County Rips Up Contract, Sues Turner Construction Over Hospital Project

Santa Clara County has terminated an international construction company from a $300 million hospital construction project in San Jose and filed a lawsuit alleging a breach of contract today.

The contract with New-York based Turner Construction for a new 168-room facility and North Utility Loop at the Santa Clara Valley Medical Center is almost three years behind schedule, county officials said.

In a letter dated to the company today, county project manager Ken Rado said Turner Construction has not made any plans to address the low number of workers, finish the job sooner and concerns surrounding worker and hospital safety.

The county has also filed a lawsuit against Turner Construction alleging the company breached their contract and were negligent in their operations, County Executive Jeff Smith said. The lawsuit, filed by Oakland-based attorney Eric Firstman on behalf of the county, seeks tens of millions of dollars in damages, Smith said.

The project was approved by voters in 2008 and, once completed, will meet a state law requiring all hospitals to be seismically retrofitted by 2030. Construction started in 2009 and the project was initially scheduled to be completed by late 2012, but was later changed to October 2013, then to this Saturday, according to county officials.

On Aug. 28, the county issued its final default notice to the company, citing multiple issues including numerous delays, safety concerns, and the loss of funds at the expense of taxpayers for the project.

The county also released a video of a near-fatal steam explosion last year at an underground vault at the North Utility Loop as a worker was climbing out.

Parts of the project had to be rebuilt, including the third floor, which had to be torn down and built again to meet state requirements, Rado said.

“We’ve given Turner every opportunity for coming up with a strategy to cure the breach of contract and actually get the job done,” Smith said.

Turner Construction spokesman Larry Kamer said last week that the project is 90 percent complete and the company has received 850 change orders from the county, which has poorly managed the project.

“The red herring of change orders is absurd because the way the contract was bid anyone would know that there would be many change orders,” Smith said. On Friday, the county posted a suspension notice locking out company workers from the site off South Bascom Avenue.

Even after the notice was posted, company officials were still interested in negotiating with the county to move forward on the project, Kamer said last week.

Turner Construction officials were not immediately available to comment on today’s developments.

On Friday, the company provided a proposal to finish the project, but Smith said the five-page document was not sufficient and “took very little time to read.”

The county has reached a verbal agreement with another contractor to move forward with the project, Smith said.

Smith couldn’t name the company, but said it has experience in taking over projects and bringing them to completion. A written agreement with the new company is expected to be finalized by early next week, Smith said.

-Bay City News