A Louisiana-based company involved in thousands of emergency home repairs in the territory has filed suit against the V.I. government and its prime engineering contractor, insisting two years of nonpayment have left it more than $65 million in the red.
Lamar Contractors, LLC, was one of several companies to assist the territory with the Sheltering and Temporary Essential Power, or STEP program, which offered temporary repairs to residents whose homes were damaged by hurricanes Irma and Maria in 2017.
A first-tier subcontractor under AECOM — the STEP program’s prime contractor — Lamar oversaw the restoration of thousands of homes in the territory, and in turn, expected timely payments from AECOM to assist with salaries, lodging, materials and other costs.
That, however, didn’t happen — so much so that Lamar claims its unpaid invoices for completed work total $65,571,655, according to court documents obtained by The Daily News.
Worse still, Lamar claims AECOM never revealed just how much the STEP program was “critically underfunded.”
Since the program has a reimbursement structure, the Federal Emergency Management Agency can only reimburse the Virgin Islands once the territory pays its contractors and provides “proof of payment” for work completed.
With the V.I. government cash-strapped, payment cannot be made in a timely fashion, leaving contractors and their subcontractors in limbo long after they completed their work.
“Had AECOM been transparent and forthcoming with Lamar about the lack of funding for the project, Lamar could have made a business decision on how to best deal with the fact payments could be unpredictable and delayed,” according to the lawsuit.
“Lamar is now faced with the consequences of advancing its own funds for the project and facing related debt obligations and business problems as a result of the same.”
Indeed, Lamar itself had seven subcontractors — many of which were from the Virgin Islands — who are now facing “financial ruin” due to AECOM’s nonpayment, according to court documents.
The allegations against AECOM are the latest of several from subcontractors who worked in the STEP program and later voiced frustration over untimely or nonexistent paychecks.
In many cases, companies from the mainland brought workers, vehicles, tools and supplies to the territory, only to go weeks or months with no pay and no means to fund their efforts.
The result has left many companies in serious financial trouble — which, for some, continues to this day, more than a year after the STEP program came to a close.
V.I. Housing Finance Authority Executive Director Daryl Griffith, whose agency administered the program, said much of the STEP program’s flaws stem from its design and layers of reviews, inspections, audits and approvals necessary for funds to be released from FEMA.
“In a perfect world, [payments] would happen in a 30-day cycle, but that’s just not the case with disaster work,” Griffith said in an earlier interview with The Daily News. “Unfortunately, that’s the reward and the risk of being a businessperson.”
While Griffith recently assured the V.I. Legislature that AECOM has been paid more than $236 million, which can then be funneled down to its subcontractors, Lemar remains skeptical.
According to court documents, Lemar alleges that AECOM and its affiliates have paid themselves 74% of the money from the Housing Finance Authority, while all of its subcontractors have shared the remaining 26%.
Lemar also claims AECOM provides misleading information on the timing of payments and the approval of invoices, operating on a “pay-if-paid” stipulation, meaning it will only pay subcontractors when it receives payment from the V.I. government.
“[AECOM] has instituted a pattern and practice of making false promises to Lamar of substantial payments at a nearby but undefined date,” according to the court documents. “It now appears AECOM is trying to buy time by creating the illusion to Lamar that multimillion-dollar payments will be submitted in the upcoming weeks without committing to any hard deadlines associated with the same.”
Lemar requested that an expected $56 million from the Housing Finance Authority, and any future payments totaling the $65,571,655 as a minimum amount, be placed into the registry of the V.I. District Court until the declaratory and injunctive relief sought in the lawsuit is ruled upon.