A May 11, 2021, lawsuit by New Mexico’s Southwest Glass, Inc. instigated a Miller Act dispute related to non-payment for a federal construction project in Albuquerque, New Mexico — claiming that its nonpayment is connected to significant wire fraud by a third party.
Southwest Glass’ lawsuit — filed against co-sureties Travelers Casualty and Surety Company of America, Fidelity and Deposit Company of Maryland, and Zurich American Insurance Company — concerns its April 24, 2018, contract with Caddell Construction Company, LLC for work on Albuquerque’s National Nuclear Security Administration (NNSA) complex.
The new NNSA facility broke ground on July 2, 2018, with a projected construction time of “approximately two and a half years,” and the facility is meant to be occupied by late 2021. After working throughout the duration of the facility’s construction and receiving its first four payments for the project, Southwest Glass claims it has not received its fifth and sixth payments, which come to an outstanding total of $1,415,000.
Specifically, Southwest Glass was hired to construct doors, storefronts, windows, skylights, and other aspects of exterior architecture for the project — noting that, even as the lawsuit is going, it is continuing its work.
Contractors who work on United States government projects can use the Miller Act to protect themselves against non-payment. This process is similar to filing a mechanics lien — the government requires general contractors to post payment bonds that guarantee payment for a project’s subcontractors and suppliers, who can submit a Miller Act claim against the bond.
Southwest Glass claims that non-payment is the result of third-party wire fraud
The lawsuit claims that, as part of the contract between Caddell Construction and Southwest Glass, it was agreed that payments would be made via electronic funds transfer or automated clearing house methods. This required Southwest Glass to submit its banking information — with the contract further noting that “Any changes to the form will result in all payments being made by check and sent via US mail.”
For the first period of its work (encompassing four payments), Southwest Glass encountered no issues. However, a June 23, 2020, email sent to Caddell Construction purporting to be from Southwest Glass requested to change its automated clearing house information. The lawsuit alleges that this email did not come from Southwest Glass, but instead came from a third party who intended to misdirect the contract’s payments — and succeeded in doing so.
According to Southwest Glass, the automated clearing house form submitted by this third party “contained several obvious signs that it should not be trusted.”
As part of this, documents note that the person claiming to be a contact at Southwest Glass provided a telephone number which was the same as an alleged contact for the form’s provided bank — specifically a SunTrust bank, which is not a company that operates in any part of New Mexico (as the fraudulent form claimed it did).
Despite these alleged red flags, Caddell Construction agreed to accept the allegedly fraudulent automated clearing house form, and began issuing payments to this new account — including a June 26, 2020, payment of $680,000 and a July 22, 2020, payment of $735,000.
As the lawsuit states, “no notice was provided to [Southwest Glass] of the payment or the change in the [automated clearing house form] and no attempts were made to confirm the validity of the [new banking information].”
Southwest Glass claims that since this time, it has not received any of the payment that was directed elsewhere, leading it to provide notice of its Miller Act claim to the three co-sureties on February 26, 2021.
Despite dispute, NNSA facility’s construction has been a lucrative project for contractors
The NNSA facility in dispute — officially known as the John A. Gordon Albuquerque Complex — has been a significant project since its inception. Caddell Construction’s original contract was for $127 million, though government contract options give the possibility that the final value will be more than $140 million.
Housing data centers, offices, secure areas (including vaults), and even a fitness centre, the project was intended to replace a 25-building complex which dated back to the 1940s. Caddell Construction stated that the 334,000 square foot facility would be “state-of-the-art” and designed specifically to achieve the United States’ LEED Gold accreditation.
Though originally intended to be finished in December 2020 — and “topped out” in August 2019 — there is still construction work being done, and the facility will not be fully occupied until late 2021.