Bid battles

Morro Bay and Cayucos haven't even built a new sewer yet, but people already think something stinks



What do Los Osos, Morro Bay, and Cayucos have in common? Is it the bucolic views of the Pacific? Nope. How about foggy nights? Not even close. For those who guessed Montgomery Watson Harza—or MWH, a household name for anyone familiar with local sewer projects—you get a gold star.

Under the current estimate, a joint project between Morro Bay and Cayucos to build a new sewer is estimated to cost $31 million and slated for completion in early 2015. In fact, the company that developed those estimates is MWH, the much-debated and disparaged global engineering firm behind the Los Osos sewer project back when that effort was in the hands of the town’s Community Services District—and the top pick for the sewer version currently under the auspices of San Luis Obispo County.

“It was a given that MWH—just like in Los Osos—that the [Request for Proposal] process was just a dog and pony show,” Morro Bay resident Linda Stedjee told New Times.

A Request for Proposal, or RFP to acronym-philes, is a traditional process for public works projects in which a municipality pitches its desired project to contractors, whittles down the best bids to a “short list,” and then selects its top pick.

The Morro Bay/Cayucos project was divided into two RFPs, one for design and one for project manager. MWH was awarded the former, with a $2.7 million bid to design the project. A review committee selected MWH out of five proposals sent by contractors, the other four being Carollo Engineers, Brown & Caldwell, CDM, and HydroScience.

But according to critics, MWH had an ace up its sleeve as far as bidding goes. Morro Bay Capital Projects Manager Dylan Wade is a former employee of MWH, having left in April 2007 to begin work for the city. Wade was also a member of the review committee.

In fact, in 2005, when Wade was still working for MWH, his laptop was stolen from the former MWH Los Osos office as the company was facing intense scrutiny from members of the Los Osos CSD for alleged bid rigging, suspicion of over-billing the community, and complaints of conflicts of interest among public officials.

“The theft coincides almost perfectly with an announcement from the CSD of a resolution to investigate activities pertaining to sewer contracts, spending, and design,” New Times reported at the time.

When it comes to the current project, Wade said he has no financial stake in MWH and, in fact, he recused himself from the final stage of the Morro Bay-Cayucos selection process.

“Conflict of interest: I don’t have any,” he said. “Conflict of interest is based on financial interest, and I don’t have one.”

According to Morro Bay City Attorney Robert Schultz, there’s no public record of how each review committee member evaluated bids. Responding to a public records request from Stedjee for the individual evaluation sheets of committee members, Schultz said such materials are exempt from disclosure until there’s a formal protest or legal challenge.

“The city does not collect or maintain the evaluation committee members’ individual evaluation score sheets,” Schultz said on March 18.

Morro Bay City Council Member Betty Winholtz isn’t necessarily upset that MWH was selected to design the joint sewer project. What really concerned her was that the contractor was selected with almost zero input from the 10-member board comprised of the Morro Bay City Council and Cayucos Sanitary District. There was no opportunity to affect the selection process, Winholtz criticizes. She said staff members essentially presented their selection to board members.

“So again, staff says, ‘We want this one,’ without any information,” Winholtz told New Times.

Dennis Delzeit was selected as the project manager, to be paid $250,000. Delzeit was also on the seven-member review committee that selected MWH.

“To clarify, I was contacted by the city about a year ago. The city has a large number of capital improvement projects that are in process and—because of my background, my professional experience—asked if I was available to assist and move this particular project,” Delzeit said.

He added, “I obviously was not part of the committee to select a project manager.”

Winholtz and Morro Bay City Council Member Noah Smuckler were the only two members who voted against MWH. Smuckler echoed many of Winholz’s concerns, saying the board was largely left out of the process.

“I’ve felt frustrated by it. … We really have not been given [a] choice on the board level, and we haven’t demanded it, either,” Smuckler said.

Speaking at the April 8 board meeting, Winholtz said, “I think we’re trying to preclude something by limiting our scope.”

Critics say other companies seemed to have been purposefully wedged out of the bid process, which was geared toward companies abiding by a traditional process called design-bid-build. Under such a process, a municipality solicits bids from contractors for various aspects of the project, but unanticipated costs come back to the public rather than the contractor.

Residents of Los Osos have bellowed a constant war cry over this bidding process, claiming it’s outdated and prevents newer companies from bringing different ideas to the table.

In Morro Bay and Cayucos, one such non-traditional company, PERC Water, has been heralded by some as a viable and cheaper alternative for sewer projects. Proponents claim PERC’s way of doing business would be more environmentally friendly and cost less than the MWH method.

“If you do it right and the contract is well done and you can depend on the firm, it’s an interesting way of displacing some of the long-term liabilities and cost,” Smuckler said of companies like PERC.

A PERC project would come under a design-build-operate-finance framework, which supporters say removes much of the liability and unforeseen costs to the public over the project’s life.

Smuckler, Winholtz, and a small army of residents have pressured members of the board of directors to put a hold on MWH’s contract and allow PERC to submit a proposal late in the game. But killing the contract and re-soliciting bids hit resistance from other board members and staff.

At the April 8 meeting, Wade said accepting new proposals would cost both Morro Bay and Cayucos time and money and would force the project “to sort of restart.”

Still, in a seemingly unprecedented move, the board decided to allow PERC to bring forward its proposal, which could, in theory, result in MWH’s ouster. PERC will likely make its pitch at the Oct. 14 meeting.

   “We just want to make sure that all the information is available and people know what all their options are,” Marian Clayton, marketing director for PERC Clayton, told New Times.

   Steve Hyland, who’s listed as project manager under the current contract with MWH, did not return a call for comment.

Though some locals question whether PERC would ultimately be able to take over a contract originally awarded to MWH, such a switch would likely send a drastic message—if it even occurs.

“It’s a really interesting time for what’s happening with this project,” Smuckler said.

Contact Staff Writer Colin Rigley at

Add a comment