MegaProject 1349: US transport authority initiates termination of multi-billion rail P3
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Regional Transportation District (RTD), a public transport authority operating in eight counties in Colorado, a state in the western USA, has sent a Notice of Concessionaire Termination to Denver Transit Partners (DTP), a consortium contracted in 2010 to design, construct, finance, operate and maintain a 58km commuter rail network in Denver, the state capital.
The estimated construction cost of the network, comprised of three separate rail lines, was US$1.2 billion at the time of the award. However, as completion has been plagued by technology issues and legal battles, costs have spiralled.
The A and B Lines were completed in 2016. However, DTP has failed to gain the required approvals for the crossing gate technology used on the lines, meaning that the lines have since been operating with crossing attendants and without quiet zones in residential areas, as trains are required to blow their horns when approaching a crossing. Thus, DTP has not met its contractual obligations for the delivery of the network.
The third line in the network, the G Line, was scheduled to begin operations in the fall/autumn of 2016. Due to DTP's struggles to get the crossing gate technology approved, it is still in the testing and commissioning phase. The Revenue Service Deadline Date as set out in the P3 contract for the network was 2 June 2018.
RTD's Notice of Concessionaire Termination gives DTP two options to avoid termination of the contract: remedy its breaches within 30 days or propose a remedial plan to cure the breaches within 20 days. However, this is far from a simple solution. DTP strongly disputes that it has breached its contract, last month filing a lawsuit accusing RTD of the same.
The consortium is alleging that a change in law, or a change in the interpretation of law, by federal and state rail safety agencies is the cause of its failure to get final approval for the grade crossings and quiet zones and thus its failure to fulfil its contractual obligations for the design-build phase of the project. The consortium is attempting to gain a considerable amount of compensation from RTD - the specific amount is not known, but RTD has stated that it is tens of millions of dollars.
For now, the concession agreement remains in full force and effect. Accordingly, DTP is contractually obliged to continue preparing for commencement of revenue service on the G Line and to continue revenue service on the A and B Lines. The planned operation start date of the G Line remains unknown.