Highlands University is in a jam. After having terminated “for convenience” the contract with Makwa Builders LLC and hiring Franken Construction to step in and complete the new student center, Highlands may have bitten off more than it can chew. Makwa is demanding the university pay it $3.2 million for work it and its subcontractors did and for the profits it would have made if allowed to complete the job.
The idea of paying such a hefty settlement in this project is unsavory to say the least. Makwa was behind schedule practically from the beginning, and the new contractor, Franken Construction, says much of the work that did get done was shoddy at best. According to Franken officials, there are a number of items that were done wrong up to this point, which suggests that some work is going to have to be redone before moving forward to complete the project.
If you want to back-date this project to when the troubles started, may we suggest the bid award itself. Regent Jesus Lopez has said Highlands suspected that Makwa had seriously underbid the job but that the university was compelled to follow the state procurement code, which requires going with the lowest bidder. However, Highlands didn’t have to accept any of the bids, but did anyway. Mistake No. 1, we’d say.
The second mistake may have been in terminating the contract “for convenience” instead of “for cause.” Now, Highlands may be obligated by its own contract to pay a severance of sorts — the total of which, according the Makwa, is $3.2 million. If paid, the total project will cost about 39 percent more than what it originally budgeted. That’ll be a big hit for the university.
Lopez, who has been outspoken in his criticisms of Makwa and its work since last year, has gone so far as to suggest that a grand jury may need to look into the company and its practices. That may or may not be so, but one thing’s for sure — if Highlands doesn’t act to counter Makwa’s demand for a multi-million dollar severance, the likelihood Makwa will win and Highlands will lose is great. Makwa submitted its compensation request on April 30 , but the company’s attorney said Highlands has yet to respond. Ignoring the problem won’t make it go away.
If Lopez’s implications are right and Highlands has reason to believe Makwa intentionally low-balled the bid to get the job, perhaps the best next step for the university is to file suit alleging fraud. We suspect that would be better than a $3.2 million hit. The university may have made mistakes in getting itself into this jam, but it appears that Makwa came nowhere close to fulfilling its obligations. And even if the company didn’t commit fraud, looking at where the building stands now suggests, at the very least, a level of incompetence that doesn’t deserve compensation.