Ogren’s MWH Gravity Bias Costing Los Osos Tens of Millions

UPDATE: Orenco's Mike Saunders replies to the Coastal Commission. On Thursday, June 10, Mike Saunders of Orenco challenged the California Coastal Commission staff's last-minute addendum, which echoed the County's preference for a conventional gravity system and its concerns regarding the STEP collection system. "While we have an obvious interest in this project we have a greater interest in protecting the integrity of our core business," wrote Saunders in a detailed e-mail to the commissioners and staff on the eve of the Commission's de novo hearing in Marina del Rey. "While we understand that this is not your direct concern, we do believe that correcting poor information is part of your responsibility in properly administering the California Coastal Act."

Why was the cheaper, environmentally-preferred STEP collection system suddenly dropped from the County’s design-build process for the Los Osos Wastewater Project last year? Why didn’t the only STEP design-build team in the mix appeal that decision?

In a fascinating glimpse into Public Works’ dirty little secret war against STEP to promote MWH gravity collection, San Luis Obispo County Supervisor Frank Mecham, occasionally the lone dissenter on the Board of Supervisors when it comes to voting more money for County Public Works to spend on the Los Osos project, has served as middle man in recent behind-the-scenes correspondence from Orenco Systems’ Bill Cagle and County Public Works Director Paavo Ogren. Their comments from this still-smoldering debate reveal some of the back story on Ogren’s STEP vendetta, his vicious disregard for the truth, and the brutal price Los Osos “Prohibition Zone” homeowners and the people of Los Osos will have to pay for it.

In the first Los Osos update in over five months, Ogren spoke on several controversial topics during his far-ranging April 27 County Board of Supervisors LOWWP session – the U.S. Department of Agriculture (USDA) loan/grant package, bond sales, the $7-plus million spent by the County thus far to develop the project, repayment of the prior $6.5 million SRF loan, the second Prop 218 vote, due diligence, and a looming sewer rates and charges hearing, among others.

But even by Ogren’s high standards of spinning facts beyond recognition, none of his myriad comments were more distorted and deceptive than those condemning the STEP collection system and STEP contractors WM Lyles and his team, which included Sutherlin, Oregon-based Orenco Systems Inc. and Dana Ripley, author, with his Ripley Pacific team, of the STEP-based Los Osos Plan Update.

Triggering Ogren’s twisted rhetoric was one crisp, clearly worded question from Chairman Mecham, a question first raised in public comment:

Mecham: “What would be the cost to restart the design-build process?”

Ogren: “Well, if we were to re-issue the RFP that we’ve already issued that would be a relatively nominal cost. My concern would be, how would the contractors who are currently involved in the design-build respond, what would be our reason for re-starting design-build?

“I’ll point out that the single firm that did propose on a STEP system never appealed the decisions. The actual interviews and everything we’ve always treated as relatively confidential, so we haven’t gone out there and explained why they weren’t shortlisted, but again the contractor never appealed it so that’s some evidence at least that – and I will say that the cost estimates that that particular contractor provided our (staff) don’t resemble anything of what some of the individuals in the public are throwing out there. In fact their cost estimates for a STEP system were slightly higher than our cost estimates for a STEP system.”

Naturally, Ogren’s comments did not pass the WM Lyles team unnoticed. One month later, on May 28, Cagle, Program Leader, National Accounts for Orenco Systems, wrote a five-page letter to Board Chairman Mecham calling Ogren’s April 27 assertions “incorrect” and improper. Point by point, line by line, Cagle explained to Mecham why STEP was eliminated from the design-build process, why WM Lyles did not appeal, how the design-build had been “adulterated,” and the consequences for both Los Osos and the County.

Wrote Cagle to Mecham in response to Ogren’s comments, in part:

“There is no mechanism in the Request for Qualification (RFQ) to eliminate STEP as a viable project alternative. The tight interrelation between eliminating STEP and the WM Lyles Design Build (DB) team is suspect, especially when the expressed reasons fall outside of the RFQ evaluation criteria. The evidence surrounding the short-listing process insinuates impropriety.

“Even if the Lyles team won the appeal, a DB team cannot function with an unwilling partner that misrepresented that STEP technology was both a viable collection alternative AND an acceptable alternative to SLO County. So far, the consequence of removing innovation from the DB process is ongoing civil unrest and DB administrative cost overruns in excess of $5 million. Both of which have the potential to escalate from this point forward. Design Build Institute of America (DBIA) warns of these consequences when a Design Build process is adulterated.”

Responding to Ogren’s comment that “the single firm that did propose on the STEP system never appealed on the decisions,” Cagle said: “During the DB interview … the owner (SLO County) sent a clear message that SLO County would not be a cooperative partner on a ‘STEP’ design build team…  STEP and therefore the Lyles team was eliminated for reasons that fell outside the RFQ evaluation criteria.”

Cagle also refers to Ogren’s controversial ally, MWH, Public Works’ top candidate on both project short lists – for collection and treatment facility.

“Montgomery Watson Harza was favored with their own outdated (2004) gravity sewer design, even with an apparent violation of California Public Contract Code 20133, that specifically states, “Any architect or engineer retained by the county to assist in the development of the project specific documents shall not be eligible to participate in the preparation of a bid with any design-build entity for that project.”  Stated in black and white on Carollo’s SLO County contract are the MWH line items that contain verbiage about determining Viable Project Alternatives. Not only is “Determining Project Specific Alternatives” specific, but it gives the appearance that MWH was involved in steering the project alternatives selection.”

Cagle also noted that “on 3/27/09 the day of the shortlist announcement, the first day of the appeal process, the chair of the appeal committee, Paavo Ogren [via John Waddell] sent out a press release stating that STEP (and thereby the only STEP DB team) was not welcome.” In addition to the timely STEP-killing press release, Cagle refutes the Waddell memo in his detailed May 27, 2009 letter to the Planning Commission headed “7 reasons why STEP was eliminated.”

Cagle explained that Lyles did not appeal the failure to shortlist because Lyles’ two teams’ Statements of Qualifications (SOQs) were both based on STEP collection, and the County made it very clear that STEP was not an acceptable collection alternative. Even though STEP was clearly identified as an acceptable alternative in the Request for Qualifications (RFQs) and in the Prop 218 Engineers Report, Public Works’ Powerpoint presentation to the Board of Supervisors made it perfectly clear that that was not the case. Lyles wouldn’t even attempt an appeal with that sort of bait-and-switch in play, and so Lyles made a decision to cut their losses. There was obviously no reason for Lyles to expend any further resources on an appeal given that STEP was in fact never really on the table.

“A STEP team cannot function when the main team player, SLO County, is unwilling. Design Build can only be successful when the primary parties are working in a trusting partnership,” wrote Cagle. “Mr. Ogren understands this as he went through the Design Build Institute of America Boot Camp training at Cal Poly, SLO.”

The County simply had to eliminate STEP from the design-build process to protect MWH: “Had a STEP design been allowed to advance,” Cagle wrote, “it was obvious that these favored costs would have sealed the fate of the gravity sewer system.”

Lyles was not, as Ogren put it – “the single firm that did propose on the STEP system” -- Lyles was the only team that proposed a project using STEP technology.

“And there you have the crux of the problem,” wrote Cagle. “Notwithstanding the fact that the STEP alternative would likely beat any gravity sewer proposal on cost and that the WM Lyles team represented the most qualified team to deliver the most sustainable solution, the RFQ evaluation committee did not include the WM Lyles STEP alternative on the shortlist. The only logical explanation to this suggests impropriety and a pre-determined outcome of the RFQ process.”

Ogren responded to Cagle’s letter in a June 3, 2010 email to go-between Mecham. Well, sort of. Ogren largely ignores Cagle’s arguments, acknowledging him briefly in only one line: “Obviously I don't agree with several of Mr. Cagle's statements in his most recent correspondence, which is why it was important to have the STEP issue as a point of focus last year,” wrote Ogren. Instead, he reminds Mecham that the STEP debate is ancient history, that the STEP ship sailed on April 7, 2009, and won’t be coming back this way again. After touching on key project steppingstones and milestones achieved up to this point by the County, and with the key piece, the Coastal Development Permit, so close they can taste it, Ogren attempts to steamroll his critics as well as Mecham, declaring that momentum is clearly with the County.

“The project that your Board approved, and which is now the jurisdiction of the (Coastal) Commission, is an excellent project for Los Osos,” Ogren wrote Mecham, “and the time has come to move forward.”

Of course, Ogren and Gibson would like to move forward as fast as possible, faster than the Planning and Coastal Commissions have taken on Los Osos, faster to cover up their tracks, faster than anyone can challenge the details of their deeply flawed project.

By the same token, Ogren has consistently distorted the facts about STEP versus gravity and Lyles’ position. Public Works has repeatedly asserted over the last year that STEP collection is not viable or cost-effective simply because Lyles failed to appeal. This couldn’t be further from the truth. The truth is that it was clearly evident to Public Works that MWH’s gravity plan could not compete with Lyles’ STEP plan and therefore the Lyles team needed to be dropped before any real numbers were on the table for all to see.

--- Ed Ochs