The Arbitration Award and Court’s Ruling validated Modern Piping’s performance on both the Hancher and UICH Projects. President Harreld’s statement to the Board of Regents concedes the University of Iowa is responsible for the problems that plagued both the Hancher and UICH Projects. On the UICH Project, the University of Iowa’s construction manager described the project as suffering acardinal change, which in construction means the owner made so many design changes that the contractors building the project were no longer building the same project that was bid. On projects that suffer a cardinal change, the result is typically contractors recover all the costs incurred on the job regardless of the terms of the contract; this is because the change in the scope of the project was so drastic, the terms of the original contract no longer apply. The University of Iowa’s numerous design changes on the UICH Project resulted in a cardinal change, costing the contractors millions of dollars for which the University of Iowa is liable. The University of Iowa has paid millions of dollars to some contractors on the UICH project, yet refuses to pay the legally-enforceable judgment owed to Modern Piping.
While Modern Piping is proud of its work and the outcomes of these projects, the University of Iowa should be ashamed of its conduct. Internal documents show the UICH project manager attempted to put two local contractors out of business. These contractors are locally-owned companies in Eastern Iowa that provide good paying jobs to some of your friends and neighbors. Internal documents show the General Counsel’s Office devised a strategy of intentionally violating the University of Iowa’s contracts with contractorsto gain a strategic advantage and intended to tie the contractors up in litigation for years after completion the project. Such unbecoming conduct is inconsistent with the University of Iowa’s core values: excellence, learning, community, diversity, integrity, respect, and responsibility.
President Harreld’s statement to the Board of Regents, which was drafted by General Counsel Carroll Reasoner, contains numerous inaccuracies:
1. The statement about only two contractors filing suit is false. In Case No. LACV079455 in Johnson County, the University of Iowa is in litigation with two other contractors. That the University of Iowa General Counsel is not aware of the number of lawsuits arising out of these projects is indicative of the quality of legal advice that is provided to President Harreld.
2. The statement about not accepting Modern Piping’s claims as valid and never agreeing to pay is false. Internal University of Iowa documents admitted Modern Piping’s claims were valid and some were to be backcharged to other contractors. At the arbitration, the University of Iowa conceded Modern Piping was entitled to recover some amount on all its claims on both projects and only disputed the exact amount of damages. The University of Iowa conceded no less than $3.4 million was owed. None of this amount has been paid, even though it was conceded. If the claims weren’t valid, President Harreld wouldn’t have agreed to settle for $18.5 million.
3. The statement about Modern Piping not standing behind its work is inaccurate. Modern Piping offered the same settlement language the University of Northern Iowa had agreed to as part of a settlement on a different construction project. The University of Iowa refused. Modern Piping offered the same settlement language as a settlement of a construction dispute arising out of the UIHC parking garage. The University of Iowa refused. Modern Piping offered settlement language similar to a federal contractorcompleting a federal project. The University of Iowa refused. Modern Piping asked to be treated like Northern Iowa treated contractors in a settlement, like the University of Iowa treated contractors in a settlement, or like a federal contractor on a federal project. The University of Iowa rejected all these reasonable requests.
4. The statement about the as-built plans and specifications simply ignore the decision of the Arbitration Panel after hearing nine days of testimony: “This Interim Award specifically precludes Iowa from asserting backcharges for as-built drawings.” Modern Piping has prepared all requested documents to a level significantly more detailed than requested by The University of Iowa. This advanced detail, which is many times more accurate than standard documents, was suggested by Modern Piping as part of anegotiated settlement to which the University of Iowa has declined to honor. This part of the negotiations also included a significant discount from the awarded $21.5 million dollars.
5. Regarding the SINGLE piping leak at Hancher Auditorium President Harreld either misstated, was mislead by his staff, or intentionally mislead the Board of Regents. Modern Piping has been working closely with Steve Otto from the University of Iowa Design and Construction Services Department to ensure all repairs are being made to the exacting standards the project required. Modern Piping has assumed all financial responsibility for this event. Modern Piping will continue to stand behind the work our team executed under difficult circumstances. Modern has an on-site representative who has been coordinating the repairs. We expect all repairs at Hancher will be complete next week. Once again, the report given to the Board of Regents was inaccurate, incomplete or intentionally misleading.
The interest is accruing at $2321 per day on the amount due. From the first day of class on August 20 through the last day of finals on December 14, 2018, interest will accrue in the amount of $269,236, or stated differently, for the same dollar amount, Iowa could offer free in-state tuition to about 33 Iowa residents for the fall semester. Especially in tight economic times, the University of Iowa should be focused on its core educational mission, not issuing press releases draft by its General Counsel riddled with false and inaccurate statements.
Modern Piping is extremely proud of our entire team, including those tasked with completing work on both projects. The professionalism and commitment to completing projects with extremely high quality and efficiency should be applauded. Modern Piping is looking forward to resuming a productive relationship with the University of Iowa, if possible. In addition, we are also proud that this stressful time has not diminished our ability to complete mission-critical projects for our clients. It is truly a testament to the strength of our organization.
