CARSON CITY -- Nearly two-thirds of a $10 million judgment against the state over a dispute involving the construction of the Southern Nevada Veteran's Home was paid out by the Board of Examiners on Friday.

Judgments of $3.35 million for the main contractor, Addison Inc., and $2.494 million for a subcontractor, Quality Mechanical Contractors Inc., were approved by the panel after their attorneys agreed to slight reductions in the amounts awarded by an arbitration panel.

The agreement saves about $154,000 from the total award. It also eliminates interest payments to the two firms. Interest had been accruing on the entire arbitration award at a rate of about $2,400 a day since the June 14 decision that found the state Public Works Board and its architect liable for construction problems that delayed the opening of the home.

Three other subcontractors on the skilled nursing facility, which opened in 2002, are owed another $4 million. An attorney hired by the Public Works Board will continue to negotiate with the three companies to try to reduce the awards commensurate with Addison and Quality.

The incentive for the firms is that they will be paid more quickly if they agree to accept a lesser amount than found by the arbitration panel.

The Board of Examiners, including Gov. Kenny Guinn, approved the two settlements.

"I think this is probably the best way and the fairest way to move ahead," Guinn said.

The payments will come out of a fund to pay lawsuits against the state, called the Tort Claims Fund. Using the fund allowed Guinn to settle the claims without calling a special session of the Legislature to appropriate the money.

The remaining payments will be made by the Budget Division once agreement has been reached with each subcontractor.

The panel of arbitrators said the state and its architect were at fault in the dispute over the construction of the 188-bed home, which opened nearly $1 million over budget.

Guinn said lawmakers, many of whom are in the midst of a campaign season, did not want a special session. The session, even at one day, would have cost $40,000 to $50,000, adding to the cost of the final award, he said.

Waiting to pay the award until the regular legislative session next year would have added more than a half million dollars in interest charges.

After the arbitration panel decision, Guinn asked Dan O'Brien, manager of the Public Works Board, to resign.

Addison was removed from the project by the Public Works Board in 2001 in the dispute over finishing the project, which was close to completion.

The panel found that the plans issued by the Public Works Board to receive bids were incomplete.

Because of a Nevada Supreme Court decision, the state had to submit to binding arbitration to resolve the dispute.

Of the total $9.8 million award to the contractors, almost $4 million is just for attorneys fees.