Philadelphia airport terminal work delayed by lawsuits

The gleaming expansion of Terminals D and E at Philadelphia International Airport has been open since December 2008: Fancy shops, ultramodern passenger screening, additional airline gates.

But completion of the project - now estimated to cost $341 million, up from an initial $185 million in 2005 - is mired in construction lawsuits and finger-pointing.

Reams of court papers have been filed, and the case is headed for trial before Common Pleas Court Judge Mark I. Bernstein. No date has been set.

When the 204,000-square-foot "connector" building opened between Concourses D and E, with 14 lanes of passenger security screening, more construction was to follow.

In spring 2009, an automated baggage-handling system was to be ready one floor below the passenger-security area. Soon after, new ticket counters and a combined D-E ticketing building were to be built, as well as offices for the airlines based in D and E - Southwest, Air Tran, Delta, Northwest, United, and Continental.

But 21/2 years later, it hasn't happened.

The explosives-detection luggage system, although installed, is not yet operational. The system, designed to screen outbound bags at a rate of 750 an hour, has still not passed the performance testing required by the Transportation Security Administration.

Until the baggage system is up and running, ticket counters and offices cannot be built. Delta Air Lines employees are using a modular trailer on the sidewalk outside its ticketing area as their break room.

The lawsuits attribute the delays, costs, and failure to get work done to "change orders," revisions to TSA security mandates, and contractors that did not do what they were supposed to do.

The renovations are paid for by airport revenue bonds funded by the airlines and "passenger facility charges," a $4.50 departure tax imposed on every passenger traveling through the airport that is used for Federal Aviation Administration-approved projects.

Experts say the way public construction projects are bid in Pennsylvania adds to inefficiency and drives up cost. State law requires that cities and public agencies seek multiple independent "prime" contractor bids, rather than awarding all work to a single contractor responsible for hiring building-trades contractors.

"Then you hold that contractor's feet to the fire to make sure his or her subcontractors are performing and doing things on time and within budget," said Kent George, former chief executive officer of Pittsburgh International Airport and now airport aviation director in Fort Lauderdale, Fla.

"It's not the airport's fault. It's the fault of the procurement processes that have been established in Pennsylvania," George said. "Change the law. And also, quite possibly, the city's rules, too. The city can pile on."

In the Terminals D and E expansion, subcontractor G&T Conveyor Co. Inc., manufacturer of the bag-handling equipment, sued the general contractor, Ernest Bock & Sons, and two insurance companies. Bock, in turn, sued the city and two electrical contractors.

In 2007, the city hired Bock to install the $40 million bag-handling system. Bock hired G&T to furnish the equipment. In November 2009, G&T sought monetary damages for "hundreds of days of delay" - 664 contract days as of February 2010.

Problems emerged when the first electrical contractor, Chisom, fell behind schedule, laid off employees, and left the job, court papers say.

The second electrical contractor, Mulhern, had staffing problems after Electricians Union Local 98 declined to send laborers because wages and benefits were still owed for the earlier electrical work. Mulhern left the job after seven months.

Bock has denied responsibility for delays and countered that the city was liable and "slow to execute change orders." Bock filed a counterclaim that G&T had failed to provide project management and supervision.

The city asserted that Bock failed to "appropriately manage" the project, the work schedule, and its subcontractors, and did not provide necessary documentation for its "numerous" requests for information and change orders.

In July 2010, the city controller investigated some of Bock's other work in Terminals D and E and found in an auditor's report that the firm had not complied with the minority-, women-, and disabled-owner business-enterprise requirements. The controller recommended sanctions, including prohibiting Bock from participating in future city contracts for up to three years. Under a settlement, Bock agreed to not bid on city jobs until next spring.

Construction projects, by nature, are fraught with claims and sometimes litigation. "It's common," George said. "We have litigation on and off, all the time, down here, too."

Said lawyer Christopher McCabe, who handles government and public works contracts and construction law, and practiced 13 years in the city Law Department: "I don't think there's any construction that is ever on time or on budget - big public works projects. It's rare.

"Every large building project in the city probably has one or two claims. There are always things that come up on a job that make it more expensive, things that are unforeseen," McCabe said.

Bock has been paid close to $38 million for the baggage system, "and it's still unclear whether the system will actually handle baggage as specified in the contract," the city said in May.

The equipment, which works through computer software and programming, has failed to perform basic functions of moving, detecting, and tracking checked bags. G&T reconfigured the system, which now looks as if it will work, one lawyer said. Final testing could be early next year, after which the TSA must certify it for use.

Then the bag system must be connected to the airline ticket offices, originally scheduled to be completed in December 2009 and now projected to be done next July.

Six years ago, airlines approved a $185 million renovation of the two terminals. Later, a $45 million extension was added to Concourse E, a project for which Southwest Airlines hired the firms and managed the day-to-day work; it came in under budget and on schedule.

"The final invoices haven't been processed, but it's right around $10 million under budget," said Steve Sisneros, Southwest's manager of properties.

Delays and cost overruns have not been uncommon with recent airport projects.

The $550 million international Terminal A-West, which opened in May 2003, took almost four years to build. US Airways Group Inc., the project's developer, filed for Chapter 11 bankruptcy during construction.

The city allowed a private company to design and build that structure, bypassing the normal procurement process. City Council approved the design-build approach with the goal of building a terminal as quickly as possible, but it ended up over budget and delayed because of the construction method and security changes required after Sept. 11, 2001.

US Airways also managed the construction and design of Terminal F, which was initially budgeted at $75 million but cost $99 million. In June 2001, the airline and the airport asked City Council for - and received - $175 million more in bonds to complete the terminal, The Inquirer reported at the time.

The current project at Terminals D and E grew in scope and cost as passenger traffic increased, airlines merged or wanted different space, and TSA procedures changed.

The cost is now "in excess of $341 million," the city said, with a targeted completion date in September.