Award: NYC Borough-Based Jails System, Brooklyn Facility
Value: $2.95 billion
Location: Brooklyn, New York
Client: New York City Department of Design and Construction
Tutor Perini has secured a $2.95 billion contract to build one of four proposed New York City borough jails to replace the troubled and decaying Rikers Island detention center.
The Los Angeles-based contractor said it was selected by the city’s Department of Design and Construction for a design-build contract for the Brooklyn facility for the overall NYC Bourough-Based Jails System.
The system of four smaller jails located in Manhattan, the Bronx, Queens and Brooklyn aims to shutter and replace Rikers, where 19 inmates died in 2022, the highest death toll in 25 years.
Ron Tutor, chairman and CEO at Tutor Perini, said the firm looks forward to partnering with the city’s Department of Design and Construction “to deliver a new, state-of-the-art facility that will enable DDC’s historic plan to close Rikers Island and replace it with a smaller network of safer modern jails.”
The company did not provide a timeline for completion of the project, but, in a notice of public hearing in March, the city said the contract would last more than six years from the date of a notice to proceed. Tutor Perini said it expects that notice in June, at which point design work will commence.
That timeline puts completion of the jail into 2029, more than two years past the city’s self-imposed deadline to shutter Rikers. At the time of the hearing meeting in March, a spokesperson for Mayor Eric Adams said the timeline reflected both the goals put in place, and the challenges facing the broader building sector.
“This contract reflects realities facing the construction industry,” a City Hall spokesperson told Bloomberg.
For Tutor Perini, the win illustrates the feast or famine nature of mega-construction projects.
The company reported losses on its 2022 revenue and earnings, a result of courtroom defeats and high-profile project cancellations, such as the $4 billion Capital Beltway project in the Washington, D.C., area.
Tutor said during the company’s full-year 2022 earnings call that Tutor Perini had lost $11 billion in potential new work in the past two years, and added, "That's more low bids than we've lost in the history of the company over 50 years."
Beyond those losses, the firm is also expecting to book an additional $84 million loss on its George Washington Bridge Bus Station project when it reports first quarter earnings on Thursday.
According to a filing with the Securities and Exchange Commission, the company recently lost a protracted legal battle on the troubled development in the Washington Heights area of Manhattan that resulted in the charge.
Tutor has often made the point on conference calls with investment analysts that while mega projects carry outsized risk, the firm also often encounters only two or three other bidders on major contracts that are able to provide the scale and resources called for. In 2022, Tutor Perini ranked as the 13th largest contractor by revenue.
Tutor Perini said that it will include the award in its second-quarter backlog.
Clarification: This story was updated to reflect the context of Ron Tutor’s comments about the $11 billion in lost work.