BASELINE REPORT ON 

MAJOR PROJECT MONITORING OF THE 

DULLES CORRIDOR METRORAIL 

PROJECT 

Federal Transit Administration 

Report Number: MH-2007-060 

Date Issued: July 27, 2007 
U.S. Department of 

Memorandum

Transportation 

Office of the Secretary 

of Transportation 

Office of Inspector General 

Subject: ACTION: Baseline Report on the 

Dulles Corridor Metrorail Project 

Federal Transit Administration 

Report Number: MH-2007-060 

Date: July 27, 2007 

From: 

Rebecca Anne Batts 

Acting Assistant Inspector General 

 for Surface and Maritime Programs 

Reply to 

Attn. of: JA-40 

To: Federal Transit Administrator 

We have completed our initial major project monitoring of the Dulles Corridor 

Metrorail Project in the Washington, D.C., metropolitan area. Our objectives were 

to (1) assess the status of the Dulles Project, including costs, funding, and schedule 

and (2) identify any potential risks that may adversely impact the project’s 

completion. This report provides the results of our initial monitoring effort, alerts 

you to potential risk areas for the project, and underscores the need for the Federal 

Transit Administration (FTA) to provide vigilant oversight. The Department of 

Transportation (DOT) has a vested interest in the Dulles Project. Of particular 

interest to DOT is the large amount of Federal funding that could eventually be 

committed to the project and DOT’s long-term lease agreement with the 

Metropolitan Washington Airports Authority (MWAA) to manage Dulles 

International Airport, Ronald Reagan Washington National Airport, and the 

surrounding Federal lands. Further, the Commonwealth of Virginia is planning to 

turn over project control to MWAA this year. 

Because the project is at a critical decision point in FTA’s New Starts process, 

now is the time to fully evaluate all potential risks and develop mitigation 

strategies. The New Starts process stands out among Federal transportation grant 

programs as an example of a systematic approach to evaluating projects for 

funding. The New Starts program relies on full funding grant agreements, which 

are long-term funding commitments that help meet the financial requirements of 
2

large transit projects.1 The Dulles Project sponsors have requested $900 million in 

New Starts funding, which is under consideration by FTA. 

Segmented into two phases, the main focus of our report is Phase I of the Dulles 

Project, because only this phase is being assessed for an FTA New Starts grant and 

few details are available regarding Phase II. Phase I would expand Metrorail to 

Reston, Virginia. Continuation of the Metrorail to Dulles International Airport 

would occur in Phase II. We conducted our work from June 2006 to July 2007 in 

accordance with Generally Accepted Government Auditing Standards as 

prescribed by the Comptroller General of the United States. We will continue to 

monitor this project and report on its progress as events warrant. See Exhibit A 

for a fact sheet summarizing the status of the project. Our scope and methodology 

are discussed in Exhibit B. 

BACKGROUND 

The Dulles Corridor Metrorail Project proposes a 23.1-mile extension of Metrorail 

in the Commonwealth of Virginia, including 11 additional Metrorail stations. It 

would also add a new Metrorail line—the silver line—to the existing mass transit 

system operated by the Washington Metropolitan Area Transit Authority 

(WMATA). The Dulles Metrorail extension is almost entirely above ground. The 

project is segmented into two distinct phases, which are essentially separate transit 

projects. See Exhibit C for a map of the two phases. 

• Phase I is the first 11.6-mile segment that would run from near the existing 

West Falls Church Metrorail Station and through the Tysons Corner area to 

Wiehle Avenue in Reston, Virginia. As currently envisioned, Phase I would 

run largely above ground with a short tunnel section under the Route 7 and 

Route 123 interchange. 

• Phase II would continue Metrorail service through the Dulles International 

Airport to Loudoun County, Virginia. 

Over the past year, the project has generated a great deal of attention and 

controversy. Most prominently, there have been debates over whether or not to 

proceed with the project’s current design, which runs almost entirely above 

ground, or to substitute this design with a large tunnel through the Tysons Corner, 

Virginia, area. In May 2006, the Virginia Secretary of Transportation appointed a 

panel to review this issue under the auspices of the American Society of Civil 

Engineers. Although the panel reported that the tunnel was feasible and 

 

1

 The purpose of the New Starts program is to provide Federal financial support for locally planned and operated 

public transit. Federal support is in the form of competitive, discretionary capital investment grants in local fixed 

guideway transit projects, such as commuter rail, light rail, heavy rail, bus rapid transit, trolleys, and ferries. 
3

potentially cost-effective, the panel’s report had qualifications and uncertainties. 

In September 2006, the Governor decided to retain the original design of the 

project, and project officials have proceeded accordingly since then. However, 

there is still strong pressure from the public, local government officials, and 

citizen groups to build a tunnel. 

New Starts projects like Dulles must emerge from a regional, multimodal 

transportation planning process. The systems planning process begins with the 

identification of the transportation needs of a region. Federal financial support for 

the initial planning process is derived from various programs within the Federal 

Highway Administration and FTA. Once this planning has been done, the next 

step is the alternatives analysis, which evaluates corridor-level options, such as rail 

lines and highway expansions. This stage results in the selection of what is known 

as the locally preferred alternative—which then becomes the New Starts project 

FTA evaluates for funding. The project sponsor then submits to FTA a request for 

entry into preliminary engineering—where FTA begins its evaluation of the 

project, and approves it for entry into the New Starts funding pipeline. 

From preliminary engineering the project may proceed through final design, award 

of a full funding agreement, and ultimately construction. At each of these stages, 

FTA evaluates the project for advancement into the next stage. Annual funding 

recommendations are made for projects that are in final design or construction as 

part of FTA’s annual budget submission. However, a recommendation for 

funding does not guarantee that a full funding grant agreement will be executed. 

As required by law, FTA cannot execute a full funding grant agreement until it has 

given Congress 60 days to review the grant agreement and accompanying 

materials.2

 As of July 2007, the Dulles Project is being considered for approval 

for entry into final design. Figure 1 depicts the planning and project development 

process. 

 

2

 OIG Testimony CC-2004-021, “The Rating and Evaluation of New Starts Transit Systems,” April 28, 2004. OIG 

testimonies and reports can be accessed at our website: www.oig.dot.gov. 
4 

FIGURE 1. FTA NEW STARTS PLANNING AND PROJECT DEVELOPMENT PROCESS 

Legend: 

FFGA – Full Funding Grant Agreement 

FONSI – Finding of No Significant Impact 

LPA – Locally Preferred Alternative 

MPO – Metropolitan Planning Organization 

NEPA – National Environmental Policy Act 

PE – Preliminary Engineering 

PMP – Project Management Plan 

ROW – Right-of-Way 

Alternatives Analysis 

Select LPA, MPO 

Action, PE 

Application, PMP 

FTA Evaluation to 

Enter Final Design 

Preliminary Engineering 

Complete NEPA Process 

Record of Decision/FONSI 

Refinement of Financial Plan, PMP 

Final Design 

Commitment of Non-Federal Funds 

Construction Plans, ROW Acquisition 

Complete Final Design 

Begin Construction 

Construction Management 

FTA Evaluation 

to Enter PE 

Full Funding 

Grant Agreement 

FTA Evaluation for FFGA 

Corridor Planning 

- FTA review of alternatives 

at beginning of alternatives 

analysis 

- FTA approves New Starts 

baseline alternative 

Project Management Oversight 

Quality Control 

Technical Oversight 

Financial Capacity Assessment 

FTA Action 

Decision Point 

Start-up 

Preliminary 

Engineering 

Final Design 

- Before and after data collection 

plan 

Construction 

Source: FTA. 
5

FTA evaluates proposed New Starts projects based on a set of financial and project 

justification ratings as shown in Figure 2. The ratings are measured on a scale of 

high, medium-high, medium, medium-low, or low. The individual ratings are 

combined and included in the summary financial and project justification ratings, 

based on weights assigned to each measure. By law, projects must receive an overall 

summary rating of at least medium to be recommended for funding. In addition, 

notwithstanding their overall project rating, FTA’s policy is to generally not 

recommend for funding any project that does not receive a rating of at least medium 

for cost-effectiveness. Although Congress, in the 2005 Safe, Accountable, Flexible, 

and Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), 

exempted the Dulles Project from this cost-effectiveness policy, the Dulles Project 

must still achieve a cost-effectiveness rating of at least medium-low to receive an 

overall rating of medium. In its fiscal year 2008 New Starts Report to Congress, FTA 

assigned preliminary ratings to Dulles of medium-low for cost-effectiveness and a 

summary rating of medium. Every year, FTA publishes this report, which includes 

preliminary ratings for pending projects. As of July 2007, FTA was assessing the 

cost-effectiveness of the project, among other things, to determine whether the project 

will be approved to enter final design. 

Figure 2. The New Starts Evaluation and Rating Framework 

Summary Rating 

Project Justification 

Rating

Financial Rating 

Other Factors 

Mobility 

Improvements

Non-Section 5309 

Share

Capital Finances Operating Finances

Environmental 

Benefits

Operating 

Efficiencies

Cost Effectiveness Land Use 

User Benefits 

Low Income 

Households

Employment 

Capital Cost 

O&M Cost 

User Benefits 

Source: FTA. 
6

RESULTS 

FTA will be challenged by overseeing the complex Dulles Corridor Metrorail Project, 

which has a large potential Federal investment. Approximately $1.5 billion of Federal 

monies could be committed to Phase I of the project—a $900 million New Starts 

grant, a $375 million DOT Transportation Infrastructure Finance and Innovation Act 

(TIFIA) loan, plus a $200 million line of credit to be used if needed. We have 

identified some risk indicators that merit FTA’s close monitoring in light of this 

potentially large Federal investment. In some cases, we have observed similar risk 

indicators on other high-risk, federally-funded transportation projects as discussed 

below. We make recommendations at the end of this report. 

The Dulles Project Has Already Experienced Significant Cost 

Growth and Schedule Slippages, Underscoring the Need for a 

Rigorous Assessment of the Project 

Even at this early stage, Phase I of the Dulles Project has experienced substantial 

growth in estimated costs of approximately $1 billion since 2004. The project has 

also had schedule slippages of about 4 years (as shown in Table 1). In past reviews of 

major projects, rapid cost growth and schedule slippages so early in the project were 

clear signs of risk. The reliability of the current cost estimate is unknown. FTA’s 

project management oversight consultant has identified problems with previous cost 

estimates.3

Table 1. Phase I History of Cost Increases and Schedule Delays 

Date of Estimate Estimated Project Cost Estimated Project 

Completion Date 

December 2004 $1.52 billion 2009 

April 2006 $2.065 billion 2011 

January 2007 $2.31 billion 2012 

March 2007 $2.4 - 2.7 billion 2013 

Current Cost Estimate. The current cost estimate of $2.4 billion to $2.7 billion 

reflects the results from design-build negotiations with Dulles Transit Partners, which 

were completed on March 30, 2007. This contract with Dulles Transit Partners has a 

firm-fixed price component of $1.1 billion plus a $500 million allowance for Dulles 

Transit Partners to engage subcontractors through competitive bidding. The rest of 

the cost estimate—referred to as agency costs—is not fixed or part of the contract 

with Dulles Transit Partners. The cost estimate was presented by project sponsors as 

a range because there is uncertainty as to the amount of these agency costs. Agency 

costs include project management, rail cars, start-up, and testing. According to 

 

3

 FTA has institutionalized the use of project management oversight consultants (PMOCs) and financial management 

oversight consultants (FMOCs) to oversee large transit projects and to report to its in-house staff on findings and needed 

corrective actions. They are third-party contractors who review FTA-funded projects in accordance with FTA guidance. 
7

project sponsors, these agency costs could range from $800 million to as much as $1.1 

billion. FTA and its project management oversight consultant are currently assessing 

the cost estimates as the project is being evaluated to enter final design. To its credit, 

FTA has recognized the risks and complexities of this project and has taken steps to 

rigorously assess the cost and schedule risks. FTA commissioned a review of the 

project’s cost estimates in addition to the usual New Starts reviews. The firm 

conducting the review has not been involved in the project. 

Cost-Effectiveness of the Project. Cost-effectiveness is one of several criteria that 

FTA uses to assess the merits of potential New Starts projects, such as Dulles, and 

make a decision as to whether to provide full funding. Earlier this year, the project 

was already near an unacceptable cost-effectiveness rating of low, when the cost 

estimate was much lower, $2.065 billion. Now the cost estimate could be as much as 

$2.7 billion. The project must achieve a final cost-effectiveness rating of at least 

medium-low or it will not be eligible for New Starts funding. Achieving this rating 

may prove difficult with the current cost increases. 

Project’s Design-Build Contract and Competition. One possible cause of the cost 

growth may be the timing of the contract award and the limited competition. Virginia 

entered into the first contractual arrangement with Dulles Transit Partners at the 

beginning of preliminary engineering in 2004, when there were still many unknowns 

about the project. 

• Virginia awarded a contract for preliminary engineering with limited competition. 

In December 1998, Virginia received an unsolicited proposal and then solicited 

bids for the project, receiving only one additional proposal. Using its state publicprivate partnership authority, in June 2004, Virginia awarded a “comprehensive 

agreement” to Dulles Transit Partners, a joint venture of Bechtel Infrastructure, 

Inc. and Washington Group International. By the time the comprehensive 

agreement was executed, only the Dulles Transit Partners’ offer was available. 

• The comprehensive agreement appears to allow advertising the eventual designbuild contract (final design and construction) work to others, on a competitive 

basis, only upon failure to reach a final agreement with Dulles Transit Partners. 

Negotiations with Dulles Transit Partners were concluded on March 30, 2007, and 

Dulles Transit Partners was actually awarded the design-build contract in June 

2007. Therefore, there was no competition for this stage of the project. 

• The design-build contract with Dulles Transit Partners calls for an increase to the 

contract price for each day that the notice-to-proceed for commencement of final 

design is delayed past August 1, 2007. If this deadline is not met—and it appears 

unlikely that it will be—the effects on project costs could be significant. 
8

FTA Needs Assurance That Sponsors Have Identified Sufficient 

Local Funding Sources, as Estimated Project Costs Have Increased 

Significantly 

As estimated project costs for Phase I have increased by approximately $1 billion 

since 2004, funding requirements have also grown. In particular, the potential Federal 

investment (grant, loan, and line of credit) is quite large. All funding sources are 

subject to review and approval by DOT, and approval of Federal funds is not 

necessarily a given. The remainder of the costs must be borne by the project 

sponsors. 

Sources of Federal Investment. Because project officials have applied for funding 

to two DOT programs, the project will undergo two separate Federal financial 

reviews. It is imperative that these reviews be rigorous to ensure that project officials 

have demonstrated access to sufficient and reliable funds from other sources, such as 

Dulles Toll Road revenues, to complete the project if costs continue to escalate. 

• The project’s proposed New Starts grant, which would be fixed at $900 million, 

would only cover about one-third of the new cost estimate for Phase I. Approval 

of New Starts requires FTA to review proposed sources of local capital funding. 

Additionally, FTA’s financial management oversight consultant is scheduled to 

review the final financial plan before FTA allows the project to enter final design. 

As we have reported in the past, only the most promising New Starts projects 

should be selected for funding.4

• MWAA applied for a DOT TIFIA loan of $375 million in January 2007, plus a 

$200 million TIFIA line of credit to be used if needed. The loan would be secured 

by Dulles Toll Road revenues.5

 The DOT TIFIA Credit Council must evaluate 

MWAA’s application and must advise the Secretary of Transportation on whether 

or not to approve the application.6

 An independent review by the TIFIA Credit 

Council is critical. FTA must closely coordinate with the TIFIA Credit Council 

and provide it with the information it needs to make a sound decision regarding 

the project’s credit worthiness. 

 

4

 OIG Testimony CC-2004-021, “The Rating and Evaluation of New Starts Transit Systems,” April 28, 2004. 

5

 TIFIA’s implementation is the responsibility of the Secretary of Transportation. A seven-member TIFIA Credit Council, 

representing the budget, policy, counsel and intermodal offices within the Office of the Secretary and the Administrators 

of the FHWA, the FTA, and the Federal Railroad Administration, provides direction and makes recommendations to the 

Secretary regarding the selection of projects. Staff support is provided by the TIFIA Joint Program Office, which is 

administratively located in the FHWA. 

6

 TIFIA staff informed us that MWAA’s application is permissible even though MWAA is not completely in charge of the 

project. However, they also told us the TIFIA loan would not be approved, nor funds released, until MWAA has been 

certified as the FTA grantee. 
9

Sources of Local Funding. If approved, the Federal funding sources would only 

cover a portion of the project’s costs. To get a sense of how MWAA intends to fund 

the project when it takes over, we reviewed a preliminary financial plan prepared in 

January 2007 (if the project is approved to enter final design, a formal financial plan 

would be prepared for FTA’s review). Based on our review of this preliminary plan, 

we have made the following observations regarding the project’s local funding 

sources. 

• The preliminary financial plan was based on a lower cost estimate than the cost 

estimate announced in March 2007 ($2.3 billion in January 2007, compared to as 

much as $2.7 billion). As of July 2007, even more local funding would be needed. 

• Of particular note is the project’s heavy reliance on Dulles Toll Road revenues to 

cover the local share. According to the January 2007 preliminary plan, MWAA 

proposed to rely heavily on Dulles Toll Road revenues—in the amount of 

$777.6 million, including paying back the TIFIA loan. Further, as part of the 

agreement to manage the Dulles Toll Road, MWAA also will have to fund 

improvements and repairs to the road. The project could be endangered if these 

revenues are not sufficient to cover project costs and maintain the road. Users of 

the Dulles Toll Road could be subjected to large toll increases in the future if 

higher project costs require more and more local funding. We are not aware of 

any legal or contractual limits on how high the tolls could be set, and the 

December 29, 2006 “Dulles Toll Road Permit and Operating Agreement” between 

MWAA and the Virginia Department of Transportation does not limit MWAA’s 

authority to increase toll rates, although it requires some public hearings and 

consultations. 

• Fairfax County’s total contribution, which it expects to collect from business taxes 

in a special Dulles Rail Transportation Improvement District, decreased in the 

January 2007 preliminary plan from what was previously announced. Previously, 

the Fairfax County share included an additional $182.7 million to be provided 

through debt or general fund revenues (on top of proceeds from the business tax 

district). This amount was no longer included in the January 2007 financial plan. 

Further increases in funding demands could once again put pressure on Fairfax 

County to commit funds beyond any proceeds from the business taxes. 

Before awarding a full funding grant agreement, FTA should ensure that all local 

funding sources are secure and stable enough to cover any increased costs. On prior 

occasions, we recommended that FTA delay funding decisions until it could resolve 

significant questions regarding proposed funding sources, among other things. In a 

prior report on the Seattle Central Link Light Rail Project, we reported that FTA did 

not ensure that, as cost estimates increased dramatically, project sponsors had 

identified sufficient local funding sources to make up the difference and complete the 
10

entire project.7 This project has since been put back on track, but some of the 

problems it encountered could have been avoided had a more rigorous review of the 

project been performed early on. 

FTA Should Consider Reevaluating the Transportation System 

User Benefits With the Most Current Information Available

A key figure used to calculate the cost-effectiveness of a New Starts project is 

transportation user benefits, specifically, an estimated number of hours saved by 

weekday commuters in a future “forecast year” as a result of the project. According 

to FTA, in the case of the Dulles Project, this figure was calculated in 2004, at the 

time of approving the Dulles Project to enter preliminary engineering. Since then, 

FTA refined its method for determining this figure in a way that would now exclude 

certain user benefits that the Dulles Project included. FTA then made a decision not 

to retroactively reconsider user benefits figures for older projects such as Dulles, even 

though they have not been approved for full funding. Considering the heavy 

competition for New Starts funding, we believe it is important that funding decisions 

are made using the best and most current information available. 

The New Starts process provides several points for FTA to review the merits of 

proposed projects for good reasons, and the Dulles Project is at a critical point 

(approval to enter final design). FTA’s policy, as stated in the fiscal year 2008 New 

Starts Report to Congress, is in agreement with this idea as indicated in the following: 

“FTA emphasizes that project evaluation and rating is an ongoing process. As 

proposed New Starts projects proceed through the project development process, 

information concerning costs, benefits, and impacts is refined and the ratings may be 

reassessed to reflect new information.”8

• FTA requires project sponsors to submit, in advance of the assessment of formal 

New Starts justification criteria, a series of reports and maps produced by a 

software tool called Summit. FTA makes this tool available to project sponsors, 

and the sponsors use data from their travel forecasting models as input to Summit 

to produce the required reports and maps. One output of Summit is a 

transportation user benefit figure—a key figure used in the calculation of 

cost-effectiveness. 

• According to FTA officials, Summit was new when they approved the Dulles 

Project for entry into the preliminary engineering phase in 2004. However, FTA 

later gained a better understanding of Summit and realized that the transportation 

user benefit included travel hours saved during off-peak weekday hours by 

travelers who were not using any part of the Dulles Project extension, but only 

 

7

 OIG Report Number IN-2001-051, “Interim Report on Seattle Central Link Light Rail Project,” April 4, 2001. 

8

 Competition for New Starts funding is heavy. In February 2007, FTA reported that 10 projects were in the New Starts 

pipeline. 
11

existing track between the East Falls Church and Stadium Armory stations. Such 

riders would save time with the addition of the new silver line trains, which would 

add to the number of trains during off-peak hours, thereby shortening wait times 

(train frequency during peak hours is expected to be the same with or without the 

Dulles Project). 

• FTA officials then deliberated on whether these hours were legitimate 

transportation user benefits resulting from the project. They subsequently 

concluded that inclusion of such hours could be controversial and changed their 

policy to exclude such benefits on subsequent New Starts projects. However, they 

did not believe it was fair to go back and reconsider other projects that had already 

moved forward in the New Starts process on the basis of including these hours. 

Therefore, FTA decided to perform future calculations of transportation user 

benefits excluding hours saved by travelers using only existing portions of the 

system, but not to reevaluate older projects, such as Dulles. 

FTA officials have pointed to the considerable expenditures on the Dulles Project thus 

far as a partial rationale for not revisiting the transportation user benefits at this time. 

Nonetheless, we believe that the significantly higher amount estimated to be spent if 

the Dulles Project goes forward is a more important consideration than the amount 

already spent. Accordingly, FTA should consider reevaluating the transportation user 

benefits for the Dulles Project in accordance with current FTA policy and use this 

updated figure to make any decisions regarding the project’s New Starts funding. 

FTA Must Closely Monitor the MWAA’s Management of the Dulles 

Project During and After the Current Transition Period 

The organizational structure of this project is already complex, considering the range 

of key Federal, state, local, and private sector players with a stake in the project, 

including FTA, the DOT TIFIA Credit Council, MWAA, the Virginia Department of 

Rail and Public Transportation, WMATA, Fairfax County, and Dulles Transit 

Partners. The ongoing transition of project control to MWAA only adds to the 

complexity, and MWAA will be challenged by managing this network of public and 

private organizations and their diverse interests. 

FTA’s vigilant oversight will help to mitigate several potential management-related 

and other risks posed by MWAA’s takeover of the project. Specifically: 

• FTA must be sure that the lines of authority and roles and responsibilities are clear 

during and after the transition period toward MWAA’s takeover. It must also 

ensure that MWAA is fully staffed and has sufficient resources dedicated to 

oversight so that it is able to effectively manage the project. 
12

• Because MWAA leases Dulles International Airport and the surrounding land 

from DOT—where much of Phase I would run—FTA should closely coordinate 

with other DOT offices as the transfer is reviewed to ensure that any arrangements 

MWAA enters into and any actions MWAA takes do not violate the lease terms. 

If the Dulles Project is approved for full funding, FTA will need to continue 

monitoring this situation throughout final design and construction. 

The transition of project control to MWAA in particular poses a potential risk that 

warrants FTA’s close oversight. The transition from the Virginia Department of Rail 

and Public Transportation to MWAA is ongoing and has been delayed since at least 

March 2007. Until the final transfer occurs, the two agencies will be sharing 

responsibilities, which could create risks regarding which entity has ultimate 

stewardship and oversight responsibility. Even after the transfer, such questions will 

still exist because of the project’s complex organizational structure. For example, 

MWAA will be in charge of final design and construction of the project, but it will 

ultimately be owned and operated by WMATA. 

In the past, we reported on projects that failed to implement an effective project 

management and oversight structure. For example, the Boston Central Artery/Tunnel 

(CA/T) Project, which experienced massive cost overruns and schedule delays, 

presents many lessons learned regarding the project sponsor’s ineffective oversight. 

These lessons are relevant in light of the MWAA’s lack of experience in managing a 

mass transit project. The Massachusetts Turnpike Authority (MTA), which similarly 

had little experience in managing an undertaking of the scope and magnitude of the 

CA/T Project, hired a joint venture of Bechtel/Parsons Brinckerhoff to provide 

preliminary designs, manage design consultants and construction contractors, track 

the Project’s cost and schedule, advise MTA on Project decisions, and, in some 

instances, act as the MTA’s representative. Eventually, MTA even combined some of 

its employees with Bechtel/Parsons employees in an integrated project organization. 

This was intended to make management more efficient, but it hindered MTA’s ability 

to independently oversee Bechtel/Parsons Brinckerhoff because MTA and 

Bechtel/Parsons Brinckerhoff had effectively become partners in the project.9

 

MWAA has submitted to FTA for review a project management plan for the Dulles 

Project. A thorough project management plan and FTA’s oversight to ensure that all 

parties are following the plan should help to ensure that problems similar to those 

encountered in the CA/T Project are avoided. However, there has already been some 

disruption in the Dulles Project. Specifically, last year Virginia officials told us that 

since the announcement of the upcoming transfer, the project had lost key staff 

members and Dulles Transit Partners had assigned 25 percent of its staff to other 

projects. Consequently, MWAA officials told us they have been covering temporary 

 

9

 OIG Testimony CC-2005-027, “Impact of Water Leaks on the Central Artery/Tunnel Project and Remaining Risks,” 

 April 22, 2005. 
13

staffing shortfalls with consultants, and are planning to start staffing up in the near 

future. FTA should closely monitor the project’s progress during this period of 

significant transition so that the project stays on track. 

FTA Must Ensure That the Dulles Project’s Contract and Related 

Agreements Sufficiently Protect WMATA From Undue Risk 

The unique design-build contract for this project presents potential risks for the 

Federal Government, project sponsors, and the eventual owner-operator of the 

Metrorail expansion, WMATA. FTA has been reviewing the design-build contract 

and associated agreements as part of the New Starts process. To mitigate potential 

risks, this review should ensure that these documents sufficiently protect WMATA in 

particular. 

WMATA was not a participant in the design-build contractual negotiations even 

though it will eventually be forced to deal with the consequences. MWAA and 

WMATA recently negotiated an agreement that is intended to offset the 

disadvantages of WMATA’s lack of direct control over the project’s construction. 

Before the project proceeds, FTA must ensure that this agreement contains sufficient 

protections for WMATA. If approved, FTA will also need to ensure that WMATA’s 

interests are protected as the project is constructed. 

Specifically, FTA should ensure that WMATA’s interests are protected in three major 

areas. 

• As the entity that is responsible to Metrorail users, WMATA must be assured that 

the construction of the project meets WMATA standards so that future operating 

and capital replacement costs are minimized. Specifically, WMATA should have 

assurance that the project is constructed in a way that includes certain items that 

WMATA has deemed necessary to the safe, efficient, and effective operation of 

Metrorail. For example, WMATA officials told us that they consider the heating 

of third rails as being essential to avoid interruptions of service in winter weather. 

• WMATA must also have sufficient warranties against latent defects in the design 

or construction of the project that may not surface for years. This is particularly 

important, because WMATA will not directly oversee the work of contractors 

constructing the project—as it did with the recent Largo extension. 

• MWAA as project sponsor—not WMATA as eventual owner-operator—will be 

the entity that has the authority to declare “substantial completion” of the Dulles 

Transit Partners contract.10 WMATA must have assurances that MWAA does not 

declare substantial completion on a product that does not meet WMATA’s needs. 

 

10 Per chapter 8 of FTA’s “Best Practices Procuement Manual,” “Substantial completion is usually defined as the time 

 when the construction site or the supplies delivered are capable of being used for their intended purposes.” 
14

RECOMMENDATIONS 

1. We recommend that the Federal Transit Administrator: 

a. Conduct all of the reviews involved in the New Starts process per FTA 

regulations with extra vigilance and consider going beyond those reviews 

regarding the sufficiency of local funding sources, the contractual and 

associated arrangements that deal with WMATA, and MWAA’s project 

management plan. 

b. Consider reevaluating the transportation user benefits for the Dulles Project 

in accordance with current FTA policy and use this updated figure to make 

any decisions regarding New Starts funding for the project. 

c. Closely coordinate with the TIFIA Credit Council to share information 

about the project. 

2. We recommend that when reviewing the TIFIA loan application, the TIFIA 

Credit Council conduct an independent rigorous review of the Dulles Project 

that takes into account all of the unusual risks associated with the project. 
15

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

A draft of this report was provided to FTA for comment on July 20, 2007. On 

July 25, 2007, FTA provided us with its formal comments, which are contained in 

their entirety in the Appendix. FTA agreed with the information in the report and 

stated that it would respond to the specific recommendations within the next 30 days. 

In its July 25, 2007 comments, FTA did not indicate whether or not it concurred with 

the recommendations. Therefore, we request that FTA respond to the 

recommendations in its response to this final report. 

ACTIONS REQUIRED 

In accordance with Department of Transportation Order 8000.1C, we request that 

FTA provide us with responses to the recommendations within 30 calendar days from 

the date of this report. If you concur with the recommendations, please indicate the 

specific action taken or planned for each recommendation and the target date for 

completion. If you do not concur, please provide your rationale. You may provide 

alternative courses of action that you believe would resolve the issues presented in 

this report. 

We appreciate the courtesies and cooperation of FTA representatives during this 

audit. If you have any questions concerning this report, please call me at (202) 366-

5630 or Thomas Yatsco, Program Director, at (202) 366-1302. 

# 

cc: Secretary of Transportation 

 Assistant Secretary for Transportation Policy 

 Assistant Secretary for Budget and Programs 

 Members, TIFIA Credit Council 
16 

EXHIBIT A. FACT SHEET ON THE STATUS OF THE DULLES 

CORRIDOR METRORAIL PROJECT 

As part of our major project monitoring effort, we developed the following fact 

sheet that summarizes key points regarding the status of the Dulles Project. 

PROJECT DESCRIPTION

• The entire Dulles Project proposes a 23.1-mile extension of Metrorail in the Commonwealth 

of Virginia, including 11 additional Metrorail stations. The project is segmented into two 

distinct phases. The bulk of this fact sheet deals with Phase I, which is currently in the New 

Starts pipeline and is being considered for approval for entry into final design. 

• Phase I: The first 11.6-mile segment of new construction would originate at the existing 

orange line tracks between the East Falls Church and West Falls Church Stations and run 

through the Tysons Corner area to Wiehle Avenue in Reston. 

• Phase II: The second 11.5-mile extension, from Wiehle Avenue west, through Dulles 

International Airport, and to Route 772 in Loudoun County, is designated as Phase II. 

Phase II is in the preliminary engineering phase and may not involve any Federal funding. 

• Vehicles: Phase I includes the purchase of 64 new heavy rail cars. 

See Exhibit C for a map of the project. 

PROJECT TEAM

The current lead agency for construction is currently the Virginia Department of Rail and Public 

Transportation (DRPT). Technical support comes from the Washington Metropolitan Area 

Transit Authority (WMATA), which will ultimately own and operate the new Metrorail 

segments. The Metropolitan Washington Airports Authority (MWAA) is expected to become the 

lead agency for construction sometime in 2007, which will coincide with its takeover of the 

operations of the Dulles Toll Road. Dulles Transit Partners (DTP), LLC has served as the 

project’s preliminary engineering contractor under the Virginia Public-Private Transportation Act 

and will now serve as the design-build contractor. DTP is owned by Bechtel Infrastructure, Inc. 

and Washington Group International. 

PROJECT PARTNERS

In addition to the project team, project partners include Fairfax County, Loudoun County, the 

Virginia Department of Transportation (VDOT), the Town of Herndon, FTA, and the Federal 

Aviation Administration. 

CONTROVERSY OVER PHASE I DESIGN

• In response to public input, in May 2006, the Virginia Secretary of Transportation established 

a tunnel review panel with the American Society of Civil Engineers to provide a 

recommendation on the option to route Phase I through a tunnel in most of the Tysons Corner 

area. A mostly aerial design with only a short tunnel had already been designated as the 

locally preferred alternative. 

Exhibit A. Fact Sheet on the Status of the Dulles Corridor Metrorail 

Project 
17 

• In July 2006, the tunnel review panel reported that the difference in expected costs between 

the tunnel option, and the original elevated structure with a short tunnel, was only 

$250 million. However, ASCE stated that the report was only the opinion of the panel 

members and that ASCE did not “certify, guarantee, nor warrant the work in this report.” 

Additionally, the panel did not attempt to quantify all potential cost impacts. 

• On September 6, 2006, the Governor of Virginia decided against the tunnel alternative 

because too many unanswered questions remained about cost and schedule, and because he 

believed the potentially higher costs of a tunnel could have jeopardized the possibility of 

Federal funding. 

• Despite continued efforts by some members of the public, the project has continued to 

proceed assuming the original design with only a short tunnel. 

COST

• The final environmental impact statement (of December 2004) projected a Phase I of cost of 

$1.521 billion. In August 2005, an independent cost estimate based on 50 percent 

preliminary engineering (PE) design set Phase I’s estimated cost at $1.840 billion, a 

20 percent increase over the previous projected cost. It was based on a more detailed design, 

a better understanding of the planned construction approach, and significant changes in rightof-way, materials, labor, and fuel costs. 

• In October 2005, FTA’s project management oversight consultant (PMOC) performed an 

evaluation of the $1.840 billion cost estimate and concluded that the contingency and 

inflation factors used in the estimate were insufficient. 

• In April 2006, a general engineering consultant (GEC) prepared an independent cost estimate 

based on the true 100 percent Preliminary Engineering design and incorporating revised 

contingency and inflation factors as recommended by the PMOC. The GEC set Phase I’s 

estimated cost at $2.065 billion. DRPT subsequently adopted a Phase I budget of $2.065 

billion. 

• The PMOC found significant issues with the $2.065 billion estimate in a review performed in 

September/October 2006. The PMOC concluded, “the escalation factor used was inadequate, 

the contingency was too low, and the project’s cost and schedule could be seriously impacted 

due to the many uncertainties identified as a result of the lack of design and/or missing scope 

in the 100% PE design.” 

• Based on the March 2007 negotiation of the design-build contract with DTP, the cost estimate 

is presented as a range of $2.4-2.7 billion because there is uncertainty as to how much the 

“agency costs,” which are outside of the DTP contract, will be. Agency costs include project 

management, rail cars, start-up, and testing. FTA is now evaluating this estimate. 

FUNDING

• The sources of funding for Phase I were previously identified, but MWAA has renegotiated 

funding shares in connection with assuming the Commonwealth’s remaining financial share 

of the project. 

• A new funding breakdown will not be available until after FTA finishes evaluating the cost 

estimate. However, the current plan is to build Phase I using $900 million in Federal New 

Starts money, with the rest covered by Dulles Toll Road revenues, revenues from a Fairfax 

County special tax district, and a small amount from the Commonwealth of Virginia. 

• MWAA has also applied for a DOT Transportation Infrastructure Finance and Innovation Act 

(TIFIA) loan of $375 million, plus a $200 million TIFIA line of credit to be used as needed. 

The loan is to be repaid from Dulles Toll Road revenue. 

Exhibit A. Fact Sheet on the Status of the Dulles Corridor Metrorail 

Project 
18 

PROJECT IMPLEMENTATION SCHEDULE

• In addition to the Dulles Project sustaining substantial cost growth over the last few years, the 

schedule to complete construction and begin revenue service on Phase I has slipped 

from 2009 to 2013.

• Additional schedule slippages are probable, because at last report, the June 2007 dates listed 

below were annotated as “delayed,” and later dates were annotated as “at risk.”

Phase I Schedule

• Initiate Preliminary Engineering: June 10, 2004 

• Complete Preliminary Engineering: April 2006 

• Submit Request to Enter Final Design: April 28, 2006 

• General Agreement on Transfer to MWAA: October 31, 2006 

• Amended Record of Decision: November 17, 2006 

• Toll Road Transfer and Permit Agreements: December 29, 2006 

• Submit TIFIA Loan Application: January 16, 2007 

• Final Negotiation of Design-Build Contract: March 2007 

• Submit Full Funding Grant Agreement Application: June 20071

• Transfer of the Dulles Toll Road and Metrorail Project to MWAA: June 20071

• Final Design Approval: June 20071

• Execute Full Funding Grant Agreement: December 20072

• Start Construction: December 20072

• Complete Construction: September 20122

• Start Pre-revenue Operations: December 20122

• Revenue Service: March 20132

1

Delayed, per May 2007 PMOC report. 

2

At risk, per May 2007 PMOC report. 

Exhibit A. Fact Sheet on the Status of the Dulles Corridor Metrorail 

Project 
Exhi

19 

bit B. Objectives, Scope, and Methodology 

EXHIBIT B. OBJECTIVES, SCOPE, AND METHODOLOGY 

Our objectives were to identify potential risks that may prevent the Dulles Project 

from being completed on time and within budget. Specifically, our objectives 

were to (1) assess the status of the project, including costs, funding, and schedule 

and (2) identify any potential risks that may adversely impact its completion. 

We began by reviewing and collecting relevant material from an earlier 

monitoring effort of the project. We then adapted project monitoring material that 

our office had developed over the last several years for other major projects, as 

needed to fit this particular project. Specifically, these materials consisted of data 

requests and questionnaires for cognizant DOT offices and for project personnel. 

We sent the adapted requests and questionnaires to FTA and to DRPT, and they 

provided us the requested data and responses to questions. 

We evaluated the collected material, researched related material, and have 

regularly directed follow-up inquiries to FTA, DRPT, and MWAA as needed. We 

conducted meetings at FTA offices, the project office, MWAA, and WMATA. We 

have also kept ourselves updated on recent developments through project Internet 

sites, periodic project reports, news sources, and periodic inquiries to see whether 

events are progressing on schedule and whether new developments have occurred. 

Further, we assessed OIG’s prior reports and testimony statement on major 

highway and transit projects for lessons learned and risk indicators. 

We analyzed all the collected information to identify potential risk areas that we 

present in this report. Because this was a monitoring effort, we have not 

performed any detailed audit verification, but we did look for and resolve 

inconsistencies in the material presented. We conducted our major project 

monitoring work from June 2006 to July 2007 in accordance with Generally 

Accepted Government Auditing Standards as prescribed by the Comptroller 

General of the United States. 
Exhi

 

bit C. Map of the Dulles Corridor Metrorail Project, Phases I and II 

EXHIBIT C. MAP OF THE DULLES CORRIDOR METRORAIL PROJECT, PHASES I ASource: Dulles Corridor Metrorail Project. 
21 

EXHIBIT D. MAJOR CONTRIBUTORS TO THIS REPORT 

THE FOLLOWING INDIVIDUALS CONTRIBUTED TO THIS REPORT.

Name Title 

Tom Yatsco Program Director 

Tyler Apffel Project Manager 

Frank Schutz Senior Auditor 

Tom Wise Senior Auditor 

Oleg Michalowskij Senior Analyst 

Thomas Lehrich Chief Counsel 

Seth Kaufman Associate Counsel 

Harriet Lambert Writer-Editor 

 

Exhibit D. Major Contributors to This Report 
22 

APPENDIX. MANAGEMENT COMMENTS 

Administrator 1200 New Jersey Ave. S.E. 

Washington, DC 20590

U.S. Department 

of Transportation 

Federal Transit 

Administration July 25, 2007 

Brigadier General Calvin Scovel 

Inspector General 

Office of the Inspector General 

U.S. Department of Transportation 

1200 New Jersey Avenue, SE 

Washington, DC 20590 

Dear Brigadier General Scovel: 

Thank you for the opportunity to review the Office of the Inspector General draft report 

“Baseline Report on the Dulles Corridor Metrorail Project” (Project No. 07M3007M000) dated 

July 20, 2007. 

The Federal Transit Administration agrees with information contained in your report and will 

respond to your specific recommendations within the next 30 days. In the meantime, please do 

not hesitate to contact me directly at (202) 366-4040, if you have any questions or if you need 

any additional information regarding the Dulles Corridor Metrorail Project. 

Thanks again for your time and interest in this project. 

Sincerely, 

James S. Simpson 

Appendix. Management Comments