A messy government contract dispute that resulted in a $52 million award in late 2008 to the builder of the problem-plagued Regional Justice Center has a new twist.
Clark County on Wednesday afternoon filed a lawsuit against Jacobs Engineering Group Inc., the company hired to provide oversight of construction at the Regional Justice Center, the Clark County Detention Center and smaller projects paid for with bond funds voters approved in 1996.
The lawsuit accuses the company of “mismanagement from the outset” and cites the severe delays and cost overruns that plagued the project from the start.
The lawsuit claims that because of Jacobs’ “gross mismanagement,” Clark County was forced to pay the contractor, AF Construction, $9.6 million for the problems at the detention center. The settlement was mediated in the fall of 2005. An additional $31 million was paid after a bill was presented for time and materials. The toll for the Regional Justice Center was higher after an arbitration panel awarded $52.6 million to AF Construction in November 2008.
According to Kirk Lenhard, the county’s private attorney, the county filed the lawsuit in an attempt to compel Jacobs to pay for the roughly $90 million it has shelled out to AF.
“The county would like to recoup everything it lost,” Lenhard said. “But that probably isn’t realistic.”
In addition to the lengthy delays and budget issues, the county alleges Jacobs is responsible for gross technical inaccuracies and construction defects.
Jacobs was awarded the bid in May 1997. In its presentation, the company outlined 51 basic services that would be included in its scope of work. In return, Clark County paid the firm about $18 million: $10 million to monitor construction of the justice center, $5 million to oversee the expansion the county jail across the street, and roughly $3 million to keep an eye on renovation of the county’s Department of Family Services and youth camp at Spring Mountain. The lawsuit involves only the downtown justice center and jail. “They were hired to look over the shoulder (of AF),” said Lenhard. “That’s the dispute — did Jacobs do their job?”
Attempts to contact officials for Jacobs at the company’s Pasadena, Calif., office for comment Thursday were unsuccessful.
The lawsuit claims Ken Adams, the project manager for Jacobs, misrepresented his education, credentials and experience, and was not qualified to manage the massive project. The county, according to the lawsuit, wholly depended on Jacobs’ representations. “Clark County isn’t in the building business,” Lenhard said. “So we had to rely on them.”
Court papers state Jacobs was aware Adams was underqualified and did not even have a bachelor’s degree. He was not a civil engineer, and was not certified in project management, yet allowed him to claim he was.
“This is a major issue,” Lenhard said. “He didn’t have anything he said he had. This caused a lot of angst with the county.”
The county had to wait to file the lawsuit until the arbitration was over.
According to Lenhard, the contract with AF included an arbitration clause, meaning the parties agreed to let a third party determine how to resolve disputes. No such provision was included in the Jacobs contract. As a result, the county had to deal with AF first.
The lawsuit further alleges breach of contract, fiduciary duty and good faith; intentional misrepresentation; and professional negligence. In all, the county makes 14 claims against Jacobs.
When the arbitration decision came down concerning the county and AF, criticisms of the county were sharp.
The project, arbitrators said, was underfunded from the start, laying the groundwork for future problems with an unrealistic funding strategy.
County officials often demanded changes to work that the contractor had already done “without considering economic waste,” arbitrators wrote.
Still, they sided with the county in some instances. They agreed with the county’s contention that the contractor was out of its depth with the justice center project. AF Construction’s previous jobs were much smaller and less complex, they wrote.
Lenhard said the county hopes to put the new case on the fast-track, saying money would be saved.
“This thing just needs to be resolved,” he said. “This has been going on far too long.”
Contact Doug McMurdo at email@example.com or 702-380-8135.