LM Township must pay $900K in contractor dispute

Bryn Mawr >> Despite having been completed and re-opened for nearly four years now, Lower Merion Township will have to pay out an additional $900,000 for the Ludington Library project after an arbitrator recently ruled against the township in a long running dispute with contractors.

Because of the ruling, the final costs of the renovation for the project ran about $10.8 million.

Dan Bernheim, chairman of the Board of Commissioners’ Legal Affairs Committee, made the announcement at a committee meeting April 27.

According to Bernheim, the dispute started due to what he called “substantial delays” in the project. In particular, he said the delays by the plumbing contractor, Altchem Environmental Services, were a major factor in those delays. He described the performance of Altchem as “nothing other than dismal.”

In the end, Bernheim said the plumbing contractor ended up filing for bankruptcy while the bonding company that acted as surety for the work also went insolvent, he said.

“So this has operated somewhat as a perfect storm against us and as a result we’ve had some disagreements as to who was responsible for what in connection with the delays,” Bernheim said.

Because of those disagreements, the case went to what he called a mandatory arbitration.

“Unfortunately, the arbitrators found against the township and, unfortunately, they did so in a fairly significant amount of $898,252,” Bernheim said.

Bernheim went on to say that the township would be unable to appeal the ruling.

Township Manager Ernie McNeely said with the judgment the total cost of the library project came in at about $10.8 million. That included a fund raising and reimbursement that equaled about $1.4 million, he said.

Bernheim said because of what has happened with the project, the township has changed its procedures. Now they will use an “owner’s rep” working on major building projects. That person, he said, is answerable to the township with a function of overseeing the project.

“In each of the other [library] projects we now have that point guard so that we minimize, if not totally eliminate, a repeat scenario,” Bernheim said.

One commissioner expressed his disappointment in the arbitrator’s decision.

“This is an embarrassment for the township,” Lower Merion Commissioner Scott Zelov said, adding that the Ludington Library project was a poorly managed job. Zelov also acknowledged that current township manager, McNeely, was not in Lower Merion at the time.

According to Zelov, one the management problems with this is that the State of Pennsylvania requires municipalities to have a four prime contractors for large building contracts.

“We are burdened by the Commonwealth of Pennsylvania for the various special interests to keep the multiple prime requirements imposed on municipalities. We are forced to have four prime contractors. In the private sector — in the real world — that would never happen. And having four prime contractors is one of the reasons that this project was poorly managed and we had this result,” Zelov said. He added that there are special interest groups keeping the four prime contractor rule alive.

McNeely added that its only school districts and townships that have to follow this rule of having four prime contractors. Boroughs and home-rule chartered communities do not have to follow the rule, he said.

The money is coming out of the township’s Capital Budget and is being sent to the law firm, of Flamm Walton Heimbach & Lamm PC representing the general contractor. The board could decide later to take the money from the capital budget or the general fund.

Zelov also added that the township should think about its upcoming projects.

“I think this board needs to consider what capital projects we will delay because of this $900,000 unanticipated capital project. That’s what this is. This is $900,000 in additional capital expense that we did not anticipate and it’s not in our six year capital plan. Does this put at risk the one remaining library project? We certainly should consider that.”

When asked about the status of upcoming projects, township officials say they are not planning any changes.

“There are no current plans to change any upcoming projects. Future CIP projects will be presented to the Commissioners at the late June CIP workshop. This annual CIP workshop is when the Commissioners provide staff with feedback on future CIP projects,” assistant township manager Bob Duncan said in an email asking about future projects.

Source: Mainline Media News