Project Labor Agreements ban results in Iowa government headaches
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A contractor that faces tens of thousands of dollars in late penalties from the city of Des Moines is the subject of more than $1.7 million in lawsuits linked with its work on at least eight Iowa government projects, court records reviewed by Axios show.
Why it matters: The situation is an example of how contractors are sometimes hired by governments despite concerns with their work.
- It’s a result of a 2017 state law that narrowed the ability of governments to review a bidder’s qualifications.
Flashback: The 2017 law is linked with a successful effort by Republicans to block governments from mandating Project Labor Agreements, which they contend promotes more fair and open competition among contractors who do not use union labor.
- Democrats warned that the bill was an attack on local governments and would result in taxpayer waste.
Zoom in: Graphite Construction Group of DSM — formerly known as the Rochon Corporation — was the lowest bidder and hired last year for a $560K project at Witmer Park despite concerns about its past work.
- The city’s legal team advised City Council members not to consider its track record in some of the other projects due to the 2017 law.
What’s happening: The Witmer project is almost three months overdue with daily penalties of $500.
- Final payment negotiations continue between DSM and the company for a separate fire department project that was completed more than three months late and is also subject to penalties.
In another case: Metro Concrete, a former Dallas Center business that worked as a subcontractor, alleges Graphite’s actions forced it into bankruptcy.
- A bankruptcy trustee seeks more than $900,000 in pay or damages linked with work on an Atlantic Schools athletic facility, the DSM fire station, a DMACC renovation and a state vehicle maintenance building.
Of note: Graphite was the lowest bidder for Atlantic’s project but completion was delayed for months.
- The district will not hire the company again, Superintendent Steve Barber told Axios this month.
And in more cases: Central Iowa Ready Mix alleges Graphite owes it almost $426,000 in labor and materials for work on a Metro Waste Authority project.
- Blackford Foundations of Ankeny seeks $411,000 from Graphite for breach of contracts linked with projects at Mytrue Medical Center in Harlan, Southeast Polk Schools and Witmer park.
What they're saying: Changes made to projects after Graphite was hired as well as pandemic-related delays and deficiencies among subcontractors are to blame for the delays at projects, Graphite’s president Russell Carew told Axios.
- He declined to comment about the specific allegations in the ongoing lawsuits.
The big picture: Problems linked with the 2017 law are not common but there are "a few bad actors," Alan Kemp, director of the Iowa Leagues of Cities tells Axios.
- Local governments can better protect themselves with clear contracts that include penalizations for being late, he said.