The city of Edinburg dropped its contractor and voted to allow performance bond provider Hanover Insurance Company to appoint a new contractor to finish the project.
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Edinburg drops water plant contractor
EDINBURG — The City Council voted unanimously Tuesday to terminate its agreement with a McAllen-based construction company responsible for the city’s $13 million water plant expansion on its west side.
“We had already issued a stop work order and now this action terminates the contract by convenience,” said City Manager Ramiro Garza, referring to Texas Descon Construction LP’s contract.
The city utilized a clause in that contract that allowed them to exit the agreement at will, he said. Council members also voted to allow the bond company Hanover Insurance Company to take over the financial aspect of the project and help appoint a new general contractor.
Edinburg is the third entity in HidalgoCounty that’s publicly cut ties with the family-owned and operated construction company Texas Descon in the past few weeks. The City of San Juan recently accepted a letter of voluntary default and the Pharr-San Juan-Alamo school board also voted to terminate four renovation contracts.
In CameronCounty, the City of La Feria’s safe dome projects were also awarded to Texas Descon. The same bond company that backed those projects took over the dome construction. La Feria city officials said Friday afternoon they did not vote to drop the contractor, nor have yet received a letter of default.
Texas Descon’s owners and its attorneys did not respond to requests for comment on this story despite emails, calls and a visit to the company’s office.
Across all the projects that total more than $92.2 million, each bond company has stepped in to take over and some have appointed new general contractors to finish the job within the budget.
For the San Juan water plant, the job is only about halfway done, officials said. But in Edinburg the project had barely started, Garza said. While other entities complained of poor performance, Edinburg officials said they didn’t use that clause, instead evoked an option that doesn’t blame the company for anything.
Texas Descon disclosed to San Juan officials that they had no experience building water plants but leaders awarded them the contract anyway. But Edinburg was also in need of an expansion, its two water plants were running at more than 90 percent capacity last year. The city also borrowed $10 million from the Texas Water Development Board for the project to increase its capacity from 8 million gallons per day to 16 million gallons each day.
Last year, the city’s utilities department recommended that the council award the water plant expansion contract to New Braunfels-based R.P. Constructors Inc. because it was the lowest bid that satisfied the requirements.
City staff reported to the council that Texas Descon didn’t submit all the paperwork initially and knocked down the ranking — but the firm did submit the lowest bid of all.
But both bids were more than the $10.7 million Dannenbaum Engineering estimated the project would cost, according to a report the McAllen company prepared for the city last year.
An executive session agenda item in Tuesday’s meeting listed possible action regarding rival general contractor R.P. Constructors Inc., the same company that originally bid for the project. But Edinburg council members did not vote on it.
“We’re still going to negotiate that,” Garza said. “We’ll probably have that at the next meeting with the final decision.”
Construction liens, which are meant to protect subcontractors if they aren’t paid in a timely manner, are essentially written claims on file with the public entity and bond company that the subcontractor is missing payment for invoices. Traditionally, mechanical liens bar clean title for private projects, but public construction require bonds.
In the meantime, it’s unclear how much has been paid to hundreds of subcontractors, vendors and suppliers for their services to date. Dozens of subcontractors may be out of pocket for thousands of dollars each, especially if they never filed a construction lien or if they had verbal contracts with Texas Descon.
General contractors are responsible to disburse money from the project owner to subcontractors.
Emails obtained by The Monitor through an open records request filed this spring revealed personnel and bookkeeping issues as the small firm struggled to pay its desperate subcontractors at the PSJA school district.