Aug 26, 2022 - News

Project Labor Agreements ban results in Iowa government headaches

Illustration of a hundred dollar bill with Ben Franklin wearing a construction hat.
Shoshana Gordon/Axios

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.

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.
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