Wednesday, August 8, 2012

District settles with McKinstry subcontractors

Checks issued to local companies in June for more than $451K


By TERRY SMITH
Express Staff Writer

The Blaine County School District issued checks in June totaling more than $451,000 to 13 local companies that worked as subcontractors for Seattle-based McKinstry Essention.

The money was in excess of the $18.6 million that the district has acknowledged it agreed to pay McKinstry for a contact signed between the parties in 2010 for energy savings work and facility improvements at eight district schools and facilities.

McKinstry, in litigation filed in May, is suing the school district in Blaine County 5th District Court, alleging that it performed work worth $25.8 million and that the district still owes the company up to $7 million. In a counterclaim, the district is alleging damages of at least the $18.6 million it authorized.

According to recently filed court documents, the school district is now acknowledging that it has paid McKinstry or its subcontractors a total of about $19.3 million, an amount nearly $700,000 greater than the $18.6 the district authorized.

The district hopes to recoup the overpayments in litigation. Most of the extra money has gone to local companies that McKinstry hadn't paid.

The payments in June were supposed to be made to the companies directly by McKinstry, but McKinstry stopped paying local subcontractors late last year after the school district stopped making payments to McKinstry. The payments were issued to the subcontractors on June 20 through joint checks written out to McKinstry and the various subcontractors.

Information on the payments was obtained on Monday by the Idaho Mountain Express through an Idaho Public Records Law document request that was filed with the district on July 27.

"I do hope you note that the entire joint-check procedure was initiated by the district, not McKinstry, and was implemented to protect our local subcontractors," district Communications Director Heather Crocker wrote in a letter forwarding the information to the Express.

According to the documents, the checks totaled $451,039. The largest check, for $106,402, went to Western States Geothermal in Ketchum. The second largest, for $71,108, was to Sawtooth Plumbing and Heating in Hailey. The third largest, for $64,601, went to Thornton Heating and Sheetmetal in Ketchum.

Other local subcontractors receiving payments in June were Matteson Fire Sprinkler, $26,484; Interior Contractors Inc., $47,661; Precision Plumbing, $7,242; Buffalo Electric, $8,029; C&R Electric, $10,729; Burks Excavation, $8,119; Thermal Temp Heating & Air Conditioning, $7,519; Dusty's Electric, $3,531; Evans Plumbing, $47,502; and S. Erwin Excavation, $42,106.

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Further documentation provided to the Express shows that the school district issued multiple checks on two other occasions to local McKinstry subcontractors. The three separate issues bring the total paid to subcontractors through joint checks to $1,045,063.

Five checks totaling approximately $106,282 were issued to four subcontractors on Feb. 9. Matteson Fire Sprinkler was paid $53,176, Interior Contractors Inc., $694, and Sawtooth Plumbing and Heating, $1,150. Evans Plumbing was issued two checks at that time, one for $7,155 and the other for $44,106.

On Jan. 13, four other checks totaling approximately $487,741 were issued to four subcontractors. Sawtooth Plumbing and Heating was paid $17,651; Thornton Heating and Sheetmetal, $195,106; C&R Electric, $47,542; and Western States Geothermal, $227,441.

Apparently, the 13 subcontractors paid by joint checks were the only ones owed money from the work. About 55 local companies were subcontracted by McKinstry, and the district documents do not show that any of the others claimed to be owed money.

"It's important for the public to understand that to our knowledge all subcontractors have been paid for the work they performed," Crocker wrote Tuesday in an email to the Express. "The school board and administration felt this was a priority. As we've said from the beginning, we are proud of the work performed by over 55 local companies."

McKinstry spokeswoman Heidi De Laubenfels also provided a written statement on Tuesday.

"I would like to clarify that McKinstry has made considerable direct payments to subcontractors, and continued to do so even after it stopped receiving full payments from the Blaine County School District," De Laubenfels wrote.

"Since August 2011, McKinstry has paid its subcontractors out of its own reserves, uncompensated by BCSD," De Laubenfels continued. "McKinstry also urged the district to issue joint checks so it could sign over additional payments to the subcontractors and help keep them out of the payment dispute with the district administration.

"While many contractors would have stopped work on Hailey Elementary, Carey High, Wood River High, the District Support Services building and the Community Campus building, and refused to pay the subcontractors—whose contracts only require payment if BCSD pays McKinstry-—McKinstry and its subcontractor partners continued working to improve BCSD's schools and facilities for its students, staff and community.

"McKinstry is proud of the work that it has completed with its subcontractors, and is proud of its efforts to ensure payment to those partners," De Laubenfels stated.




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