Lexington, Kentucky-based Gray Construction has filed an approximately $3.5 million federal lawsuit against Tyson Foods and the Industrial Development Board of Gibson County, Tennessee, for nonpayment on a $425 million project that benefited from state funding, according to court documents.
The federal lawsuit alleges Tyson Foods failed to fully pay for a 392,600-square-foot poultry processing facility built on a 285-acre site in Humboldt, Tennessee. Opened in April 2021, the plant’s construction was made possible, in part, by a $20 million state economic investment package and was hailed as an economic success by Gov. Bill Lee, according to the Tennessee Lookout.
Gibson County owns the property, which it leased to Tyson as part of a tax-incentive plan, according to court documents. The dispute centers around five change orders that Gray claims were approved, but have not been paid by Tyson.
Tyson Foods has not responded to Construction Dive's request for comment on the litigation, which was filed on Dec. 29.
Problems with the project
Gray Construction contracted with Tyson Foods in October 2018 to provide labor, materials and equipment for the design and construction of the plant, according to the lawsuit.
But Tyson Foods also hired another contractor to conduct site work and provide the building pad for the plant, which Gray needed to be completed before it could start building the structure, according to the complaint.
Gray's suit claims the building pad came in eight months late, without the requisite amount of specified stone, proper drainage or sufficient compaction, delaying Gray's own work on the project until July 8, 2019, months after it planned to start its work.
The firm said it was then forced to perform additional earthwork, resulting in costly and time-consuming maintenance, as well as work during unanticipated winter conditions, according to the complaint. COVID-19 delays also stymied the project.
At the same time, Gray alleges that Tyson Foods contracted directly with one of Gray's subcontractors, delaying other work that Gray had already subbed out to the firm, putting it even further behind schedule.
Change orders allegedly not paid
Alleged by Gray Construction, Tyson Foods failed or refused to pay the following project change documents:
- Gray incurred costs to maintain Tyson’s standard operating procedure and mitigate weather impacts suffered as a result of the condition of the building pad. The cost of this change was $564,565.
- Tyson’s management of the preparation of the building pad resulted in unanticipated site costs. The cost of this change was $1,751,719.
- Tyson’s contractor failed to timely and fully provide the subgrade for paving. As a result, Gray encountered unsuitable soils, which forced it to incur additional costs to rehabilitate the site. The cost of this change was $101,228
- Gray incurred COVID-19 costs related to proper protective equipment and necessary materials for compliance. The cost of this change was $284,615
- Gray’s roofing work was impacted because of Tyson’s contractor’s performance. Tyson directed Gray’s roofing contractor to perform its scope of work rather than Gray’s scope of work. The cost of these changes was $412,395.
Additionally, according to allegations in the complaint, Tyson has not paid Gray Construction for the full amount of its base scope of work on the project, despite previously approving a payment of $10,268, and has withheld retainage on the project worth approximately $329,656.
Gray claims Tyson Foods is in violation of the Tennessee Prompt Pay Act, which is aimed at ensuring contractors and subcontractors on construction work are paid timely and in full for completed work.
Neither Tyson nor Gibson County have responded to the court filing.