A regional sewer board has approved a $114 million contract with Teichert Construction of Davis despite receiving another bid that was $13.8 million lower.
Under state competitive-bidding laws, public agencies must award contracts to the lowest and most responsive bidder. Members of the Sacramento Regional County Sanitation District said the low bidder, Steve P. Rados Inc. of Santa Ana, was in violation of the law because one of its planned subcontractors was not licensed in California when the district accepted bids from seven companies.
However, the subcontractor, Peltz Co. of Alliance, Neb., had submitted an application to the Contractors State License Board almost four months before the district chose Teichert and received a California license the day before Wednesday’s vote, records show. Peltz’s license approval led the sewer district’s top administrator to change his earlier recommendation for Teichert and suggest that the board throw out all the bids, a decision a deputy Sacramento County counsel called the “most conservative legal approach.”
The board, made up of elected officials in Sacramento and Yolo counties, nonetheless voted 10-4 in favor of Teichert. In addition to concerns about state law, board members said they were concerned about delaying the project an estimated three months by restarting the contract bidding.
Critics said the decision will add needless costs to a project that has already led to steep increases for ratepayers. The “flow-equalization project” will create 110 million gallons of wastewater storage and is part of a larger $2 billion project under construction to meet more stringent water-quality regulations.
“You have the opportunity to save taxpayers $14 million,” said attorney Michael Minchella, representing Rados. “You have the full legal power to award this contract to Rados.”
Two district board members, Sacramento County Supervisor Don Nottoli and Sacramento City Councilman Larry Carr, cited the financial impact on ratepayers as reasons for voting against the Teichert contract. The two other dissenting board members, Elk Grove City Council members Steve Ly and Pat Hume, pointed to frustrations over how district staff handled the bidding process.
Before Wednesday’s vote, Rados and another contractor, Balfour Beatty Infrastructure of Fairfield, filed protests with the district in anticipation of the Teichert award. Balfour Beatty submitted the second-lowest bid, $2 million less than Teichert. Minchella and Balfour Beatty attorney Randy Finch indicated they would sue if the district went with Teichert.
The attorneys complained that the district sent mixed messages about the requirements for subcontractors. The district prequalified three contractors for a required element of the project, roller-compacted concrete. Only two of the three, Peltz and Interstate Highway Construction, bid for the project. The attorneys said the district was misleading by saying Peltz was qualified at the start of the bidding process and later saying it was not qualified.
“That just shocks the conscience,” Finch said.
Hume called the district’s decision to prequalify Peltz and then find the company in violation of state law “ludicrous.” He voted against the Teichert award.
District Engineer Prabhakar Somavarapu, the top official at the district, conceded that the district needs to avoid such discrepancies.
Rick Lopes, a spokesman at the Contractors State License Board, said Peltz Co.’s license application took four months to process because the board was waiting for the state Department of Justice to finish a criminal background check.
Deputy County Counsel Lisa Travis told the board that Rados and Balfour Beatty were in violation of a state law that went into effect in July requiring subcontractors to have a state license when bids are made. The contractors’ attorneys argued that a license is only needed at the time work is performed and that the board did not have to reject the bids based on the state law.
While Travis originally recommended awarding the contract to Teichert for legal reasons, her position softened by Wednesday, when Peltz had its license.
“The most conservative legal approach would be to reject all bids – you have every legal right to do that,” she said. “That might be the most reasonable legal approach to take.”
Finch said the board would make a mistake by selecting Teichert simply because its subcontractor was licensed when bids were submitted. Interstate bid $20.9 million for work that Peltz would do for $10 million less, he said.
“It’s a waste of taxpayer dollars,” he said.
Call The Bee’s Brad Branan, (916) 321-1065. Follow him on Twitter @BradB_at_SacBee.
How board voted
Here’s how the Sacramento Regional County Sanitation District board voted on the Teichert contract:
Yes: Sacramento City Councilmen Rick Jennings, Jeff Harris and Steve Hansen; Sacramento County Supervisors Patrick Kennedy, Susan Peters and Roberta MacGlashan; Yolo County Supervisor Oscar Villegas, West Sacramento City Councilman Bill Kristoff, Rancho Cordova Councilman Dan Skoglund and Citrus Heights City Councilwoman Jeannie Bruins
No: Nottoli, Hume, Carr, Ly
Absent: Folsom Mayor Andy Morin and Sacramento County Supervisor Phil Serna