Legal wrangling halts construction

Construction of the new Dental School building at 40th and Locust streets, halted since mid-September, has been held up by a legal dispute between the University and the project's contractor. And according to Penn officials, the new facility, which was scheduled to be completed last October, may not open its doors for another year. Penn defaulted on the contract and filed an arbitration demand in September, alleging that York Hunter Construction failed to fulfill its obligations according to the agreement. Responsibility for the project's completion now lies with the contractor's surety company, which provides insurance to ensure the project's ultimate completion. Preliminary preparations for construction of the $22 million Schattner Center -- named for Dental alum Robert Schattner, who donated $4 million to the project -- began in October 1998. The building was originally slated to be completed by October 2000. Representatives of York Hunter say initial delays made this completion date impossible, while the University charges that the construction company was not on track to complete the project by the final deadline. "The story from our end is that the contractor was terminated for failure to perform according to our contract," General Counsel to the University Roman Petyk said. "The decision to terminate was a decision that represented a very careful, considered response to many problems that the University perceived." "It is currently in arbitration," Pelyk added. "We are confident that we will prevail in that arbitration, and that the contractor will have been in the wrong." Counsel for York Hunter say that the construction company was planning a countersuit for wrongful termination. "What was unusual was that the job was stopped when we had over 90 men on the job and we were on the way to having it completed by January 15, 2001," Silvermintze said. Vice President for Facilities Omar Blaik said he expects an agreement with the surety company to be reached in the next several days, allowing construction to restart with the surety company overseeing work. Once the project is finally resumed, Blaik estimated it will take nine months to complete. Representatives of New York-based York Hunter said they were on track to complete the job until Penn defaulted -- and that the University's faulty and tardy planning was the root of any delays. "The October date [to complete construction] had been moved back to January," York Hunter President Kenneth Colao said. "The project got off the ground three months later than it was supposed to because of design problems. The notice to proceed was also three months late. There was a three month delay before even getting a shovel in the ground." The two groups appear to have been working off disparate timelines. In discussions prior to signing the contract, the bottom two floors of the building were to be completed in July 2000, with the remainder of the building to be done the following October. Petyk said that these original July and October deadlines remained firm from the University's perspective. But Mike Silvermintze, general counsel for York Hunter, said that the University had an "inaccurate view of the schedule." Once breaking ground was delayed three months, Silvermintze said the construction company assumed the completion date would also be pushed back three months to January. Petyk, however, said he knew of no January deadline, but that Penn contracted for and expected that work would be completed in October. But Colao said that in mid-September, Penn had still failed to pay the company for its work in July and August. He said that this hardship compounded the problems with design and materials, all affecting the contractor's ability to complete the job. "There were a lot of details that were not constructable," Colao said. "There were a lot of questions and clarifications that were not responded to." Petyk said that payments were not stopped until after the contract was terminated, which was consistent with the terms of the agreement. He said that Penn also opposed York Hunter's claims on issues of design and communications. "These are all issues that go to the heart of the dispute between the parties and they will be resolved in arbitration," Petyk said. "We disagree with their contentions." Penn defaulted the contract on September 14, effectively putting construction on hold. The responsibility for the project was then relegated to the contractor's surety company, National Union, who will ensure that Penn's project is completed without a loss to the University. "We have filed a claim with the [contractor's] surety or bond company asking them to perform their obligation to take over the project and complete the work," Petyk said. "We are very close to signing a takeover agreement." Blaik said that once an agreement with the surety company is reached, it could be up to a year before the rest of the job is complete. "They will not be able to start right away after we reach an agreement," Blaik said. "They will have to mobilize sub-contractors, so it could be a couple months after that [before work begins]. From the time they start, it will be about nine months." Colao surmised that this significantly longer time frame might be due to the need to reschedule the canceled manufacturing dates, a process that could take three or four months. Other factors may be the learning curve involved in construction jobs and the labor shortages in the area, Colao said.