County board and architect battle over millions in cost overruns for jail

By: - October 11, 2021 11:40 am

Floyd County officials and a Nebraska architectural company are suing each other in a dispute over millions of dollars in cost overruns tied to a new county jail and law enforcement center. (Photo by Alex Potemkin/Getty Images)

Floyd County and a Nebraska architectural company are suing each other in a dispute over millions of dollars in cost overruns tied to a new county jail and law enforcement center.

In November 2017, the Nebraska architectural firm of Prochaska & Associates submitted to the county a series of cost projections for a proposed new Floyd County Law Enforcement Center in Charles City.

Based on those projections, the county opted for a single-story, 32-bed jail addition and a courthouse renovation that was projected to cost no more than $12.7 million.

In early 2018, Prochaska & Associates submitted a “pre-design budget” of $10.9 million for construction of the entire project. The county then held a bond referendum and won public approval to spend up to $13.5 million on the project.

According to the county, the board then signed a contract with Prochaska & Associates, obligating the firm to complete work on the project and stay within the $10.9 million construction budget.

Almost immediately after that happened, Prochaska & Associates allegedly submitted “corrected budget worksheets” to the county showing a “grand total project estimate” of $13.7 million, exceeding even the amount that was approved by voters at the referendum.

The county alleges that to date, the project has racked up $16,074,469 in expenses – an amount equal to 147% of the 2018 pre-design budget.

The county alleges there have been over 30 change orders filed on the project, revising the original cost estimates to factor in items Prochaska & Associates omitted from the original plans when bids were solicited on the project.

The county is now suing Prochaska & Associates for professional negligence and breach of contract.

Architect blames county for added costs 

Prochaska & Associates recently had the case moved from state court to federal court, where it filed a counterclaim against the county.

The company alleges that the initial figure of $12.7 million was an “aspirational goal” for the cost of the work. “At this point in 2017,” the company claims, “the parties had not designed the facility and therefore had no reasonable basis from which to develop anything other than a goal for the cost of the work. Furthermore, no reasonable person could have believed that the cost projections prior to the start of design were the actual cost of the work, because everyone knew that the project was going to be the subject of a competitive bidding process.”

As for the $10.9 million figure in the contract, the company claims that number was merely the county’s budget, not the final estimate of costs. The company notes that while the $10.9 million was agreed to in writing, the contract goes on to say that if the detailed cost estimates exceeded the budget, it would be the county’s responsibility to approve increases in the budget or revise the project scope or quality to reduce expenses.

At different points between June 2018 and September 2019, Prochaska & Associates claims, the construction manager on the project estimated the project’s cost as being significantly higher than what the architectural firm had estimated. The company says the county and the construction manager then directed Prochaska & Associates to redesign the project to include the more costly elements, which it did at no extra cost to the county.

With regard to the difference in the various cost estimates, Prochaska & Associates says it could not “predict changes in the economy caused by factors outside their normal experience, including international trade restrictions, trade bottlenecks, unusual weather phenomenon and the pandemic.”

This is not the first time Prochaska & Associates has sued an Iowa county over efforts to construct or expand a jail.

In October 2016, Prochaska & Associates provided the Henry County Board of Supervisors with a needs assessment for the development of a new jail. As part of its work, the company was paid to help the board, the sheriff and a citizens’ committee publicly promote the project to help ensure voter approval of the necessary bond referendum.

The referendum was approved in the summer of 2017, but the county then selected a different architectural firm for the project.

That prompted Prochaska & Associates to file an Open Records Law request with the county, seeking to inspect all public records related to the approval of the construction manager and architect for the project. In response, the county turned over 78 pages of material, only 27 of which related to the project.

The county allegedly claimed its copies of the sought-after contracts, bids and communications surrounding the project were in the hands of the construction manager, a private company that’s not subject to public-disclosure laws.

Prochaska & Associates sued the county for violating the Open Records Law and for breach of an implied contract. The case was settled out of court in 2019.

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Clark Kauffman
Clark Kauffman

Deputy Editor Clark Kauffman has worked during the past 30 years as both an investigative reporter and editorial writer at two of Iowa’s largest newspapers, the Des Moines Register and the Quad-City Times. He has won numerous state and national awards for reporting and editorial writing. His 2004 series on prosecutorial misconduct in Iowa was named a finalist for the Pulitzer Prize for Investigative Reporting. From October 2018 through November 2019, Kauffman was an assistant ombudsman for the Iowa Office of Ombudsman, an agency that investigates citizens’ complaints of wrongdoing within state and local government agencies.

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