Litigation between Prochaska, county stalling progress on new jail

Awarding of construction contracts for the Henry County Law Enforcement Center was tabled Tuesday by Henry County Supervisors after they were served with a lawsuit by Prochaska and Associates, Inc., of Omaha, Neb., for an alleged breach of contract.

Prochaska is suing the Board of Supervisors, the Law Enforcement Center contractor John Hansen (individually), and Midwest Construction Consultants for violating the Iowa Open Records Act, breach of implied contract and breach of contract in law and unjust enrichment.

Based on conversations with Board of Supervisors, Prochaska had assessed fees of Phase 1 and 2 under market value with the assumption they would be contracted for Phase 3. Prochaska was then excluded from bidding Phase 3 because Hansen allegedly cast them in unfavorable light to the Board of Supervisors.

The Board of Supervisors entered into an agreement with Prochaska on Oct. 20, 2016, when Prochaska provided a Phase 1 needs assessment for the development of the Law Enforcement Center.

On June 27, 2017, Prochaska and the Board of Supervisors entered into an agreement letter defining the scope of services, compensation and respective responsibilities for completion of the needs assessment in Phase 1.

The scope of services within this agreement letter included an evaluation of the functional and operational deficiencies of the existing Law Enforcement Center facilities; a review of previous studies; an analysis of existing county demographic information; a forecast of anticipated capacities for the next 30 years; a summary for review by the Board of Supervisors; and a plan for Prochaska to generate a report for the Board of Supervisors to be made public to keep Henry County residents informed on the development of the Law Enforcement Center.

The proposal fee for Phase 1 was $15,000, with the exception that any project services or charges beyond what was listed would be billed to the county hourly.

On Nov. 18, 2016, Prochaska sent the Board of Supervisors another agreement letter detailing the scope of services for Phase 2 of the Law Enforcement Center. These services included the option of renovating the existing county jail compared with the new Law Enforcement Center and program of spaces for a 44-bed jail.

Compensation for the scope of services detailed in Phase 2 was set at $15,000, an amount which excluded out of pocket reimbursable expenses incurred in the interest of the project. Additional services were agreed to be billed to the county on an hourly basis.

Prochaska claims that throughout Phase 1 and Phase 2, the Board of Supervisors and Prochaska worked collaboratively in developing plans for the Law Enforcement Center. Both parties assisted each other in developing and presenting the needs assessment, the planning and design.

All of this occurred before the passing of the bond referendum for the Law Enforcement Center on Aug. 1, 2017.

After the referendum passed, the Board of Supervisors held a regular meeting during which they moved to hire a construction manager to manage the Law Enforcement Center project. Around this time, Hansen presented a proposal along with Mike Adkins from Midwest Construction Consultants offering their services as construction manager, which the Board of Supervisors approved.

In September, Hansen presented Board of Supervisors with a breakdown analysis of proposals for the architectural design of the Law Enforcement Center. Hansen cited factors such as experience, estimated costs, interior decorators selections and a number of engineer trips and general notes.

After hearing the review of proposals form Hansen, the Board of Supervisors extended interviews to Design Alliance, Weidner Architecture and Shive-Hattery. The Board of Supervisors did not extend an interview to Prochaska. The architecture contract was awarded to Weidner Architecture.

In November, Prochaska requested to inspect and obtain copies of public records relating to the approval of the Law Enforcement Center construction manager and architecture contract under the Iowa Open Records Act.

In the suit, which was filed on March 5, 2018, Prochaska claims the Board of Supervisors failed to turn over requested documents relating to the development of the law center after they were requested by Prochaska on Nov. 24, 2017, violating the Open Records Act. They did, however, provide Prochaska with an envelope containing approximately 78 pages of material, only which 27 pages were related to the Law Enforcement Center. Most of the documents produced were copies of Board of Supervisors meeting notes.

The documents they requested included requested proposals from Midwest Construction Consultants and other subcontractors; correspondence between the Board of Supervisors and Midwest Construction Consultants or subcontractors; and produced no letting documents or contracts between the Board of Supervisors and materials relating to Phase 1 and Phase 2 letter agreements.

Prochaska alleges the Board of Supervisors failed to produce such records knowingly and request to be granted attorney?s fees in the amount of $2,000.

Prochaska also claim to be entitled to compensation for services rendered for Phase 1 and 2 of the Law Enforcement Center, which was grossly under market value with the assumption or implication that they would be contracted for Phase 3. The full market value of their services is $116,818.

In the suit, Prochaska alleges that they performed services for the Board of Supervisors of which the fair market value was significantly higher and beyond the agreed upon compensation amounts stated in the agreement letter. In performing that work, both parties understood that the services performed by Prochaska were significantly undervalued in light of a contract to be issued to Prochaska upon the passage of the Law Enforcement Center bond referendum, which occurred on Aug. 1, 2017.

Prochaska is suing Hansen individually for presenting Prochaska in an unfavorable and false light, causing them the loss of work, revenue, goodwill and profits.

In the suit, Prochaska claims that Hansen interfered with the architecture proposal they submitted so as to place their proposal in an unfavorable and false light, including presenting unequal opportunities in the Board of Supervisors review of each architecture firm.

For these damages, Prochaska wants to be awarded an additional $101,202 to compensate for the loss of profits. An alternative would be for Prochaska to be awarded damages for lost profits from Midwest Construction Consultants.

Until the matter is resolved, the county is unable to move forward on the Law Enforcement Center.

Additionally, Prochaska requests Hansen be removed from the project and that they be awarded Phase 3 of the contract.

Supervisors received bids for the project last week with plans to award the contract to the lowest bidder during the Board of Supervisors meeting on Tuesday, April 24; however, because of pending litigation, the county hopes to award the contract Thursday, April 26 instead.

Supervisors made no statement regarding the litigation.