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Despite lawsuits and bad blood, Montgomery Watson may yet land Los Osos sewer contract

click to enlarge TAKING HEAT :  Public Works Director Paavo Ogren recently defended himself publicly after claims that he is in bed with civil engineering company Montgomery Watson Harza. - PHOTO BY STEVE E. MILLER
  • TAKING HEAT : Public Works Director Paavo Ogren recently defended himself publicly after claims that he is in bed with civil engineering company Montgomery Watson Harza.

The latest move in the ongoing Los Osos sewer drama could be compared to a man divorcing his wife and then dating her mom while simultaneously fighting over money with his ex. Despite an ongoing lawsuit and buckets of bad blood, SLO County has placed civil engineering company Montgomery Watson Harza as one of the top contractors in line to build a new sewer.

SLO County is about to send proposals to its top six contractors for bids: three contractors will bid on the Los Osos sewer collection system and three will bid on the treatment facility. MWH is on both lists—collection and treatment—and is the only contractor to not just make the county’s “short list” but to do so twice. County officials have budgeted about $105 million for both contracts.

“Well, they made it to the top three because they, in the mind of everyone on the (evaluation) committee, were the most qualified,” said John Waddell of the Public Works Department. “They clearly rose to the top.”

Some, such as former Los Osos Community Services District President Lisa Schicker, don’t think MWH deserves that position. “Why would they ever make it back to the short list? I just couldn’t figure that out.”

A little backstory: In 1999, MWH won the engineering contract when the Los Osos sewer was still in the hands of the Los Osos Community Services District and not the county. By 2006, the district terminated its contract with MWH because of alleged contract violations, over-billing, and conflicts of interest. Around the same time MWH sued the district for about $1.1 million in unpaid services after the CSD reversed course and canceled the project. That lawsuit is still pending while the district is in bankruptcy.

According to Schicker and other Los Osos residents, MWH helped put the district in bankruptcy. In 2005, the district was paying for the project with a state loan. Schicker said MWH, with a slim 3-2 support from the district’s board, rushed payments before a recall election that ultimately changed the board structure and project design. After the election, the state pulled its loan, leaving the district with the bill.

“In my opinion, the early payment of the contractor bankrupted the CSD,” Schicker said.

An MWH representative did not return a request for comment before press time.

It wasn’t the first time MWH had problems. In the city of Cape Coral, FL, the contractor was hired to expand the coastal community’s water and sewer system. The cost of that project quickly rose to just under $1 billion, according to the News-Press.

A 2006 audit found a number of “red flags” in the MWH contract with Cape Coral, including inflating the project cost and bid rigging. The audit findings were forwarded to the Federal Bureau of Investigation and the United States Department of Justice. A representative from the DOJ declined to comment on any investigation and the FBI did not return a call before press time.

Aside from ongoing fights with the Los Osos CSD and similar issues in Cape Coral, MWH still managed to make it on the county’s list. That has further inflamed an already livid group of Los Osos residents who have recently shifted their focus away from the design of a new sewer and more toward Public Works Director Paavo Ogren.

They have accused Ogren of having connections to MWH. Ogren has adamantly denied those claims and defended himself at length during the May 5 Board of Supervisors meeting. “… Unequivocally, I have not engaged in any illegal or unethical activities,” he responded to the rash of criticism.

Ogren and MWH, however, do have some history. Ogren was the Los Osos CSD’s interim general manager shortly before MWH was hired in 1999. The contractor began work in September, but the contract wasn’t executed until November. Ogren instructed his replacement, Bruce Buel, to fill in the contract at the district board’s request to accommodate the month of work, according to a memo Buel sent to his replacement in early 2006. Buel declined to comment further. Complaints were raised about the contract “backdating” to the District Attorney and county officials but no charges were filed.

Ogren responded: “I was the contract interim general manager prior to Bruce Buel, but the proposal process for project management services was independent from the work I was doing. … I didn’t have involvement in the hiring of Montgomery Watson back then.”

The county’s legal counsel agreed. County Counsel Warren Jensen made a public statement that he had reviewed claims made against Ogren and MWH but found no problems with either.

Here’s how MWH and the other contractors made it to the top:

• The county placed a notice for contractors to submit proposals.

• A five-person committee evaluated the candidates based on qualifications (Ogren was not on that committee).

There is, however, also an MWH connection to the evaluation committee. The current project engineer, Carollo Engineers, used MWH as a subcontracted consultant for the project in 2006. MWH was contracted for $40,000 of the estimated $849,498 cost, according to contract documents.

In order to remove MWH as a candidate, the county has to show that they’re not qualified. As of press time, the county had not found any reason to disqualify the contractor, regardless of the ongoing lawsuit and numerous allegations in the county and elsewhere.

“They’re a huge multinational firm,” Schicker said. “Why do they have to stay here? Why won’t they just go away and leave us alone?” ∆

Staff writer Colin Rigley can be reached at


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