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The Massachusetts Bay Transportation Authority will end its contracts with four firms working on the Green Line extension and will open a search for a new manager to oversee the project, after weeks of revelations about a $1 billion cost overrun and other problems with the planned trolley line to Medford and Somerville.

The MBTA will also move all of the employees who had been working on the Green Line extension to other projects, according to three MBTA officials with direct knowledge of the situation.

Though state officials this week warned they could still abandon the project and its ballooning costs, they cautioned that the changes do not necessarily point to the end of the extension. In fact, the contract decisions could pave the way for the agency to put the remaining design and construction work — which constitute the bulk of the project — out to bid again.

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"We're going to start with a clean slate and try to get a handle on the cost," said Monica Tibbits-Nutt, a member of the MBTA's fiscal control board. "At that point, we can try to make decisions. We owe it to the public."

The long-awaited Green Line extension has been under scrutiny for months after MBTA officials revealed that the project could cost $3 billion, up from earlier estimates of about $2 billion.

On Thursday, MBTA officials said that general manager Frank DePaola informed four contractor groups about the decision to end their work: White-Skanska-Kiewit, a consortium of major construction firms hired to build the project; HDR/Gilbane, another consortium that had served as a project manager; Stanton Constructability Services, a company retained to estimate the costs of the project; and AECOM/HNTB, a group selected to serve as the final designer for the project.

Fiscal control board chairman Joseph Aiello declined to discuss the decisions to get rid of the contractors, saying that he would let the action speak for itself and that it was necessary for the future of the project.

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As currently envisioned, the project would extend the Green Line 4.7 miles and add seven stations in Medford and Somerville. Public transportation advocates have sought the extension for decades, pressing the T to complete it to mitigate the environmental effects of the Big Dig highway tunnel project. To get the MBTA to agree, the Conservation Law Foundation had to sue.

Rafael Mares, an attorney with the foundation, said he believed the contract changes announced Thursday were a good sign.

"You can't go forward with this project and just accept the current cost structure," he said. "The only way to do it is to end those relationships (with the contractors) and start fresh," he said.

The MBTA has already spent about $380 million on the extension, including about $180 million for outside expertise, such as project managers. Even if the MBTA abandoned the rail project, officials said they would still need to follow through on a number of agreements, including the purchase of 24 new Green Line trolleys for $182.7 million.

After MBTA officials revealed the cost overruns in August, the MBTA's fiscal control board spent up to $1.5 million for consultants to complete several reports that attempted to reveal why the costs had escalated so quickly.

Critics had already blamed the construction process the MBTA had chosen for the Green Line project for the escalating costs. Under that process, a construction manager and a builder were selected largely on the basis of their qualifications, rather than a low bidding price.

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The project was separated into several packages, and the chosen construction group, White-Skanska-Kiewit, was able to name a "guaranteed maximum price" for its work on each phase. The MBTA was then able to negotiate each price, comparing the construction group's estimate to an independent estimate from Stanton Constructability Services, another firm that was hired.

Last week, consultants said that MBTA employees had been ill-equipped to use the new contracting process, essentially allowed White-Skanska-Kiewit to take advantage of the process, and were unsure of the actual cost estimate for the extension. Four contracts totalling $206.5 million were awarded to the construction firm, and were already 45 percent over the budget submitted to the federal government, officials said.

Even before consultants revealed their findings to the public, MBTA officials had been making moves that hinted they could drop the contractors. On Oct. 21, DePaola sent a letter to White-Skanska-Kiewit, HDR/Gilbane, and AECOM/HNTB asking them to suspend some of their work as the agency completed its "due diligence" in evaluating the project, according to a letter obtained by The Boston Globe.

The state transportation board discussed its legal strategies for the project on Wednesday during a closed-door session that led to the contract decisions, according to Joe Pesaturo, an MBTA spokesman.

In a statement Thursday, DePaola said the consultants' reports had shown that the current contracting process "was not successfully implemented," and that officials needed a "complete reassessment of the project's design, scope, and cost."

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The MBTA notified White-Skanska-Kiewit that because they could not agree on a price, officials would not award the construction consortium with a major phase of the project that was initially estimated to cost $387.5 million.

The MBTA had awarded HDR/Gilbane an $89.2 million contract scheduled to end in April 2016, AECOM/HNTB a $128 million contract scheduled to end in December 2020, and Stanton a $2.4 million contract that was scheduled to end in 2019.

After the decision, White-Skanska-Kiewit released a statement through a public relations firm: "WSK is disappointed by the board's decision to cancel the contract for convenience and that we will not be able to see this project through to its completion."

HDR/Gilbane, Stanton, and AECOM/HNTB did not return requests for comment.

Under the current contracting policy for the Green Line, the chosen construction group may not participate in future bids on some of the work. Asked if that could change, Pesaturo wrote that the MBTA is preparing a policy on conflicts of interest that would address that question.

Lawyers at the MBTA do not think the firms that were dumped on Thursday are likely to sue the MBTA, or would be successful at winning a lawsuit, according to two officials who were briefed on the situation.

Transportation Secretary Stephanie Pollack this week said a decision on the future of the project could take months, as officials are still pondering ways to scale back the project to a cheaper design.

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Control board members have said the Green Line project should only be built if the agency can cut costs, come up with an accurate budget, determine the best way to award contracts going forward, and identify enough funding to pay for it.


Nicole Dungca can be reached at nicole.dungca@globe.com. Follow her on Twitter @ndungca.