Will California pay too much for Camp Fire cleanup? Why didn’t it choose lowest bidder?
A behind-the-scenes fight has erupted over California’s handling of debris cleanup contracts for the massive Camp Fire in Paradise.
Five of six companies that lost out this week in bids for $1 billion in state contracts have filed notice with state officials that they will protest. An official with one of those firms, Florida-based Ashbritt Environmental, accused the state of giving a competitor an unfair advantage that will cause debris cleanup costs to soar by the end of the year-long effort.
Officials with the California Department of Resources Recycling and Recovery, also known as CalRecycle, declined detailed comment, but confirmed they received notice of five protests.
“We have a process in place to review contract protests, and we’ll let the process play out,” CalRecycle spokesman Mark Oldfield said in an email.
The protested contracts are among the largest the state has ever awarded for disaster relief, and are part of the estimated $2 billion cost for Camp Fire cleanup and debris removal - considered the largest disaster cleanup in state history.
That $2 billion is far higher than the initial firefighting effort in November, which has been pegged by the state at $94 million.
The three contracts issued this week, now in dispute, include two for cleanup inside the town limits of Paradise and one in unincorporated Butte County around Paradise.
Bay Area-based ECC Constructors LLC won one of the Paradise contracts with a $359 million bid. The company did cleanup work at the Carr Fire in Redding, and also just won a contract to remove debris at the Woolsey Fire area in Ventura and Los Angeles counties.
The other Paradise award went to SPSG Partners, a joint venture including Pacific States Environmental Contractors, Goodfellow Brothers Construction and Sukut Construction. That group bid $378 million.
The low bid for the Paradise contract was $285 million, submitted by KDF Forestry, a company that conducted debris removal in Puerto Rico in 2017 after Hurricane Maria.
CalRecycle, however, disqualified KDF Forestry, saying the company does not have the required certification for hazardous substance removal. The company’s operations chief Mark Wells said KDF applied for that certificate recently, and said the approval process has taken longer than he anticipated.
The contract for work in the unincorporated area outside of Paradise went to Minnesota-based Ceres Environmental Services, also doing business as Environmental & Demolition Services Group. That company listed a $263 million bid. KDF was low bidder for that contract as well, at $186 million.
“Out of the gate, they are spending hundreds of millions of taxpayer money that doesn’t need to be spent,” Wells said. The company plans to file a protest.
A protest from Ashbritt Environmental accuses the state of making last-minute amendments to the contract bid process that allowed one winning bidder, ECC, to use debris tonnage knowledge it gained working on the nearby Carr Fire cleanup to provide a seemingly lower bid. However, Ashbritt executive Randy Perkins said the ECC bid will ultimately cost more than his company’s proposal.
“These contracts are going to double in size,” Perkins said. “They gamed one line item (so that) the cheap bid becomes the most expensive item.”
ECC Constructors spokesman August Ochabauer declined comment when contacted by The Sacramento Bee, saying he will let the CalRecycle protest hearing process come to its conclusion.
State officials have fast-tracked the bid and awards process, saying debris and ash in and around Paradise are a health hazard and an impediment to property owners who want to rebuild.
The three chosen companies are expected to spend the next year scrapping an estimated 10,000-plus properties clean of ash, debris, asbestos, metal and concrete, taking some of it to recycling centers and some to landfills.
The number of properties, though, continues to be in flux.
About 8,000 property owners had signed up to have their properties cleaned for free by government contractors as of early last week when the state agreed to the contracts. The number of sign ups had increased to 10,000 as of Friday, Butte County officials said. The extended deadline for property owners to sign up is Feb. 15.
Local officials say 14,000 properties need a full cleanup. Those who do not agree to the government cleanup will be required to hire their own contractors and pay for cleanup themselves.
The Federal Emergency Management Agency is expected to reimburse California for at least 75 percent of the cleanup costs under federal emergency protocols. California officials said they are hoping to persuade FEMA to pay more than that. FEMA officials did not immediately respond to a Friday request for comment.
Clean up crews from the three chosen companies were on-site, gearing up, this week.
CalRecycle bid documents indicate those companies will do their work while the hearing process is conducted. If the hearing officer determines that the contract process was unfair, CalRecycle said it would terminate the existing contract, and award the job to the successful protester.
The price for the three current contracts has been a moving target. Based on cleanup costs at the recent Carr Fire in Redding, CalRecycle officials initially estimated that this week’s three main debris removal contracts would come in at $1.7 billion, considerably higher than the $1 billion.
The state has acknowledged that the contract costs could increase based on unforeseen conditions. “CalRecycle anticipates estimated budget amounts could increase,” the agency wrote to bidders. “CalRecycle reserves the right to amend the budget for (these three contracts) as needs arise.”
The protest adjudication will be handled by a CalRecycle in-house hearing officer.
This week’s protests are not the first challenge to the state’s post-Camp Fire cleanup effort.
A CalRecycle hearing officer last month rejected a challenge by engineering firm Arcadis of the state’s $250 million soil testing and project management contract with Tetra Tech, Inc.
Tetra Tech Inc. is parent company to Tetra Tech EC, which has been sued by the U.S. Department of Justice for faking soil samples during a cleanup project in San Francisco’s former Hunters Point naval shipyard. Two company supervisors plead guilty last year and were sentenced to prison.
CalRecycle officials defended their hiring of Tetra Tech, saying the company has successfully handled seven of the last 10 CalRecycle debris management contracts, including the Carr Fire in Redding.
The state agency said the debris cleanup program “includes daily oversight of contractors, independent testing, direct review and analysis of results, and meticulous documentation requirements at every stage of operations.”
Editor’s note: An earlier version of this story incorrectly stated that the upcoming protest hearing would be conducted by CalRecycle’s legal counsel. It will be held by a hearing officer.
This story was originally published February 2, 2019 at 3:00 AM with the headline "Will California pay too much for Camp Fire cleanup? Why didn’t it choose lowest bidder?."