NBC Bay Area has learned that Caltrans has tentatively agreed to pay the main builder of the new Bay Bridge span some $25.5 million to settle long-running contract disputes over the massive project and to forgive an $8.5 million fine bridge officials had long sought for the catastrophic failure of high strength rods on the project back in 2013.

For the last two years, Caltrans had been at war with the main bridge contractor -- American Bridge/Fluor -- over who was to blame for a string of problems on the troubled project.

American Bridge claimed Caltrans owed it $40.7 million as a result of its own bungling, including the agency’s decision to use a type of steel rods that were prone to fail prematurely when exposed to water in the marine environment. The rods used to hold down vital seismic stabilizers did just that in 2013.

The contractor separately wanted out of the $8.5 million penalty over the bridge rods assessed by the panel of transportation agency officials charged with overseeing the project.

The deal not only forgives that $8.5 million, it awards $25.5 million to the contractor, which means that the bridge project is now running $25.5 million more in debt, according to figures provided by Caltrans. But it represents a savings of $25.4 million out of the nearly $50 million set aside as a reserve for such problems. That reserve has now largely been exhausted.

Dan McElhinney, chief deputy district director for Caltrans, said in a memo to the Toll Bridge Program Oversight Committee that the settlement “results in a savings of $25,400,000” on the project. He said without the deal, “exposure risk” could exceed $60 million.

The deal will not go forward unless the bridge oversight panel – made up of the heads of Caltrans and the local and state transportation commissions – approves it at its meeting Thursday.

The self-anchored bridge, the most visible element of a much larger project, was slated to cost $1.43 billion back in 2006. But after a string of changes, material failures and cost overruns, the final cost will be nearly $2 billion. The entire project will end up costing more than $6.6 billion.

The settlement came after a mediation session in April, but was not made public until Wednesday.

Earlier this month, approved a measure to jack up bridge tolls to pay for various transit projects, including more buses, BART trains and other upgrades designed to cut traffic.

The contract dispute began over who was responsible for the failure of dozens of high-strength steel rods that broke in 2013 – a debacle that ended up costing close to $50 million to fix.

Bridge officials said American Bridge owed $8 million for its share of causing the problem. Caltrans was supposed to be on the hook for the same amount as was the chief design firm on the project, T.Y. Lin International. Caltrans has refused to pay, and T.Y. Lin’s $8 million share remains uncollected. That means that in the end, no one will be punished for the debacle.

American Bridge alleged that despite “internal documents existing prior to and during the contract” and warnings of experts who “questioned and recommended against” using the grade of rods used on the project, Caltrans authorized the use of the rods anyway. Caltrans allegedly never alerted Amercian Bridge/Fluor about the risks it knew existed.

American Bridge also contested allegations by Caltrans that it failed to properly seal rods at the base of the tower of the bridge against water. More than a hundred of those rods were left standing in saltwater that seeped in when the cracked foundation flooded – causing some to start to corrode.

ABF alleged that Caltrans’ construction decisions led to the problem. The agency opted not to weld the base of the sleeves that held the rods. Instead, the agency allowed an earlier contractor to use plumbers putty and even duct tape, the contractor said in its complaint.

Caltrans even allowed holes in the protective sleeves that let water in and desolved grout to escape.

“American Bridge installed the grout as specified in the contract and then sealed” around the rods “per the contract,” according to the claim filed back in 2016.

After the disputes emerged, Caltrans circumvented the contractual process that would allow a three-member independent panel to resolve differences, repeatedly canceling meetings and refusing to pay for the panel to do its business, the company claimed.

The lawyer who signed the complaint, Robert Leslie, declined to comment about the settlement.