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Hospital construction contract goes awry in Santa Clara County

People in Southern California may have heard about a $300 million hospital construction project that was taking place in San Jose, and according to the county, not near quickly enough. The contract called for a 168-room hospital and medical facility as approved by voters back in 2008. A New York-based construction company won the bid, and projected to complete the project by the end of 2012.

Even though construction got underway and things looked to be starting off on the right foot, the project is now an unfathomable three years behind the projected completion date. The county initially granted the contractor an additional period of time for completion, but even then they couldn’t come close to meeting the extended deadline. Now the county has taken the step of issuing the contractor its final notice of default, meaning that they are seeking to terminate the contract and likely will seek to recoup damages from the delays and the fact that the contractor has not completed the contract. It has yet to be seen if the county will sue for breach of contract, but if it does the ensuing litigation would be interesting, especially with so much at stake for taxpayers, the county government and the New York construction company.

The contractor has shot back, claiming that the delays stem from the county’s mismanagement of this project, including some 850 change orders that were poorly communicated. They claim these changes caused the delays and other problems. However, the county responded that the change orders were not a surprise and were to be expected given a project of this magnitude and scope. The county is currently in contract talks with another construction company who is comfortable coming in and completing the project and fixing what is allegedly defective.

Contract disputes, especially on large-scale public works contracts, can be incredibly complex. An experienced construction law attorney would be a tremendous asset for any party in this situation.

Source: Saratoga Patch “County Rips Up Contract, Sues Turner Construction Over Hospital Project,” Bea Karnes, Sept. 17, 2015