Contractor demands $4M from Regeneron for extra expansion costs

A New Jersey contractor has sued Regeneron Pharmaceuticals Inc. for $4 million for allegedly impeding pre-construction planning on a $1.8 billion expansion of its Tarrytown campus.

Skanska USA Building Inc. claims that Regeneron has refused to pay for extra work, mismanaged the project and precluded the contractor from bidding on the main construction project, according to a complaint filed Sept. 22 in U.S. District Court, White Plains.

“Indeed, through never-ending revisions of construction drawings, programming changes, and requests for additional, often duplicative and unnecessary work,” the complaint states, “Regeneron has frustrated, delayed, and unnecessarily encumbered performance by Skanska.”

Regeneron’s media relations office said the company denies the allegations “and looks forward to defending itself in court.”

Regeneron, a $88 billion publicly-traded research, development and manufacturing company by market capitalization, has produced 11 FDA-approved drugs and has 30 drugs in various phases of the clinical testing pipeline.

It is building labs, offices and infrastructure at the corporate headquarters and research center in Tarrytown.

Skanska USA in Parsippany, New Jersey is part of a $68 billion construction and project development company based in Sweden.

Last year, Skanska won a $6.6 million contract to provide pre-construction services for Regeneron.

The pharmaceutical company was responsible for providing project specifications and drawings, according to the complaint. Skanska’s job was to create a project schedule, develop construction estimates and budgets, and coordinate bid packages for potential subcontractors.

Each building had project milestones, the complaint states. Only after milestones were achieved and Regeneron had formally approved the designs and cost estimates, Skanska could issue requests for bids and then move on to the next building.

Skanska says Regeneron asked for extra services that were outside the scope of the original contract. For instance, Skanska allegedly had to make new estimates based on design changes made after Regeneron had endorsed previous drawings and specifications as complete.

The extra work cost Skanska $556,840, according to the complaint. But Regeneron denied a request for a change order to pay for the work, claiming that the additional services were a risk that the contractor should have expected and accounted for in its bid for the job.

Skanska claims that mismanagement by a Regeneron executive caused numerous delays that postponed subcontractor bidding and added more than $3 million to its costs.

Skanska has been negotiating for nearly a year to get the construction management contract, but Regeneron has made it clear that Skanksa will not get that work.

Skanska accused Regeneron of breaches of contract for failing to pay for additional services and delays, and breaches of the covenant of good faith and fair dealing.

Skanska is represented by Manhattan attorneys Bruce D. Meller and Peter E. Moran.

Regeneron is represented by White Plains attorney Russell M. Yankwitt.