$300M Hospital 2+ Years Behind: Santa Clara Co. Sends Default Notice To Construction Co.

Photos: Rear of new hospital facility facing South Bascom Avenue; Third-floor hallway; Third-floor patient room; ICU room on second floor; Second-floor hallway of ICU unit.

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Santa Clara County officials say they intend to default on a $300 million contract with a construction firm that has fallen more than two years behind on building a new hospital facility in San Jose, but the contractor is blaming the delays on poor project management by the county.

Turner Construction Company is the general contractor for a 168-room building off of South Bascom Avenue at Santa Clara Valley Medical Center in San Jose, but County Executive Jeffrey Smith said the project has seen multiple delays and “unmet promises.”

The county sent a final notice of default on Friday to the New York-based company and has given them a week to remedy the project’s deficiencies, Smith said during a news conference today outside the construction site.

If Turner Construction doesn’t meet the deadline, the county has authority to take them off the site, according to Smith.

The 168-room building is part of a seismic retrofit program passed by 78 percent of voters in 2008. The construction project is just west of the hospital’s “Old Main” building, which is not seismically safe and will be demolished once the new facility is completed, county officials said.

Under the state’s Alquist Hospital Seismic Safety Act, all hospitals need to be evaluated for seismic safety and retrofitted if necessary by 2030. The project broke ground in 2009 and its initial completion date was the end of 2012, which was then modified to October 2013, according to county officials.

The county gave Turner a final deadline for completion of Sept. 19, but the project is still not close to complete, according to Smith.

The company told the county in April 2014 that it would not meet the September deadline, Turner Construction spokesman Larry Kamer said.

The project is currently expected to be completed by the end of 2016, according to Kamer. Smith said it will take another two years at a minimum to complete the project. The county says the delay has led to an annual loss of $36 million, which Smith said was a “very conservative estimate.”

Another $30 million has been lost in paying workers on the job, because Turner has not provided sufficient staff on the project, Smith said. Smith said the county repeatedly asked Turner Construction for follow-up on a Sept. 3, 2014 accident in which a subcontractor employee narrowly escaped an explosion without burns in a recently installed steam line at the project’s North Utility Loop.

On July 1, the county sent a request for a formal audit to the company for the loop to include engineering studies, the cause of the explosion and redesign plans. The company has not responded to the county’s requests.

“The real victims are the patients and county taxpayers,” Smith said. The county is in talks with other contractors to take over the project, according to Smith.

“We need to get control over this project because it’s being delayed unnecessarily,” Smith said.

Turner Construction was also the general contractor for Levi’s Stadium project in Santa Clara, where two subcontractor employees were killed on the job in 2013. Smith alleged many subcontractors on the hospital project were pulled to work at the stadium, which offered a premium for an earlier completion date.

Kamer denied Smith’s allegation because it takes a “completely different skill set to build a stadium than it is to build a hospital” and said the county was responsible for delays. Turner has completed 90 percent of the project and has received 850 change orders from the county, 300 of which have come in since April 2014, according to Kamer.

The county has shown poor management and attention and failed to deliver designs on time for the project, Kamer said. There have also been close to 750 amended construction documents that need separate state approval, a process that has taken more than six months and further delayed the project, according to Kamer.

“As the nation’s largest builder of hospitals and healthcare facilities, we have never encountered a more frustrating situation than what we face at Valley Medical Center,” Turner Construction Vice President Michael O’Brien said in a statement released by the company today. “County representatives managing this project lack hospital construction experience or the knowledge of California’s exacting standards for healthcare facilities.”

The company met with county officials again Monday and remains committed to finding a solution, officials said in the statement.

The first floor will hold staff offices and rehabilitation spaces; the second floor an intensive care unit and the third through fifth floors single patient rooms, 50 of which would be isolation rooms, said county project manager Ken Rado. The third floor was torn down in early 2012 and replaced due to incorrect framing, according to Rado. Many yellow signs that read, “Electrical Circuit Testing in Progress” were posted throughout the building. The building lacked flooring and wallpaper. Construction materials were spread out throughout the rooms and hallways.

The project needs at least double the 130 workers currently at the site, Rado said.

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--Bay City News