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Morganton psychiatric hospital project subject of dispute between DHHS and contractor, P.2

In our last post, we began looking at a construction dispute involving the North Carolina Department of Health and Human Services and a contractor charged with heading up the construction of a mental hospital in Morganton. As we noted, the state is now attempting to cancel the contract after the project has run into numerous delays and significantly increased in costs due to complications.

As in any contract dispute, both sides have different perspectives on events. The Department of Health and Human Services says that its former secretaries were informed of the problems as the project ran into multiple problems but that they decided to delay taking legal action in order to attempt to resolve the matter privately. Now, the state wants the contract cancelled, and some lawmakers are talking about banning the company from wining future contracts with the state. 

The construction company, for its part, issued a lengthy position statement in early March saying that the state has failed to quickly address problems when they arose, and then failed to take responsibility for its role in the project’s complications and delays. The design company for the project, it argues, made numerous requests for changes and failed to inspect portions of the project in a timely manner, leading to delays and complications.

On top of that, the state waited 3 to 4 years before taking steps to complain of any problems to the holder of contractor’s bond, which would have given the state the right to hire a replacement contractor or allow for a refund and rebid. The construction company, at this point, refuses to cancel the contract and intends to see the project through to the end.  If the contract ends up being cancelled, the company will likely sue for wrongful termination.

Next time, we’ll say a bit more about this dispute and the importance of working with an experienced attorney to ensure construction disputes are effectively resolved according to the contractual rights of the parties. 

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