Minnesota to Consider Shutdown Claims for Road Work

September 7, 2011

A Minnesota transportation official said Friday that construction contractors won’t be blocked from claiming losses related to Minnesota’s state government shutdown, despite a last-minute insert in the state budget.

Transportation Department spokesman Kevin Gutknecht said contractors can seek payment for costs related to the 20-day government stoppage in July because their contracts allow such claims when the government is responsible for suspending work. He declined to estimate the cost, adding that it could be months before some contractors can estimate how much the shutdown set them back.

A last-minute provision passed as part of the shutdown-ending budget bars the state from paying damages related to the shutdown, unless specifically authorized in a contract.

Finance & Commerce reported Thursday that the Department of Transportation has received 110 notices of potential shutdown claims from contractors who had to stop road work during the shutdown, at the height of Minnesota’s short construction season. Contractors had seven days after the shutdown to notify the state of potential claims, but no deadline on when they submit claims, Gutknecht said.

MnDOT suspended about 100 road projects before the shutdown started July 1 due to a budget impasse between Gov. Mark Dayton and lawmakers.

“We suspended the contracts,” Gutknecht said. “Before the shutdown actually began, we told them, ‘Hey, you’re going to have to stop work because we won’t have money to pay you or people to manage the project.”‘

Contractors and officials told Finance & Commerce that the claims could seek to recoup costs for idling equipment, stopping and restarting projects and inefficiencies after the shutdown such as weather delays and higher labor and material costs. Some contracts cap the amount of potential claims, and contractors can’t seek to recover lost profits.

“If you lose 20 percent productivity, you are going to bill the state for that,” said LouAnne Berg, president of Hudson, Wis.-based J&L Steel and Electrical Services, which suspended work on the Lafayette Bridge in St. Paul.

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