IOWA CITY — Responding to scrutiny over the University of Iowa’s handling of its Stead Family Children’s Hospital construction project and its decision to keep fighting a $21.5 million judgment in favor of a contractor, UI President Bruce Harreld last week presented a fiery defense to the Board of Regents, noting that just two contractors out of dozens have filed lawsuits.
“To date, the university has had two contractors file suit to take the university to arbitration on the UI (Children’s Hospital) and Hancher (Auditorium) projects,” Harreld said in a statement distributed to the media and the regents.
However, at least two other construction firms also are in litigation over payments on the Children’s Hospital or Hancher Auditorium, which opened in 2016 after the 2008 flood damaged its predecessor.
And, as of this summer, the UI had closed out just nine of 25 bid packages on its Children’s Hospital project — more than a year after it started treating patients there in February 2017. “Closed,” said UI spokesman Tom Moore, means “all obligations of contractors have been met in accordance with the contract” and “final payment has been made.”
The UI did not produce an updated list of closed Children’s Hospital contracts for this article. But Modern Piping — the Cedar Rapids contractor that won the $21.5 million award, which the UI is appealing — disputes much of Harreld’s comments to the governing board, including that it and Merit Construction, also of Cedar Rapids, are the only two fighting the UI in court.
Minuti-Ogle Contractors in 2017 sued the regents, Williams Brothers Construction and two insurance companies over the Hancher project.
Minuti-Ogle, according to that suit, was a subcontractor for Williams Brothers, which it accused of failing to pay all the owed amounts.
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In 2016, according to the lawsuit, Minuti-Ogle had filed a claim with the regents for $3.8 million. The board, according to the lawsuit, holds retainage from Williams Brothers, which countersued, accusing Minuti-Ogle of negligent work.
Retainage is a portion of a contract’s value held until the project is substantially complete and performing satisfactorily.
Another suit, which Quality Marble and Title filed in 2017 against the board and Woodruff Construction for its work as a subcontractor on the Children’s Hospital, argues general contractor Woodruff owes it $282,685. The board, according to the suit, still owes Woodruff the retainage withheld.
UI officials told The Gazette that Harreld’s report of only two court disputes on the projects is accurate because in the other cases, “the only issue for the university is the payment of the retainage amounts, which will be paid as directed by the court.”
The UI’s dispute with Merit Construction over its work on the hospital — with about $13 million in play — is set for arbitration this fall.
An arbitration panel in February awarded Modern Piping $21.5 million for work on both Hancher and the hospital, which a District Court judge affirmed. The university is appealing.
In his comments last week, Harreld noted the UI and Modern Piping had been close to a settlement that could have shaved off millions.
But Harreld said Modern Piping refused to agree to language to “hold them to stand behind their work.”
“Given that we’re dealing with Children’s Hospital where any incident would be catastrophic … I could not take that risk,” he said. “That we’d give them a pass on their work.”
Modern Piping said the UI misconstrued disagreements over the proposed deal — noting language it offered is the same as a University of Northern Iowa settlement and a previous UI settlement over a parking garage.
“Modern Piping asked to be treated like Northern Iowa treated contractors in a settlement, like the University of Iowa treated contractors in a settlement, or like a federal contractor on a federal project,” according to its statement.
Harreld, noting the need to protect both patients and state resources, reported “failures of work performed by Modern Piping within Hancher Auditorium have been discovered, one causing $203,600 worth of damage.”
“The repairs to the space impacted by the failure of their work were completed by another local contractor after Modern Piping chose not to manage the repairs,” according to Harreld’s statement.
Modern Piping refuted that, saying Hancher has seen a “single piping leak” and that the company was working with the UI to “ensure all repairs are being made to the exacting standards the project required.”
“Modern Piping has assumed all financial responsibility for this event,” it stated.
The university, in follow-up comments to The Gazette, noted that though Modern Piping did repair the failed pipe, it did not coordinate the rest of the repairs.
“The budget for the project was $122,001 … The final costs are still coming in,” the UI statement said. “The university hired Servpro Remediation to clean up the water damage for $74,300. The Hancher Showcase had $7,300 of damaged merchandise for which it has not been paid.”
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Although the UI hasn’t received payment for the damages, officials say they expect Modern Piping’s insurance carrier will reimburse the costs.
In response to The Gazette’s request for details of other Hancher failures, the university provided a list of nine items between April 2017 and January that totaled an estimated $70,703.
UI officials said Modern Piping has not corrected most of the issues or paid related costs.
The contractor, in a statement, disputed that, reporting completing some of the work “at our own expense, outside of our scope, or after the warranty period as a show of good faith.”
“The report given to the Board of Regents was inaccurate, incomplete, or intentionally misleading,” the Modern Piping statement asserted
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