Leslie & Elliot were the general contractors on a state housing development for mentally disabled individuals. The housing units are owned by the State of Connecticut. The purpose of the state housing program is to place mentally and physically handicapped individuals into a family neighborhood setting. The housing units were standard repetitive designs, constructed with prefabricated building elements. Sixteen housing units were distributed among ten sites.
The State of Connecticut defaulted the general contractor for non-performance when the construction progress had reached a 30% completion level. The State of Connecticut paid the contractor through 70% completion. The contractor’s performance bond was called in.
Fireman’s Fund, Surety for the performance bond, hired DiGeronimo PC to evaluate the status of construction completed to date. Under the terms of a performance bond, Surety is required to use bond cash reserves to complete a project regardless of the cash balance remaining in the construction contract. This case regarded a non-performing contractor who had been overpaid. The state bears a responsibility for prudent distribution of public funds.
An agreement was negotiated at DiGeronimo PC’s recommendation. The scope of work was reduced from sixteen housing units on ten sites to eight housing units on five sites. Work on all sites had been started. The 50% reduction in the scope of work abandoned eight housing units and five sites – was 100% completed with no additional state cash outlay. The State of Connecticut was willing to negotiate the scope of work under pressure of a lawsuit for misuse of state funding by authorizing the contractor payments in excess of work completed.
DiGeronimo PC revised the scope of work for the projects to be completed and followed the design and specifications of the original architect. Negotiations were completed with a new general contractor. Construction on the reduced project is completed.