State diversity watchdogs gave a failing grade to the construction company restoring the State Capitol after the workforce restoring the People's House didn't reflect the changing face of Minnesota's population.

Last week, JE Dunn Construction learned that the Minnesota Department of Human Rights said it failed the "good faith efforts" standard to diversify its workforce on the $21 million Minnesota State Capitol Preservation and Repair Project.

Despite promises to improve its record, JE Dunn has missed its goal for employing minority and female workers by nearly 50 percent, the state said. JE Dunn's project manager Jason McMillen blames the low number of minority and female workers who can do the specialized jobs of restoring the 108-year-old landmark.

Of the 35 projects the department is currently tracking, JE Dunn's Capitol restoration is the only one that received a 4, the lowest rating.

Failing to meet diversity targets can jeopardize a company's ability to finish a contract or bid on new ones. But in this case, human rights Commissioner Kevin Lindsey said he expects the rating will improve after a meeting this week.

Lindsey said the state deserves some of the blame for failing to communicate more closely with the contractor, and acknowledged the challenges of finding qualified workers.

"There are not that many buildings like the State Capitol," Lindsey said. "We would have wanted to see more aggressive efforts in terms of recruiting workers on those nonspecialized areas. The enforcement officers did not see as much effort as they would have liked."

Still, he said, "this story is not complete. I anticipate that their score will be adjusted."

Kansas City-based JE Dunn won a $3 million contract to restore the Capitol's crumbling gold dome and started work in 2010.

The contract was expanded to include work on a new tunnel under University Avenue and other exterior restoration work on the building.

Under state law, the Human Rights Department has the authority to issue goals for the number of working hours given to minorities and women by companies that have received state contracts worth more than $100,000.

When the project was awarded to JE Dunn, the workforce goals for Hennepin and Ramsey counties were 11 percent working hours for minorities and 6 percent for women. Currently, minorities make up 5.9 percent of the contractor's workforce hours and women make up 3.45 percent.

Some of the repair work included marble repairs, gold leaf gilding, copper work, stone carving and plaster replication.

McMillen said that even more conventional work like plumbing involves cast iron pipe fitting with lead joints.

"Our good faith efforts have found that very few minorities and women are employed in these specialty trades," he said.

He said despite not meeting the standards, they continued to try to diversify their workforce. In a December 2011 letter to the state, McMillen emphasized that upcoming work would enable his company "to meet or exceed the goals for the project as a whole."

The employment percentages did rise slightly last summer, but JE Dunn again fell below the minimum standards.

Still, McMillen said, "we were quite surprised to hear our rating has been downgraded."

McMillen said the company believes it was given a failing grade because of a mix-up over a letter. The state denies that's the reason.

Christine Dufour, the department spokeswoman, said ratings reflect whether an organization is meeting or exceeding workforce goals and whether good faith efforts were implemented.

Internal shake-up

Lindsey said that while JE Dunn has not been able to meet the minimum standards for compliance, there has also been a "bit of a shake-up" at the department.

Last year, the employee who oversaw construction compliance retired for health reasons, and then her replacement also retired within five months.

Lindsey acknowledged that the transition affected the department's communication with JE Dunn.

"We could have been more engaged in some of the respective efforts for this project," Lindsey said.

Lindsey said in the past two months he has been more involved with this function of his agency. He said the meeting with JE Dunn will be the first step to making sure the company is able to meet its good faith effort requirements.

Much of the work left to be completed in the contract will continue to be highly specialized. JE Dunn will need stone carvers and marble restoration specialists, McMillen said.

The company plans to create an apprentice program to make up for the lack of minority and female workers in these trades.