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Houston Has a Problem With Airport Contracts

(CN) - Houston is not immune from contractors' claim that the city breached a contract by failing to pay prevailing wages for airport construction, a Texas appeals court ruled.

After agreeing to help build the Central Concourse at the William P. Hobby Airport, Southern Electrical Services and primary contractor Morganti Group Inc. learned that the city had amended its prevailing wage rate and certified higher wage scales than the rates in the contract. The electrical company sued the city for the difference in wages, claiming the contract requires the city to pay the prevailing wage.

The city sought dismissal for lack of subject matter jurisdiction. It said the contract only requires it to pay the lump sum due under the contract, not the increased labor costs.

Justice Jane Bland refused to dismiss the case, ruling that the contractors "alleged facts sufficient to fall within the government's waiver of immunity 'for the purpose of adjudicating a claim for breach of contract,'" as required by Texas law.

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