John Tuohy

john.tuohy@indystar.com

The lead contractor on the fifth leg of the I-69 project has been as much as nine months late paying subcontractors dating to last summer and has been threatened with legal action by the Indiana Department of Transportation, state transportation officials said Friday.

INDOT hand-delivered a notice of “failure to cause prompt payment” to contractor Isolux Corsan, which snagged the $329 million contract to design, build and maintain the 21-mile stretch of I-69 from Bloomington to Martinsville.

“We understand that contract invoices have not been paid more than nine month after submittal,” read the letter, dated March 31, which demands that payment be made by May 2. If Isolux doesn’t make the payments, INDOT can sue the company for breach of contract or require that it increase its insurance payments to ensure that the subcontractors get paid.

“Not making prompt payment is concerning to us,” said INDOT Chief of Staff Chris Kiefer.

The alleged late payments come on the heels of an announcement of an eight-month delay in completion of the project caused by problems obtaining utility and environmental permits in a timely manner. The project was supposed to be finished near the end of this year but has been pushed back to the end of July 2017.

INDOT officials said the delay will not push back the building of Section 6, from Martinsville to Indianapolis, which would open in 2022 at the earliest. Officials also said the delay in the opening of Section 5 had nothing to do with the late payments by Isolux.

Indiana Public Finance Director Dan Huge said some of the approximately 35 subcontractors told INDOT that they were not getting paid on time, which can slow progress of construction because companies need cash flow to keep buying materials and paying their workers for the next task. INDOT officials said six to 10 companies were paid late.

Although Kiefer said he knew of no subcontractors that had stopped working or walked off the job because of slow payments, one subcontractor said he knew of several that had ceased working.

“Some have chosen to stop work,” said Harold Force, president of Force Construction, Columbus. “You can drive along the highway and see the equipment.”

Force said his company has been paid late but has not slowed down or stopped. Force is building or rebuilding 30 bridges along the route.

“There have been problems with payments, and we and other firms have been part of that,” Force said. IndyStar was unable to reach any firms that Force said had stopped working.

Contract disputes halt some work on section of I-69 project

INDOT Deputy Commissioner Jim Stark and I-69 Development Partners project manager Gary Vandegriff said some companies are working at a slower pace but haven't stopped.

"Some subcontractors are in disputes and are not as productive as they could be," Vandegriff said. I-69 Development Partners is overseeing the entire I-69 project.

Isolux is an international company based in Spain that has built tollways around the world but is working on its first road project in the United States. Company officials could not be reached for comment.

Under what is known as a public-private partnership (P3), Isolux hired the construction, engineering and design firms for Section 5 and will maintain and operate the highway for 35 years. The state will pay Isolux $21.8 million a year but has the authority to deduct for poor performance.

Section 5 is the only leg of I-69 to be built in a P3 arrangement. In the others sections, INDOT is the de facto prime contractor and pays the firms directly. The financing structure for Section 6, the final leg, has not been decided.

Public-private partnerships are increasingly being used in highway projects, but Indiana has had mixed success. In 2006, the state sold operation of the Indiana Toll Road to a private developer in a $3.8 billion, 75-year lease deal, but the developer went bankrupt in 2014.

INDOT officials said a P3 project at the southern border is in much better shape. The East End Crossing is a $763 million bridge over the Ohio River linking Utica with Prospect, Ky. The project is expected to come in under budget and ahead of schedule. INDOT will pay $33 million a year from 2016 through 2050, but toll revenue will offset the payments.

Call IndyStar reporter John Tuohy at (317) 444-6418. Follow him on Twitter: @john_tuohy.

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