IOWA CITY — The University of Iowa this week satisfied another portion of a $21.5 million award judges have ordered it to pay a Cedar Rapids contractor, and UI President Bruce Harreld apologized for being part of a “war of words” that included public accusations of extortion against the company.
The UI paid $4.4 million to Modern Piping for work the contractor did on the new Hancher Auditorium. But it still is withholding about $13.5 million it owes Modern for work on the $392.7 million Stead Family Children’s Hospital.
The impasse continues a long-running and bitter dispute that has prompted lawmaker inquiries and already cost the university millions in court costs and interest.
Last week, Harreld told the Board of Regents during a meeting on campus that Modern was withholding construction closeout documents and demanding millions more than owed to turn them over. He agreed with a regent that it appeared to be “extortion.”
The Iowa Court of Appeals earlier this month sided with Modern, upholding a district court order that the UI pay the debt an arbitration panel had awarded a year ago.
“The war of words between the University of Iowa and Modern Piping is unprofessional and unfortunate,” Harreld said in a statement. “I would like to publicly apologize for playing a role in this escalation.”
He aired frustration at the “failure of communication and common sense” and said it was time to move forward “so the focus can shift to what matters — safely continuing the exceptional care provided for children in the University of Iowa Stead Family Children’s Hospital.”
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Still, the UI held firm in its assertion that Modern had not sufficiently produced required closeout documents — called “as-builts” — that detail placement of valves, gas lines and so on behind the walls of the hospital.
The UI said Friday it had paid another Cedar Rapids contractor, Merit Construction, the outstanding $9.4 million it was owed for other disputed work on the Children’s Hospital.
The UI says it plans to place the money it owes Modern into an account administered by a third party. Once the hospital project’s design professional “receives, reviews, and approves the final construction documents, Modern Piping will immediately receive full payment.”
Modern Piping attorney Jeff Stone has said and repeated Thursday — producing documents showing as much — that project managers have already received, reviewed and approved the final “as-builts.”
He said Modern is happy to provide the documents again and comply with other closeout demands, but wants the university to agree to a settlement and retract the extortion accusation.
Modern provided The Gazette with a snapshot of a project folder indicating the “as-builts” had been accepted. The contractor also produced the actual documents, including a cover sheet showing the hospital’s project manager had reviewed the documents in September 2017 and January 2018, and design professional Heery International had approved them in June 2018 with “no exceptions taken.”
However, Harreld again denied that Modern has produced what it contractually owes.
Records provided by UI officials indicated Heery had “inadvertently” signed off on the document even though they were incomplete.
“This approval was a misunderstanding that this was more than the valve locations,” according to a timeline of the dispute given reporters.
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Stone, the attorney for Modern, questioned the assertion it was done by accident — in that both the project architect and the mechanical engineer had accepted them.
“It’s not some inadvertence. … This is not some mistake,” he said.
The UI produced emails Thursday showing back and forth between the contractor and project managers about closeout document needs beyond what was initially provided. But none of those communications — except for the one this week — came after the June 2018 acceptance.
Stone said the documents produced by the UI amount to admittance that Modern provided the “as-builts” in 2017 and revised them according to requests, earning acceptance in 2018.
And Modern Piping Chief Executive Officer Ken Brown in a statement Thursday said, “The first time any inadvertence was communicated was in this morning’s press release. Modern Piping has the right to rely on the June 2018 acceptance of the as-builts by the project architect and mechanical engineer.”
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