The SDA rejected the proposal offered by Gilbane Building Co., the firm contracted to manage the project for the Authority. The SDA intends to file suit against Gilbane shortly for the remainder of the approximately $13 million cost associated with the removal of mold from Midtown Community. Moreover, due to fundamental differences that became apparent during the mediation process regarding the role and responsibilities of a Project Management Firm (PMF), the SDA has begun the process to terminate Gilbane from all Authority projects in which the company is currently involved.

Turner has agreed to pay $4.5 million and SSP will pay $2 million for their errors that contributed to mold developing in the exterior walls of the main building. Each has worked with the SDA to ensure that Midtown Community, originally scheduled to open in September 2007, meets the revised September 2008 deadline.

"Gilbane, Turner and SSP each failed to meet their contractual obligations to the SDA. More significantly, each company let down the schoolchildren of Neptune and the taxpayers of New Jersey," said Scott Weiner, CEO of the SDA. “Mistakes happen, but the taxpayers of New Jersey should not have to bear the financial responsibility for these mistakes. I am pleased that Turner and SSP have agreed to accept their financial responsibility and worked to ensure the revised project schedule is maintained.

"We will not be satisfied, however, until all the costs for mold removal are recovered. We will move expeditiously to file suit against Gilbane to recover the remainder of the cost, protecting the interests of the State and its taxpayers."

The SDA learned of the presence of mold in the exterior walls of Midtown Community in January 2007. The SDA hired experts to assess the conditions and to advise SDA concerning correction of the problem; work was undertaken with the guidance of the Department of Health. The brick façade had to be taken down and the exterior walls replaced to remove the mold. The walls and façade have been rebuilt.

The SDA decided at the outset to fund the work up front to ensure that Neptune’s students would not be forced to wait beyond a year. The SDA worked aggressively on a separate track to initiate proceedings to recover costs. The SDA had notified Gilbane, Turner and SSP that they would be held collectively liable for costs associated with the mold situation. As an initial alternative to litigation, the SDA offered to facilitate formal mediation proceedings where the three responsible parties could seek to allocate financial responsibility among them. In early 2007 each of the three responsible parties notified the SDA of its desire to participate in the mediation process.

SDA Chief Counsel, John Clark, and Senior Counsel, Janesa Urbano, led the SDA’s facilitation of and participation in the mediation. Retired Superior Court Judge John E. Keefe Sr. acted as the mediator. The mediation proceedings were conducted during a five-month period and concluded this month.

"The outcome was ultimately successful because the parties were as committed to the process of mediating the dispute as they were to performing the reconstruction work," Clark said. He noted Turner, SSP and SDA, and their lawyers, worked together and with Judge Keefe to forge a settlement.

Today, the SDA issued a Notice of Termination to Gilbane (see attached letter) in which the Authority details a series of material breaches by Gilbane. Gilbane has been directed to correct the breaches within seven calendar days or be terminated for cause. The contract covers 17 schools in Neptune Township, Barnegat Township, Asbury Park and Vineland. The SDA has developed plans ensure the work on each of these projects continues without interruption.

The mediation process revealed fundamental differences between the SDA and Gilbane regarding the role of a PMF. As a result, the SDA has decided to terminate all of its remaining contracts with Gilbane throughout New Jersey. That termination will involve PMF contracts covering five schools in Long Branch, Neptune and Barnegat Township, as well as a Construction Manager contract in East Orange. Gilbane will be asked to work with the SDA on transitioning these projects while new construction managers are hired.

Midtown Community will be a new three-story, 145,200-square-foot building holding up to 700 students in grades pre-K to 5.

Notice of Termination