The Boise, Idaho-based Washington Group took over construction of the plants--a 1,600 megawatt plant and an 800 megawatt plant--when it purchased Raytheon's construction and engineering division last July. However, the company recently developed a cash flow problem and it halted work on the plants in an effort to avoid bankruptcy.
"Pursuant to guarantees to Sithe, we're now taking on an oversite role," David Polk, spokesperson for Lexington, MA-based Raytheon, tells GlobeSt.com. When Washington Group bought Raytheon's engineering and construction division an agreement was reached--after what Polk calls "an almost unprecendented time in due diligence"--that Raytheon would maintain financial responsibility for some projects and project guarantees to others. These two plants have project guarantees.
"WGI found itself in a financial predicament and it said it couldn't finish the project," notes Polk. "Sithe needed to clear the way for Raytheon to step in so it got an order to cancel the contract." Polk emphasizes that Raytheon is not interested in getting back into this aspect of business.
"The engineering and construction business was a drain on our cash supply," he says. "It was not a core business for us. They know construction. We didn't want to hear this. We thought we were finished." Washington Group is known for a number of well-known projects, such as the Hoover Dam and the Kennedy Space Center.
According to Polk, Raytheon is only taking on an oversite role on the plants and may have to contract out to get the work done. "We are in the process of evaluating what the status of the projects are," he says. Work was halted on the projects Mar. 8.
Reportedly, Washington Group is now suing Raytheon to overturn its purchase of the company's construction unit by accusing Raytheon of hiding the unit's cost overruns.
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