U.S. Officials Indicate Support for L.A. Subway : Metro Rail: But transit chief warns MTA to step up oversight. Congressional funding decision nears.

As a key congressional vote approaches, federal officials Wednesday said they remain committed to the massive Los Angeles subway project but expressed concern about the Metropolitan Transportation Authority’s lack of progress on implementing promised management changes.

Federal Transit Administrator Gordon J. Linton also directed the federal agency’s engineering consultants in Los Angeles to step up their monitoring of the troubled $5.8-billion project.

Linton told MTA officials in Washington on Wednesday that he was concerned that they had failed to keep commitments made last year to win back federal funding for the project. Also attending the meeting was Mortimer Downey, the deputy secretary of transportation.

Funding was temporarily cut off after portions of Hollywood Boulevard sank up to 10 inches but was restored after the MTA pledged to implement a number of changes in the way the massive public works project is managed.

The federal response comes as a House-Senate conference committee prepares to consider funding for the subway next month. The House has recommended $125 million; the Senate, $45 million.

Linton expressed concern about the MTA’s failure to completely shift construction safety and quality duties from the private construction manager to the MTA by the end of February. The move was designed to give the MTA greater oversight of the project.

“Let me remind you that continued federal assistance is contingent upon the grantee’s adherence to the terms outlined in our Oct. 5, 1994 agreement,” Linton said in a letter sent to Franklin E. White, the MTA’s chief executive officer.

MTA Board Chairman Larry Zarian said Wednesday that he accompanied White on the trip to Washington for “damage control.” Zarian said he sought to reassure federal officials that in spite of the attacks on the project by some Los Angeles politicians, “we are committed to building a quality transportation system.”

MTA officials said they have nearly finished hiring the inspectors.

“We’ve had the toughest time hiring these people because of the bad publicity that we’re getting nationwide,” said Zarian. He said one candidate for the job turned it down, even though he was offered 25% more money than he earned in his present job.

Federal officials also expressed concern about whether the MTA had met its commitment to take direct supervision of the North Hollywood leg of the subway.

“With respect to responsibility for construction management,” Linton said in his letter, “you have apparently changed your approach.”

The MTA has delegated responsibility for supervising construction to private firms.

White called the matter a “non-issue” and a “misunderstanding about the language” in the remedial plan submitted by the MTA last fall.

“They do not disagree with what we’re doing,” he said. Federal officials could not be immediately reached for their assessment.

White pledged last fall that he would phase out Parsons-Dilling ham as construction manager completely but extended its contract to include more than $30 million in new work.

In other subway developments:

* Lawyers for Shea-Kiewit-Kenny, the construction manager fired from the tunnel job in July, filed suit this week in Los Angeles Superior Court, claiming that the move was a violation of the consortium’s contract with the MTA.

An MTA review board advisory panel found late last month that the firing was “inexplicable” and praised SKK’s work on the difficult job. In its lawsuit, the contractor is now asking the court to find that the panel’s ruling should be considered “final and binding” because the MTA did not properly follow the terms of its agreement with SKK.

If the court sides with SKK, that could enable the firm to seek damages from the MTA or even to get back on the tunneling job, said Patrick Duffy, an attorney for the tunneler. “That’s still an option as of today,” he added. Duffy said the contractor will probably seek damages of between $60 million and $90 million, based on the value of the remainder of the contract and on the harm allegedly done to its reputation by the MTA’s “slander” in the firing.

The MTA says it had lost faith in the firm’s ability to do the tunnel work. Just days before the firing, federal agents had raided SKK’s offices as part of an ongoing criminal probe into allegations that it had used substandard materials in building the Hollywood tunnel. The contractor has denied any wrongdoing.

Charles Safer, deputy county counsel for the MTA, said he had not seen the suit and could not comment on it.

* An MTA panel recommended a package of cost reductions that would shave millions of dollars off the Eastside extension of the subway. Among the proposals are reducing the frequency of trains and buying fewer rail cars.

* The chairmen of the Assembly and Senate Transportation committees asked the state auditor to examine questions regarding the MTA’s financial condition. Assemblyman Richard Katz (D-Sylmar) and Sen. Quentin Kopp (I-San Francisco) cited conflicting claims made over the impact of a proposed transfer of transit funds to the county.

Tunneling on Hollywood Boulevard, halted after a sinkhole opened up in June, is not expected to resume until at least mid-October. Work continues on one of the pair of tunnels in North Hollywood, but excavation has been halted since April on the other because of problems with the boring machine.

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Times staff writer Eric Lichtblau contributed to this report.