Los Osos sewer bid award costs residents and local jobs

February 6, 2014


Los Osos residents will have to foot a bill for nearly $2 million beyond expected costs and local electrical workers will lose thousands of man-hours because San Luis Obispo County staff recommendations were approved by the board.

On Jan. 28, the San Luis Obispo County Board of Supervisors awarded a $48.2 million contract to a Sacramento construction firm Auburn Constructors to build the Los Osos sewage treatment plant, one of the final components of the multi-decade sewer project. The board awarded Auburn Constructors the contract even though two competing contractors submitted lower bids and opted to hire San Luis Obispo based electrical workers to perform much of the job.

Balfour Beatty Infrastructure submitted a bid of $46.4 million, approximately $1.8 million less than Auburn Constructor’s proposal. Anderson Pacific Engineering Construction submitted a $47.5 million bid.

Both Balfour Beatty and Anderson Pacific planned to use San Luis Obispo electrical firm Electricraft as a subcontractor. Balfour Beatty and Anderson Pacific representatives estimated that Electricraft workers would receive about 40,000 man-hours on the project.

“That’s 10 to 12 people for two years who just lost out on employment,” Electricraft founder Jon Treder told CalCoastNews. “We were unjustly denied the project.”

Prior to the Jan. 28 meeting, Public Works Deputy Director Dave Flynn eliminated Balfour Beatty and Anderson Pacific from contention due to errors in their bid applications. One contractor undervalued a line item of project costs, and the other improperly placed percent signs next to decimal figures. Flynn said he could not forgive the errors.

Flynn rejected Balfour Beatty’s bid because it did not budget 2 percent of its total costs, as required, for demobilization, commissioning and training. Balfour Beatty budgeted about .4 percent of its total costs towards that line item.

Flynn threw out Anderson Pacific’s bid because it contained misplaced percentage signs. For example, it stated “.13 percent” instead of “.13” or “13 percent.”

Project bidding instructions stated that the county could waive discrepancies, irregularities, informalities or errors in order to best serve the public interest.

Flynn described the mistakes made by the two lowest bidders as irregularities, but deemed their entire bids unacceptable. When asked by CalCoastNews why he did not exercise the clause allowing him waive the irregularities in the interest of the public, Flynn did not respond.

The SLO County Public Works Department, headed by director Paavo Ogren, is charged with administrative and operations of water and waste water facilities, including the Los Osos Waste Water Project.

During the hearing, County Counsel Rita Neal and Deputy County Counsel Patrick Foran said the county could not waive the bidding errors. Foran said bidding errors are not legally forgivable if they affect the lump sum of the bid or give one contractor a competitive advantage over another.

The losing contractors argued that they neither gained competitive advantages, nor changed their total project costs by committing the infractions. However, Foran said the mistakes gave the contractors additional flexibility in how they spend project funds.

Following the legal advice of its staff, the board still could have opted to rebid the project. Several public speakers requested that the board do so, saying a rebid would result in lower figures due to competition among contractors. But, Flynn said rebids would likely come in higher, and Neal said they would create added legal risk.

The board ultimately voted 3-2, with supervisors Adam Hill and Caren Ray dissenting, to award Auburn Constructors the contract.

Ray said she considered the idea of rebidding but felt that she could not go in that direction.

“I feel like our hands are tied,” Ray said.

Hill said Flynn made the right decision to reject the two lowest bids and that he was voting against the contract as a symbolic gesture.

“I will oppose it knowing that it is symbolic,” Hill said. “I have spent everyday in this office working in some degree, sometimes quite successfully, sometimes less successfully on behalf of jobs in our community.”

Supervisor Debbie Arnold said she wanted to see local contractors at work and Los Osos residents have less to pay, but she voted in favor of the contract. So did Supervisor Frank Meacham, who said he felt bad about the situation and said “uncomfortably yes” when asked for his vote.

Supervisors Bruce Gibson, whose district includes Los Osos, made the motion to award the contract. He said staff correctly deemed the two lowest bids invalid and that rebidding the project would create too much risk.

Prior to breaking ground on the sewer project, the county budgeted $36 million for design and construction of the sewage treatment plant. The facility is now estimated to cost a total of $61 million.

Likewise, the cost of the entire sewer is rising. Before approving the sewage plant contract last week, the board finalized an expenditure overrun for the project as a whole. Project costs increased $10 million from $173 million to $183 million.

“We look forward to getting this project constructed at the least possible cost,” Gibson said at the conclusion of the meeting.


fishing village

I have been to many bid openings and mistakes do happen. It is heartbreaking for the rejected firm and the one awarded the contract is rightfully elated. No matter how carefully you read your submittal errors can occur. Let us move on, this this job done, and clean up the water for Los Osos. Everyone will benefit. Gibson will rerun for Supervisor, the information will be out there and the voters will decide whether this is important or very important. Everytime he makes a decision someone will be unhappy. I live in Morro Bay and will be supporting Supervisor Gibson in June.


The way you try to paper this section with off-topic comments and not-so-sly Gibson and Hill boosterism (paid for, most likely), your endorsement is unsurprising. The deflection and digressions you offer only reflect the insincerity of those you support.


Gibson doesn’t live in Los Osos so, he won’t have to shell out the money in sewer fees like

All the residents of the district he represents. When the bids grow and they will, he will have no issue in approving each one because it doesn’t affect his pocketbook.


Ah yes, yet another fiasco brought to you by the hysterics of the green goblins.

Niles Q

One other thing. The County Supes rejected bids for a job to build a new catery at Animal Services because it was $350,000 over their engineering estimates (39% over).

This project goes $1.8 million over estimates, and that’s OK.

It tells me the County is OK with cost over runs so long as the County budget isn’t paying the bills.

What does it tell you?


I don’t recall the state mandating that project at the animal services. Sort of a different issue I would think.

The project is far more than 1.8mil over, that was the difference in bids.

Sadly, it was sloppy work by the bidders that caused this.

Niles Q

I agree with those who call this a screw-up on the people who put together those bid packages. Let’s face it, the bid “irregularities” started with a typo, which led to mistakes in the math and ultimately the loss of a nice $48M job. Someone’s liable to get canned for that one.

Guess they don’t have the budget to have a copy editor on the payroll. Maybe they should rethink that strategy.

Too bad the local electric union won’t get much work, but who knows, some may be able to do a walk-on. All those electricians who used to work on the Morro Bay Power Plant shutdowns, can maybe now get some work with this project.

Don’t forget they will need a bunch o pipefitters and plumbers, welders, heavy equipment operators, truck drivers, etc…

As for the loss of economic impact, I’d have to disagree to a degree.

As with the workers/companies on the collection system, they will need to house their out of town workers, pay a per diem and that money will be spent in town.

I met a truck driver with one of these companies. He was being housed in a vacation condo in downtown Morro Bay, plus got a per diem for meals. He was happy as a clam. Living and working here, rent free with a couple of roommates, and then going home to his wife and family in the Valley on weekends. And if he stays, he gets a motel room for the weekend, maybe bring the family down here for a short vacation.

The rentals are rented to visitors on weekends. at top dollar.

Some guys just rented a house full time, while others, he said, have RVs here renting spaces long term.

No matter who does the work, when a big, multi-year, multi-million dollar job gets started, the entire business community has a shot to make some money.

Out of $48M overall bid, how much would be in payroll expenses? Maybe 50%?

So start at $24M in labor expenses and multiply by 4 to get the overall/macro economic impacts to get a good idea of how much this infusion of cash will effect the area. $98M by my limited math skills.

Of course, you must then subtract the long-term impact that the debt from this project — $183M-and counting, plus interest on the loans — to get an even more overall look at the project’s true costs/benefits.

Figure, whatever you borrow will be double by the time it’s all paid back (30 years) plus operations and maintenance. So we’re looking at $96M in short term benefits vs. $366M coming out of the pockets of the property owners, and sewer customers. Wow, that’s a hellova lot of money.

Looks like Los Osos is screwed in the long run. And Morro Bay is next.

FYI, the County Sheriff just broke ground on a new women’s jail. $24+ million for that one. The contractor is also from out of town.

Soon the county will be out to bids on the juvenile hall expansion, another $20 million plus job.

So we’ll see how much pull Adam Hill has for the local workers with the next big job.


Your description of the economic costs of this project are the most intelligent I have read on this site. Yes, Los Osos residents are screwed for years to come. And who benefits?

Even the RWQCB is beginning to backtrack on their prior predictions of the benefits of the wastewater treatment project. It’s on the record and back in the early 90’s one of their

engineers stated it would take 30 years to determine whether this project actually reduces nitrates. That is on the record also. Nitrates is no longer the issue, never really was.

There are no studies to show that nitrates in the bay come from Los Osos; in fact it’s well known that there are many sources of nitrate run-off. That’s also documented.

This project is already ruining people’s lives, all at the behest of the strong-arm tactics of a state agency on steroids.


Morro Bay residents – pay particular attention to the sentence that reads…..prior to breaking ground the county estimated design and construction to cost 36 million, now the estimate is 61 million. There is no reason to believe that the estimated costs will rise in a similar fashion for the Morro Bay plant-when ever and where ever it may be built.


correction-no reason to NOT believe the estimated costs will rise..