State terminates contract with Baybutt

Thursday January 10, 2013

BRATTLEBORO -- Several sub-contractors will not continue their work on the renovation of a state building downtown until they are paid by general contractor Baybutt Construction for the work they have done.

Bob Rea, the Vermont Department of Buildings & General Services' director of facilities for the eastern region, said he began getting phone calls from sub-contractors and vendors who said they have not been financially compensated by the Keene, N.H.-based company the state hired to fix up the building.

Baybutt is going through financial hardship: Three of its buildings in New Hampshire are set to be part of a foreclosure sale on Friday, Feb. 1. The business is also in the middle of a quagmire in Rockingham, where sub-contractors who insist they have not been paid are refusing to continue their work on the town's public library.

Rea told the Reformer he has been working on the matter for the past two-and-a-half months, after he started hearing concerns about the lack of progress being made on the project. He learned the stalled progress came from a lack of staffing caused by sub-contractors and vendors refusing to continue their work until they get paid.

As a result, he said, the state decided to terminate Baybutt's contract.

The state building, at 232 Main St., is expected to open in April despite the halt in construction.

Rea said the state was in the process of issuing a lien waiver -- a document stating a contractor or sub-contractor has been paid in full and therefore waives any future lien rights to the property -- from Baybutt in late October. But before the waiver could be issued, the state learned the company did not submit in a timely manner its September request for payment to the state. That meant subs and vendors were not paid until at least November and Rea does not think any of them were paid in full.

According to Rea, Baybutt had its own lien waiver form, which it sent to sub-contractors with a photocopy of a check attached to it. He said the subs signed the waiver and assumed the photocopy was an image of the check they would later receive. He said subs got, at best, a small portion of their money and the state then sent Baybutt a new lien waiver form and told the company to use that one in the future.

Rea said as a result of Baybutt's November request for payment, three sub-contractors in December received 75 percent of what they were owed via dual party checks from the project manager. But the state then got a letter from the bonding company, Merchants Bonding Company, forbidding the state from making any further payments to Baybutt without prior approval. The state then sent Baybutt a letter stating it was considering its option to declare the company in default due to lack of payments to the sub-contractors.

Vermont, according to Rea, sent Baybutt a letter on Jan. 9 saying the company is in default and that the state decided to terminate its contract. Both Rea and Mike Obuchowski, commissioner of the Vermont Department of Buildings & Grounds, also believe about $300,000 has been re-allocated from the Brattleboro project to other projects Baybutt is managing.

Rea said the contract requires the state to give Baybutt seven days' notice to rectify the situation, pay the subs and continue the project. But he said he feels that is unlikely to happen.

He said 39 percent of the $2.6 million project had been completed by the end of November. The project, Rea said, is now about 45 percent done.

He said right now there are about five people working when there should be about 30, but he said he does not believe there will be a delay in the opening of the building.

"I think we caught it early enough," he said, adding that it should be ready by the end of April. He did not say who might finish the project. "It's not a complicated project. It's pretty straightforward."

If it does not open by the end of April, the bonding company is liable for $36,000 a month in penalties.

"That puts some urgency into this," Rea said.

Rea said Baybutt has a payment bond, performance bond and warranty bond. He said the warranty bond protects the state if anything goes wrong with the building in the first year after it opens and also ensures the subs are paid. Rea said the lease space was appropriated in the project budget for about $400,000.

Domenic Poli can be reached at, or 802-254-2311, ext. 277.


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