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Council Approves Mediation with Siemens

January 8th, 2015 by

The City Council held a special called meeting 6 pm, Wednesday, January 7, for a vote to authorize special legal council to pursue mediation with Siemens, Inc., in order to dissolve the City’s contract with the company and to recover from Siemens damages and the City’s $7 million dollar financial investment in the water rehabilitation project.

Attorney Cliff Gibson, the City’s special legal council, addressed the Council to give a progress update. Mr. Gibson had previously submitted a letter to Siemens addressing the city’s concerns about an array of issues.

Those issues include what the City considers shoddy workmanship, sub-par installation of water meters, which were not the brand purchased in the Contract, the lack of any sort of bond, escrow account, or letter of credit from Siemens to guarantee the project, the fact that Siemens requested and the City paid in advance $7 million dollars of the $10 million dollar contract, and the fact that Siemens had, as of November, apparently abandoned the project and left town. There have also been serious questions raised concerning the legitimacy of Siemens’ testing and assessment of poor performance of Monticello’s original water meter system.

At Wednesday night’s meeting, Mr. Gibson presented Siemens’ response to the issues. Siemens denies all allegations, complaints, and wrong-doing, and submitted an energy efficiency bond for a little over $1 million dollars. Because the contract is for $10 million dollars, and requires a performance bond, not an energy efficiency bond, there has essentially been no progress toward resolution.

Siemens has offered to enter into mediation with the City of Monticello, and Attorney Gibson requested that the City give him the authority to enter into mediation with Siemens, with the clear understanding that all decisions would ultimately require approval by a vote from the Council. The City voted to authorize him to mediate with Siemens.

Former Mayor Joe Rogers had previously submitted a request to the Arkansas State Police to investigate Siemens and all matters related to the contract, based on Mr. Gibson’s findings and recommendations. At the time of this writing, there has been no response from them.

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