Greeley threatens lawsuits over ‘defective’ $25M renovation of main water treatment plant
By Trenton Sperry
The Greeley City Council on Tuesday gave City Attorney Doug Marek permission to pursue legal action against the construction and engineering firms tasked with a $25 million renovation of the city’s Bellvue Water Treatment facility.
Built in 1907 at the mouth of the Poudre Canyon in Bellvue – 36 miles from town – the facility is responsible for processing the vast majority of Greeley’s water. In 2016, Greeley contracted with HDR Inc. of Omaha, Neb., to design the first major improvements to the facility since 1947. In 2017, Greeley contracted with Hydro Construction Inc. of Fort Collins to perform the work, which was completed in June 2020.
According to city documents, “it has been discovered that there were several problems with the performance of the improvements at the (water treatment plant), which have required significant repair efforts by the city, and which also require the city to engage in further repair work in the future.”
The costs and details of those repairs weren’t available Tuesday.
According to city documents, Greeley has engaged in mediation with Hydro Construction, but those discussions didn’t solve the issue. So council has directed Marek to “seek damages” against Hydro, HDR, and any other responsible entity.
HDR Inc. is the sixth-largest engineering design firm in the country, according to Engineering News-Record, as well as the 10th-largest employee-owned company in the nation. It reported $2.4 billion in revenue in 2020.
A NoCo Optimist review of state business records for Hydro Construction finds its status with the state of Colorado is listed as “noncompliant” as of Tuesday because it missed an April deadline for its licensing fees. The business is set to enter “delinquent” status on June 30 pending payment of those fees. Hydro’s LinkedIn profile lists its company size as 11-50 employees.
However, Hensel Phelps, a Greeley-based general contracting firm, may now be considered a “parent entity” of Hydro Construction, as Hensel Phelps apparently acquired Hydro in August. Hensel Phelps is one of the largest general contractors in the country by revenue, according to Engineering News-Record. It reported 3,000 employees and $5.9 billion in revenue in 2021. Its corporate office is at 420 6th Ave. in Greeley.
Hensel Phelps has lately found itself in other, unrelated legal trouble. In January, the company agreed to an undisclosed settlement with Future Legends LLC, the developer of a large sports park in Windsor, over what Hensel Phelps alleged were $1.5 million in unpaid bills after the company withdrew as the project’s contractor. Future Legends had filed a counterclaim “in which it said that Hensel Phelps was an investor in the park and was required to make a capital investment in the project.”
Additionally, on May 12, Hensel Phelps agreed to pay the U.S. government $2.8 million to resolve allegations it was involved in subcontracting fraud in connection with a 2011-13 contract to build a commons and health-care facility for the Armed Forces Retirement Home in Washington, D.C. The subcontract was “designated for a (small) business owned and operated by a service-disabled veteran,” according to a news release from the U.S. Justice Department.
According to the release, Hensel Phelps negotiated with a large business to provide kitchen and food service equipment for the retirement home. It then negotiated nearly the same contract with a small business owned by a disabled vet – but with an additional 1.5% fee attached.
According to the U.S. Justice Department’s Northern District of New York, Hensel Phelps admitted “it should have known that the (service-disabled, veteran-owned small business) was merely a passthrough for (the large business), which was providing all of the work on the subcontract … and that the SDVOSB’s role was limited to providing its SDVOSB status and making it appear as though an SDVOSB was performing the work.”
In a statement provided to Engineering News-Record on Monday, a Hensel Phelps spokesperson called the issue an “oversight” and denied intentional wrongdoing. The company agreed to pay the fine “in order to avoid the cost of protracted litigation,” according to the statement.