuses during the ?Big Dig? and other previous government projects are getting federal ?stimulus? funds. This does not bode well for predictions that the stimulus spending will actually benefit society more than it costs. Funding another round of Big Digs is unlikely to improve the economy in the long run:

The federal stimulus program is funding roadway construction in many Massachusetts towns. But more than half of the companies that have received taxpayer dollars to perform the work have a history of breaking the law.

According to an investigation by Boston University?s New England Center for Investigative Reporting, more than half the companies given stimulus contracts have histories of defrauding taxpayers.

Using funds from the $787 billion American Recovery and Reinvestment Act, the Massachusetts Highway Division has awarded nearly $54 million in contracts for highway improvements. One company, Aggregate Industries Northeast Inc., based in Saugus, Massachusetts, was awarded two stimulus contracts totaling $8.9 million for roadwork in the state.

Aggregate Industries is one of the largest producers of aggregate, asphalt and ready-mixed concrete in New England. But Aggregate Industries has a record of misconduct, and six of its former managers pleaded guilty or were convicted of defrauding the government.

The company supplied thousands of truckloads of substandard concrete to Boston?s ?Big Dig? project. The ?Big Dig,? which cost $22 billion and was the most expensive highway project in the U.S., rerouted Interstate 93 underneath the center of Boston. The project was plagued with problems, mainly due to shoddy construction and inferior materials.

In 2007, the state of Massachusetts announced a fraud settlement against Aggregate Industries, alleging that for years the company had supplied defective concrete to the ?Big Dig? project. According to the settlement, the quality of the concrete was so poor that it wouldn?t set properly, which led to cracking, leaking and other defects....

But two years later, Aggregate is using taxpayer dollars to perform roadwork in Harvard, Littleton, Avon and Stoughton, Massachusetts....

Aggregate isn?t alone. The New England Center for Investigative Reporting found that 13 of the 21 companies that got federal transportation money have a history of misconduct. Aggregate is just one of the most glaring examples.

In fairness, the CNN story says that Aggregate claims to have mended its ways. But it still seems dangerous to entrust them with another major government contract so soon after their role in the Big Dig fiasco.

Full post as published by The Volokh Conspiracy on January 25, 2010 (boomark / email).