Los Osos sewer bid award costs residents and local jobs

February 6, 2014

By JOSH FRIEDMAN

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.