J.B. Bobbitt writes:

What are my realistic options in dealing with the contractor? Is
there a "industry standard" for such screw-ups?

The contractor must undo his mistake and redo the work properly, or pay to
have someone else do it. This will require you hiring a lawyer to write
nastygrams. It will likely cost more in stomach lining that you will gain.

The contractor is an expert at weaseling out of problems like this; you are
an amateur.

The best course is usually to settle for compromise like a discount on the
price. Many contractors are unreasonable, though, even when they are
clearly wrong.