Thursday, March 13, 1997
DISPUTE:
UCLA sues construction company for alleged incompetenceBy Brooke
Olson
Daily Bruin Staff
It was supposed to be a simple touch-up of several campus
facilities, administrators said. It has evolved into a
multi-million dollar lawsuit.
The UC Regents approved an $11 million suit last September
against Hensel Phelps Construction Co., as well as an architectural
firm and 10 subcontractors, alleging that the company failed to
properly construct, manage and supervise construction of the
project.
The firm was hired in June of 1988 to design and improve UCLA’s
Northwest Housing and Parking facilities.
According to the contract signed between the University and the
company, Hensel Phelps promised to competently and diligently
deliver a "fully functional, defect-free project."
However, nearly a year after the complex was completed in 1993,
the University discovered numerous defects in both structures,
which UC officials allege were deliberately concealed by the
construction company.
Problems cited in the complaint include leaks in the roof and
the basement, dangerous shower installations, defective outdoor
lighting fixtures, rotting of wood, clogged drainage systems and
the presence of water inside walls.
In addition, the University alleges that Hensel Phelps hired
incompetent labor and used defective materials.
Lawyers and managers for Hensel Phelps dispute the allegations
and have not accepted blame for the problems, but refused to
comment further.
Many UC officials and other legal counsel noted that controversy
between a company and contractors is often routine.
"It’s not unusual, these days … to be in a lawsuit or
litigation or arbitration of some kind with a major contractor over
… errors or anything," said Chancellor Charles Young.
"Unfortunately, that’s sort of the way (it is) Â people get
contracts with the expectation they’re going to be able to squeeze
more out of it," Young added.
The Chancellor also noted that in the University’s view, "there
were substantial problems created by (Hensel Phelps) which we
believe they are responsible for and should be required to
compensate for."
However, some questioned the amount of compensation being
requested by the university, noting that although disputes are
common, multimillion dollar suits against construction companies
are very rare.
"This is a huge amount of money that we’re talking about," said
student Regent Jess Bravin. "Yes, lawsuits tend to happen but not
to this degree."
But the controversy surrounding Hensel Phelps does not end with
UCLA. Last spring, the regents approved a $32 million deal with
Hensel Phelps and a development company to construct the new Office
of the President headquarters.
Some questioned the appropriateness of using a construction
company that is currently being sued by the university.
"It’s seems really ironic that the firm we’re suing for millions
of dollars is also the same one we’re paying millions of dollars to
build a new headquarters," said undergraduate president John
Du.
Administrators and legal counsel are playing down the matter,
noting that there is no reason to consider the two cases in the
same legal or business context.
At UCLA, the university dealt directly with Hensel Phelps as a
general contractor, while at Oakland it contracted with a joint
venture of which Hensel Phelps is only a partner, said UC General
Counsel James Holst in an interview with the Wall Street
Journal.
In addition, Hensel Phelps already "has connections with
politics in Oakland," Holst said. As a result, it would be easier
for the construction company to have the city approve the necessary
building permits, Holst added.
Hensel Phelps is a major player in the construction industry.
With $447 million in revenue in 1995, it ranks in the top 25
construction firms, according to Engineering NewsÂRecord, a
trade publication.
The firm has often worked closely with the UCs to develop and
construct various university projects, administrators said.
Recently, the company completed work on a chemistry laboratory and
the $55 million business school building at UC Berkeley.
The lawsuit is currently "in the process of being processed
through the legal system," Young said. "Everyone is working
together to try and come to some mutually-agreeable
settlement."