Firm Ordered Off Subway Job Keeps Key Role : Transit: Parsons-Dillingham, criticized over ground sinkage and substandard work, was set for ‘full phaseout.’ But new bids show it will still manage 12 of 22 contracts.

The construction manager for the troubled Hollywood Boulevard subway line, ordered off the job last year after some of the street’s most hallowed ground sank up to 10 inches, will retain as much as half the work on the Red Line, according to a surprising new arrangement disclosed this week.

Records and interviews show that engineering giant Parsons-Dillingham now stands to earn another $30 million or more on the job--despite persistent allegations of slipshod oversight of the Red Line construction.

The Metropolitan Transportation Authority first said in October that it would take Parsons-Dillingham off the job completely as one way of answering the concerns of federal regulators who had temporarily frozen $1.6 billion in subway funding.

But officials said the politically well-connected company has lobbied hard to keep the job, threatening legal action if it is removed. The MTA’s search to replace Parsons-Dillingham on the $1.3-billion project has been forestalled by ongoing questions about leaked data, shredded documents and conflicts of interest related to bids by other companies.

The MTA is sending out new bid requests this week showing that the Los Angeles firm will retain responsibility for three major portions of the North Hollywood line, representing as much as half the work on the 6.3-mile job.

Parsons-Dillingham is to oversee construction of one of the three subway stations, a major stretch of underground tunneling and all the communications and electronics installations for the line. Out of 22 pending contracts on the North Hollywood extension, Parsons-Dillingham is to manage 12 of them.

The route is scheduled to open in the year 2000.

Unlike the bid requests that the MTA sent out just four months ago, the new solicitations make no mention of “a full phaseout” of Parsons-Dillingham’s role in the project and talk instead of the firm sharing some duties with the new construction manager brought on the job.

MTA officials acknowledged that despite past assurances, Parsons-Dillingham’s role in the North Hollywood extension will be “substantial,” but they refused requests over the last three days to discuss the issue.

Parsons-Dillingham spokesman Ron Wildermuth also declined to discuss specific aspects of the subway job but said the firm’s continued role should save the MTA up to $25 million in reduced staffing. “We feel we’ve done a very competent and professional job,” he said.

Federal regulators took a cautious approach to the developments but said they will monitor the issue closely because of the project’s history of problems, many of them centered around the construction manager’s performance.

Parsons-Dillingham’s continued involvement on the line “doesn’t trigger any automatic responses on our part,” Federal Transit Administration spokesman Brian Cudahy said in an interview, “but it’s certainly something that will be looked at.”

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Some of the contractors vying for the newly bid job as construction manager, meanwhile, said they are worried that the unusual joint arrangement may prove unworkable.

With two construction managers in effect overseeing the job, “Who really is in charge? If there’s a problem, you get into the whole finger-pointing thing,” said Dennis O’Connor, lead representative on the project for Jacobs Engineering, the Pasadena firm recommended for the job in February before the award was canceled after an in-house investigation.

The arrangement, O’Connor said, “may just create more problems, not solve them.”

The construction manager coordinates all the various tasks in the mammoth job of building the subway line--from inspecting the work of private contractors and ensuring a safe work site to managing the project budget and reporting back to the MTA on the progress of the work.

In that role, Parsons-Dillingham has already collected more than a quarter of a billion dollars.

The firm and its parent, Parsons Corp., have also enjoyed close relations with local politicians, donating more than $25,000 to MTA board members in recent years to rank as the third-biggest donor among contractors.

But a series of financial and engineering setbacks on the line has put increasing strain on the firm’s dealings with the agency, endangering some of its most lucrative work.

A review last year deemed Parsons-Dillingham’s work below industry standards. Later, after the partial collapse last summer of the Hollywood tunnel, it was reported that a contractor under Parsons-Dillingham’s supervision had substituted weaker wood wedges for metal struts in some stretches of the tunneling.

Parsons-Dillingham also has been criticized by the MTA for its supervision of construction of a Downtown subway that had stretches of concrete walls that were thinner than designed. A state board, meanwhile, is reviewing why one of the resident engineers used by the company was not properly licensed in California.

The company has defended its work, saying it has become a “scapegoat” for many of the subway’s problems. In a letter to the MTA, the firm has also accused a main contractor of concealing deficient grouting work under Hollywood Boulevard from Parsons-Dillingham inspectors.

MTA board member James Cragin said he believes Parsons-Dillingham’s lobbying pressure and threatened litigation, combined with the cloud of controversy hanging over the contract for its successor, have prompted MTA officials to rethink the firm’s role in the North Hollywood line.

“Now there are so many bullets going in so many different directions, there’s the feeling that maybe we should just let them finish the job,” Cragin said.

But MTA board member Raul Perez, chairman of the construction committee, said he was unaware of any major role for Parsons-Dillingham in the rest of the job.

“As far as I understood it, they’d be phased out,” he said. “They’d finish the work they were involved in, but the plan would be to phase them out.”

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Indeed, at a construction committee meeting in February, MTA staff assured members of Perez’s panel that Parsons-Dillingham would be taken off the project once its ongoing tasks were completed and that its future billings would amount to a maximum of $15 million. Negotiations could bring that figure down substantially, committee members were told.

But industry experts said the firm’s future role on the Red Line now appears certain to total at least double that amount--and perhaps much more--based on the new bid documents.

O’Connor, the Jacobs Engineering representative, said MTA officials have told his company that Parsons-Dillingham will retain around 40% of a job valued at $80 million.

And a second consulting industry source said Parsons-Dillingham’s role appears to represent up to half the total job, or more than $40 million.