The walls of the new South Ferry station, shown here in December 2008, have sprung a leak. (Photo by Benjamin Kabak)

As the MTA Inspector General yesterday took the authority to task for glossing over its contracting evaluation guidelines, today, we see a prime example of work gone wrong underground. The new South Ferry terminal on the 1 line — a $527 million that has been open for less than a year — has sprung a leak, and according to reports, shoddy waterproofing by the project’s contractors as well as some design failures on behalf of the MTA are to blame.

According to amNew York’s Heather Haddon, the station is already showing an age well beyond its years, and her piece has a photo prove it. She reports of water-stained platform and mezzanine walls as well as tiles falling after the grouting has been corroded. Bad engineering, she says, is to blame. Reports Haddon:

The contractor, Schiavone Construction of Secaucus, botched the waterproofing for the station, which is located deep under the water table, according to the MTA’s independent engineer. For its part, Schiavone claimed that the MTA had flubbed the project’s design. An independent dispute board ruled last year that both parties were at fault and must share costs for the remediation…

Schiavone did not return a request for comment. Next month, the MTA will grout and add new tiles to the station with $3 million, which came from the contractor as part of the settlement, agency spokesman Kevin Ortiz said. The grouting should cure the problem, he said…

But the leaking could continue, as workers will basically fill in joint cracks instead of reengineering the station with better waterproofing technology, Henderson said.

Ortiz further clarified the agency’s approach to this problem to me in an email this afternoon. “We are monitoring the level of seasonal infiltration and will begin any necessary repairs in March during scheduled General Orders to avoid utilizing funds from the settlement for the diversions and to limit the impact on service,” he said.

For the MTA, water damage has been a source of aesthetic issues at numerous stations throughout the system. The walls on the downtown 2/5 platform, for instance, at 149th St./Grand Concourse station have long carried the scars of damage from water dripping out of corroded platforms. In other areas, wall tilings bulge from the pressure of bad waterproofing. Here, a $527 million project that was delayed due to a gap between the trains and the platform and has been plagued with some problems is the latest to carry those scars. Even the newest crown jewels can’t escape the problems of system more than 100 years old.

In complementary released yesterday, the MTA Inspector General exposed how contractors hired by the MTA are often given better evaluations than their work suggests so that the agency can maintain business ties with these bidders. For its part, agency heads say the MTA will follow the IG’s recommendations in an effort to improve its business practices.

The reports — available as PDF files here and here — find that the All-Agency Contractor Evaluation program, set up to “screen vendors will poor performance histories,” has not fulfilled that role. The fault, says Barry Kluger, is due in part to managers who are looking to curry favor with the MTA’s long-term clients. Wrote the IG:

Our interviews with managers responsible for implementing NYC Transit’s capital program provided an explanation for these deficiencies: an institutional reluctance, for a variety of reasons, to rate contractors’ work as Unsatisfactory, even when such ratings are the most appropriate.

One particularly disturbing reason given by many of these managers is that they felt pressure to upgrade ratings of Unsatisfactory to prevent important agency contractors from being precluded from bidding on future work – even though under the rules such ratings do not automatically preclude such bidding. In these cases, the managers sometimes allowed what they perceived to be agency “business decisions” to override their true assessments of contractor performance. By doing so, though, they effectively usurped the power and duty of MTA’s General Counsel, Executive Director and Board to adequately review and properly accept or reject contract awards in the future.

The examples in the reports are not unexpected. As Michael Grynbaum, who covered these findings for The Times, highlights, “managers at the Long Island Rail Road waited more than nine months to grade one vendor, DMJM & Harris, as unsatisfactory, after the firm’s work on a 2005 environmental consulting contract was deemed deficient. In the interim, that vendor received five more contracts worth nearly $25 million from New York City Transit, Metro-North Railroad, and the authority’s bridges and tunnels division; none of those other agencies were aware of any problems with the firm.”

Another egregious example of questionable ratings involves Siemens, the company originally selected to update subway signaling technology. Writes Grynbaum: “Under official guidelines, Siemens should have received an unsatisfactory rating. But a top official at New York City Transit instructed managers to instead assign a rating of “marginal,” a higher mark, because of business considerations.” We all get the point.

In response, the MTA has agreed to implement a series of measures designed to better evaluate and assess contractor performance and better oversee those issuing the ratings. “Too often we have let our contractors slide when they fail to perform, and that is why we have accepted the I.G.’s recommendations and are working to implement them,” Jay Walder, MTA CEO and Chairman, said.

For Walder, this report is but the tip of the iceberg of the inefficiencies he plans to combat. It’s a rather in-the-box example of how the MTA’s business practices are run with less oversight than they should have, and it’s a prime way Walder can restore both transparency and accountability to the agency’s contracting. I don’t want to be too cynical about Kluger’s findings or Walder’s commitment to improving the way the agency conducts business, but this is indicative of the organizational problems Walder must solve.