Panel Attacks MTA Firing of Tunneler : Subway: Independent experts say the action ‘makes no sense’ and will be costly. Transit officials call finding one-sided.

In yet another blow to the county’s beleaguered transit agency, a panel of independent experts concluded Monday that the firing of the firm digging the Hollywood subway “makes no sense at all” and will mean “horrendous” costs and delays.

Despite a barrage of bad publicity over the subway construction, the three-member tribunal--which included the Metropolitan Transportation Authority’s own appointee--said in a unanimous report that the agency should put tunneler Shea-Kiewit-Kenny back on the job. The panel characterized the firm’s performance as “impressive” and “outstanding.”

The report marked a potentially damaging political strike against the MTA because it was issued by a panel of engineering experts charged with offering an independent review of the contract--including one member appointed by the MTA, one by Shea-Kiewit-Kenny and a third by both parties.

But the immediate practical impact is still unclear and it is likely the courts will have to sort out the high-stakes dispute over the $178-million contract.

MTA officials immediately discounted the review board’s ruling, calling it “irrelevant” because the group had no power to arbitrate the issue. Transit officials did not even bother to attend last week’s hearing because they said the panel had no authority to hear the matter.

“We told them right from the beginning that we’re not going to participate,” MTA Board Chairman Larry Zarian said. “It’s advisory only and their review is not binding. . . . We are exactly where we were before [the ruling]--we stand our ground.”

But Patrick Duffy, a lawyer for Shea-Kiewit-Kenny, said the tunneling consortium will fight in court to get back on the job if the transit agency does not heed the panel’s recommendations.

The firing came earlier this month, just days after federal agents searched the tunnel contractor’s offices looking for evidence that the firm knowingly used substandard materials in the subway construction.

Transit officials said they had “lost confidence” in the firm’s work. But in a 23-page decision that was given to the dueling parties Monday, the Disputes Review Board concluded that the firm is made up of the “most competent tunnel contractors in the world” and its performance on the $5.8-billion subway project is “impressive.”

“It will take months for the MTA to bring in another contractor and additional months for that contractor to bring its operations up to the pace and standard achieved by SKK at the time of the termination. The additional costs . . . will be enormous,” the report said.

MTA officials said the panel was basing its conclusions on only one side of the story because its members did not attend last week’s hearing to present their findings.

Monday was a day of political wrangling over the subway project.

In Washington, an effort to snatch and reallocate federal money marked for Los Angeles’ beleaguered subway failed as Congress voted to include $125 million for the project in this year’s Transportation Department spending bill.

Meanwhile, the MTA withstood another attack from Sacramento over its contractors, as state Sen. Richard Polanco (D-Los Angeles) called Monday for the firing of Parsons-Dillingham, the construction manager that has overseen the work of Shea-Kiewit-Kenny and other subway contractors.

After a string of complaints last year about the firm’s oversight of the construction, MTA officials pledged to phase Parsons-Dillingham out of the project completely for the subway’s third phase in North Hollywood.

But that never happened. Instead, the firm retains a huge chunk of the project oversight, valued at more than $35 million.

Times staff writer Faye Fiore contributed to this story from Washington.