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Contractor sues Sacramento sewer district for rejecting low bid

Large pumps fill a building at wastewater treatment plant for the Sacramento Regional County Sanitation District near Elk Grove<137>, Calif., on Friday, May 16, 2014<137>. The district’s board last week chose a Davis contractor and a ratepayer and competitor are challenging the move. <137>The plant is going through a billion-dollar upgrade to limit the pollutants it discharges while at the same time trying to figure out how to sell more recycled water to large users.<137>
Large pumps fill a building at wastewater treatment plant for the Sacramento Regional County Sanitation District near Elk Grove<137>, Calif., on Friday, May 16, 2014<137>. The district’s board last week chose a Davis contractor and a ratepayer and competitor are challenging the move. <137>The plant is going through a billion-dollar upgrade to limit the pollutants it discharges while at the same time trying to figure out how to sell more recycled water to large users.<137> Sacramento Bee file

Attorneys for a Santa Ana contractor have asked a judge to block a $114 million sewer contract awarded to Teichert Construction, arguing that the regional Sacramento sewer district violated state law by rejecting a bid that was $14 million cheaper.

The lawsuit was filed late Tuesday in Sacramento Superior Court by attorneys representing Steve P. Rados Inc. and Craig Hoellwarth. Rados was the low bidder for the contract with the Sacramento Regional County Sanitation District, whose 16-member board voted last week to award the contract to Davis-based Teichert, the third-lowest bidder for the job.

Hoellwarth is an Elk Grove resident and district ratepayer. According to the lawsuit, Hoellwarth and other ratepayers “will suffer irreparable injury in that they will be deprived of the right to have all public contracts submitted to competitive bidding to ensure that public funds are not wasted or misused.”

Hoellwarth, a retired project manager from a Phoenix architectural firm, said he was upset when he learned the details of the contract from another retiree with experience in contracting. He said he spoke to someone at Rados and agreed when the contractor’s employee asked if he would join the lawsuit.

“I was involved in construction contracts and bids” before retiring, Hoellwarth said. “I was surprised that supervisors would approve a contract that was $14 million over the low bid.”

Hoellwarth said he doesn’t expect to recoup anything from the lawsuit and simply joined as a ratepayer who “wants the right thing done.”

District spokeswoman Claudia Goss said the district would not comment on the litigation because it is pending. Calls to the district board’s chairwoman, Citrus Heights Councilwoman Jeannie Bruins, were not returned.

District board members, who are elected City Council members and county supervisors from the region, said last week that they awarded the contract to Teichert because Rados and the second-lowest bidder planned to use a subcontractor that was not licensed in California when bids were submitted.

However, the subcontractor received its license the day before the contract vote, which led the district’s top administrator to recommend that the board reject all bids and start the process over. A deputy county counsel who originally recommended Teichert on legal grounds also switched her position.

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.

Prior to the board vote, Deputy County Counsel Lisa Travis pointed to a state law requiring subcontractors to list their California contracting license in bid proposals.

In the lawsuit, Rados’ attorney Michael Minchella argues that the state law does not require subcontractors to have a license until work begins and, even if the law was broken, it did not merit throwing out Rados’ bid.

The lawsuit states the district violated state competitive bidding laws by prequalifying three contractors, two of which did not have state licenses, thereby creating a monopoly for the third contractor, Interstate Highway Construction. Teichert chose Interstate, which bid $10 million more for the work than the subcontractor selected by Rados and the second-lowest bidder, Balfour Beatty Infrastructure of Fairfield.

Balfour Beatty’s attorney has also indicated the company will sue the district over the contract award.

Call The Bee’s Brad Branan, (916) 321-1065. Follow him on Twitter @BradB_at_SacBee.

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