From the Bay Citizen
No-bid contracts cost taxpayers big money, and that’s one reason the $79 million Napa Valley Wine Train flood-control project has become a “tax dollar sinkhole,” two U.S. senators say.
In a statement issued yesterday in response to a California Watch report, Sens. John McCain, R-Ariz., and Tom Coburn, R-Okla., faulted the U.S. Army Corps of Engineers for not seeking competitive bids on the Wine Train job.
The project involves relocating a rail bridge for the Wine Train tourist attraction as part of construction to stop serious winter flooding on the Napa River.
“Taxpayers ultimately lose when contracts aren’t competitively bid,” the senators said. “The Wine Train project is truly a gravy train of government waste.”
As California Watch reported last week, the Corps of Engineers, in an apparent rush to get work under way, steered the $64 million Wine Train contract to a small Alaska construction company called Suulutaaq in 2008. Competitive bids weren’t solicited because the company was eligible for sole-source federal contracts under a program to assist Alaska Natives.
In 2010, Suulutaaq’s former chief executive testified in a lawsuit that the government had paid $10 million too much because it hadn’t sought competitive bids.
Meanwhile, costs on the project have risen by more than 20 percent, from $64 million to more than $79 million, records show. About $64 million has come from the federal stimulus program.
McCain and Coburn first criticized the Wine Train project in 2009, when they listed it among the 100 most “silly and shortsighted” federal stimulus projects in the nation. In their statement yesterday, they derided the project as a “stimulus handout,” and said, “Sadly, we’re not surprised by allegations that the Army Corps overpaid by $10 million.”
Spokesmen for the Corps of Engineers, Suulutaaq and the city of Napa didn’t respond to requests for comment for this story.
But in last week's story, Suulutaaq General Manager Tracy Crain disputed that the government had overpaid on the Wine Train project.
Napa Mayor Jill Techel in a 2009 interview defended it as an ideal stimulus project, saying it was "shovel-ready, green and it creates jobs.” The Corps of Engineers told the Government Accountability Office in 2010 that the no-bid contract speeded completion of the flood-control project, saving taxpayers money on overhead and inflation.
Allegations that the government had overpaid by $10 million surfaced in pretrial testimony in the 2010 lawsuit, which involved a contract dispute between Suulutaaq and a construction management firm. Greg Poynor, former Suulutaaq CEO, testified that after the company had obtained the contract for the Wine Train job, it subcontracted heavy construction work to the giant Kiewit Corp. construction firm.
Before work began, Kiewit officials scrutinized the no-bid contract, Poynor testified. The Kiewit officials concluded that a competitive bid would have been $10 million less than what the government had agreed to pay Suulutaaq, Poynor testified.
Crain, the Suulutaaq official, contended that Poynor couldn’t be trusted, saying he had been fired for fraud. In a lawsuit, Poynor has denied wrongdoing and said his firing was unjustified.
In a phone interview last week, Sen. Coburn also questioned whether there had been “an adult in the room” when the Corps decided to steer millions in stimulus funds to the Wine Train project.
Federal money for flood control in California is limited, Coburn said. He said it might have made more sense to spend flood-control funds in the Sacramento-San Joaquin River Delta. There, some experts worry that the system of 100-year-old levees may be prone to collapse during earthquakes.
“If you set priorities, probably (the Napa project) would not have been one,” he said.
This story was produced by The Bay Citizen, a project of the Center for Investigative Reporting. Learn more at www.thebaycitizen.org.