Boston Big Dig / McCourt-Obayashi false change-order scheme
Risk Mechanism
Misclassification of apprentice-level workers as journeymen inflated time-and-materials change-order claims after award, enabling overpayment through distorted labour-rate billing and weak certification controls.
Case Summary
McCourt Construction Company, Inc., doing business as McCourt/Obayashi, pleaded guilty in 2008 for its role in a false-claims conspiracy on Boston’s Central Artery/Tunnel project. DOT OIG reported that the contractor falsely classified apprentice-level tradespeople as journeymen in daily reports used to price time-and-materials change orders. The misclassification inflated payments and caused an estimated USD 300,000 in government losses.
Risk Lesson
This case demonstrates how false daily reports and inflated labour classifications can manipulate time-and-materials change orders after award. It highlights warning signs such as repeated post-award claims, weak support for labour rates or hours, inadequate verification of daily reports, and payment approvals based on contractor-submitted records without independent checks.
Reference
U.S. Department of Transportation, Office of Inspector General. (2008, May 20). Massachusetts Construction Contractor Pleads Guilty for Role in Falsification of Change Orders on Central Artery/Tunnel Project. Available from: https://www.oig.dot.gov/library-item/31100