A long-simmering dispute between Santa Clara County and the
contractor who built the new South County Courthouse in Morgan Hill
came to a head last week, as county officials announced they will
pay West Bay Builders and three project subcontractors a settlement
of $8.1 million.
A long-simmering dispute between Santa Clara County and the contractor who built the new South County Courthouse in Morgan Hill came to a head last week, as county officials announced they will pay West Bay Builders and three project subcontractors a settlement of $8.1 million.
The settlement raises the total price tag of the project from $52 million allocated in 2004, to $60.4 million, according to county spokeswoman Gwen Mitchell.
About $4.5 million of the settlement will come from a 10 percent contract retention the county has withheld for the last five years – a requirement of the California Public Contract Code. The remaining $3.6 million will come from savings on other recent county construction projects, a reduced scope of work on a server room project, and “funds made available as a result of the favorable construction climate,” Mitchell said.
The board of supervisors is expected to vote on and approve the settlement Sept. 29.
“We believe the settlement is in the county’s best interest, and we’re pleased to put this dispute behind us,” said Acting County Counsel Miguel Marquez.
Earlier this year, project contractor West Bay Builders claimed that years of delays in completing the construction, which began in 2004 and ended in April 2009, were the result of faulty designs submitted by the county which required hundreds of change orders. The contractor, who was facing pressure from a list of subcontractors, anticipated the county would not pay for about $17.8 million worth of work that was required on top of the original contract in order to complete the project, the company’s president Paul Thompson has said.
Thompson did not immediately return phone calls Monday.
Prior to the settlement announced Friday, county officials were confident they would not owe the builders a dime more than the contract price, and the delays were their fault due to faulty work.
The dispute went to mediation in May, and the $8.1 million settlement was the result of the two-day non-binding session with mediator Randy Wulff. Results of the mediation were not disclosed to the public until Friday.
Supervisor Don Gage predicted in May the county would be owed monetary damages for faulty work he said was performed by the contractor. However, he said Monday that the settlement is “worth it” because it avoids court action that could be lengthy and costly.
“We needed to get that off the books. It would have cost us more money in litigation,” Gage said. “I’m willing to let it go.”
The settlement agreement also requires West Bay Builders to fully release the county from the more than $17 million in claims it was at one point prepared to file suit over. West Bay has also agreed to fully address all labor, material, equipment and other costs claimed by all project subcontractors and not otherwise resolved by the settlement amount, and to hold the county harmless in any stop notices or other claims, according to Mitchell.
Mitchell said neither the county nor the private building companies pursued any court action.
Of the $8.1 million settlement amount, $3.25 million will go to West Bay Builders, $2 million will go to Marelich Mechanical, $1.9 million to Cupertino Electric, and $950,000 to Allen Specialties, Inc.
The Morgan Hill Courthouse opened for court business in April, and officials celebrated a grand opening May 20.
Even after the 73,000-square-foot courthouse and adjacent 17,000-square-foot legal services building opened, Thompson said in April that change orders for more work or repairs of previous work continued.
