The Massachusetts Bay Transportation Authority on Thursday terminated some contracts related to its 4.5-mile expansion of its Green Line light rail system north of Boston.
Some work in progress will continue, the MBTA said in a statement.
The announcement comes one day Massachusetts Secretary of Transportation Stephanie Pollack told the state Department of Transportation board and the MBTA fiscal control board in a joint meeting that canceling the extension because of cost overruns "must remain on the table."
The MBTA is a unit of the state DOT.
According to a report the MBTA released in August, costs related to extending the line from its current Lechmere Square terminus in East Cambridge to Somerville and Medford will "substantially exceed" the original $2 billion estimate by up to $1 billion. State officials acknowledged that work costs have soared since the original estimate, which came during the 2008 recession.
The project, for now, involves a "mainline" branch that would operate along the MBTA Lowell commuter rail line, beginning at a relocated Lechmere Station in Cambridge and traveling to College Avenue in Medford; and a branch line operating within the existing right-of- way for the Fitchburg commuter rail line to Union Square in Somerville.
"The decision marks the start of a transitional period, during which no new construction work will be awarded. During this time, however, much of the construction work that is already under contract and in progress will continue," the MBTA said in Thursday's statement.
Canceling the project would involve about $740 million in "sunk costs" including wind-down expenses, Pollack said. The commonwealth could also be open to litigation, given the federal government's requirement to extend the line as part of a settlement connected to construction of the Central Artery/Tunnel "Big Dig" megaproject.
In addition, the federal Department of Transportation could withhold funding.
A review identified flaws in the implementation of the procurement, and found that unrealistic schedule demands drove decision-making and costs.
The control board told MBTA General Manager Frank DePaola to notify the MBTA's construction manager/general contractor, a joint venture of J.F. White Contracting, Skanska USA Civil Northeast, and Kiewit Infrastructure; its project manager/construction manager, a joint venture of HDR Engineering Inc. and Gilbane Building Co.; independent cost estimator Stanton Constructability Services; and the final designer, Aecom Technology Corp.
The control board believes that to proceed with the project, the MBTA must cut costs by adjusting its design; accurately determining a budget; determining the best means to procure and deliver the design and construction of the project; and ensuring sufficient funding by engaging multiple funding sources.
"Today's actions are necessary steps to resolving the future of the [Green Line] project," said control board Chairman Joseph Aiello.
The control board will also vet all Green Line extension contracts and actions, regardless of value, for 90 days as the MBTA moves forward with cost reduction, accurate budgeting and reprocurement efforts.
The MassDOT board and fiscal control board will continue its discussions of the Green Line extension at a 1 p.m. joint meeting on Dec. 14.
The Green Line fiasco is yet another headache for the oldest transit system in the U.S.
On Thursday, a northbound Red Line train left Braintree, a suburb on Boston's South Shore, around 6 a.m. with passengers but not its operator and bypassed three stations before officials shut down the third rail. No passengers were injured.
MBTA personnel are investigating reports of possible tampering with safety mechanisms. The FBI told local media that they have communicated with MBTA police.
"This train was tampered with and it was tampered with by someone who knew what they were doing," Baker told reporters.
Last winter, a record 110 inches of snow paralyzed some transit operations in Greater Boston and triggered the resignation of MBTA general manager Beverly Scott. Baker in the spring signed legislation establishing the control board after a Baker-appointed panel called out the authority on several fronts, including an infrastructure backlog.
According to Baker, the control board has provided the "T," as locals call the season, some badly needed transparency. "The T's finances and its operations for years and years were closed in secrecy," he said.
Standard & Poor's in September lowered its rating on the MBTA's $3.7 billion parity sales tax bonds outstanding to AA-plus from AAA, saying the authority's potential capital needs could result in "substantial additional bonding."
Moody's rates the MBTA bonds Aa2.
Institutional investors looked past the negatives in October when the MBTA sold $357.4 million of senior sales tax bonds at levels comparable to the commonwealth's general obligation bonds.
Moody's Investors Service rates Massachusetts GOs Aa1, while Fitch Ratings and Standard & Poor's rate them AA-plus.