A federal judge ruled Friday that concrete behemoth Aggregate Industries could drop Armendariz Construction, the Hispanic-owned company it hired in order to meet minority participation goals on the T-REX construction project.
Bankruptcy Judge Michael Romero said Aggregate had proved in a July hearing that Armendariz could not handle the $39 million in concrete work demanded by the Interstate 25 project on its own. More important, since Armendariz was not certified as a disadvantaged business to make concrete, a requirement of their $39 million joint venture, Aggregate could cancel the deal just as the highway project enters its final year.
The ruling will have little effect on T-REX minority-hiring goals of about $177 million. Project officials have said they expect to meet the goals when the $1.67 billion project is completed in late 2006. Armendariz had the lion’s share of subcontracts made available to minority- and female-owned companies.
Officials for Armendariz and Aggregate could not be reached for comment late Friday.
T-REX auditors last year determined Armendariz, a one-man company based in Delta, was not properly certified as a disadvantaged business enterprise, known as a DBE, to manufacture concrete.
Auditors also determined that Armendariz was little more than a pass-through company designed to make it appear that minorities were actually doing the work they were paid to do, a violation of federal law.
As such, more than $22 million that Aggregate already paid Armendariz to produce concrete for the 19-mile T-REX job could not be counted toward the project’s minority-hiring goal.
Southeast Corridor Constructors, the prime contractor on T-REX and the firm that hired Aggregate, faces up to $12 million in fines if it falls short of the minority-hiring goal.
Owner David Armendariz had argued that his firm wasn’t allowed to do the work it was hired to do by the British-owned, Golden-based Aggregate.
Once T-REX determined Armendariz’s work wouldn’t count toward the job’s hiring quotas, Southeast Corridor Constructors discontinued paying a $1.50-a-cubic-yard premium for having a DBE on the job – money that was passed along to Armendariz as its profit. Without the premium, Aggregate argued, there was no need to keep Armendariz around.
Armendariz had been certified as a DBE concrete provider, but a manufacturer is a different classification under state rules.
Aggregate officials said they tried to mentor the smaller company to be a viable concrete manufacturer that could eventually take on additional federal and state projects.
