Coos County wants union firm to finish gas pipeline

A non-union, out-of-state contractor that critics said botched a multi-million-dollar taxpayer-financed natural gas pipeline for Coos County has been replaced by a union firm from Oregon. The costly experience has fueled demands to reform the contracting laws for state and local governments.

Florida-based MasTec Inc., won the contract to install a 60-mile pipeline between Roseburg and Coos Bay by underbidding its unionized competitors by $4 million. The entire project was estimated at $43 million. MasTec's low-ball bid for its portion of the work was $24 million.

But it didn’t turn out to be such a good deal for Coos County or the State of Oregon.

Coos County sold $27 million in bonds to construct the pipeline and the state kicked in roughly $24 million in Lottery monies earmarked for economic development. Thus far, the county reportedly has spent about $31 million, but the job is only 85 percent complete.

When it is completed, Coos County will own the pipeline and lease it to NW Natural.

Since beginning work on the pipeline last July, MasTec has been slapped with millions of dollars of fines and claims for allegedly underpaying workers and violating state and federal water quality regulations.

The Oregon Bureau of Labor and Industries (BOLI) is investigating claims that the contractor underpaid its workers by as much as $4.1 million. Total back wages and penalties could reach $8.3 million, said the Portland-based Fair Contracting Foundation, a labor-back organization that initially discovered the pay discrepancy.

Randy Knop of Laborers Local 121 and president of the Pendleton Building Trades Council, said MasTec misclassified workers in order to pay the lowest possible wages. He said the company was using laborers to perform the work of pipefitters, heavy equipment operators and truck drivers. The prevailing wage rate of a laborer is lower than that of a pipefitter or operating engineer. At its peak, MasTec employed about 350 workers. Half of those workers, it was estimated, were from out of state.

The wage discrepancy, Knop pointed out, is nearly identical to the difference in the bid between MasTec and the next-lowest bidder.

Last December, a group of residents called the Coos County Coalition filed a federal lawsuit in U.S. District Court in Portland accusing MasTec and Coos County of violating the federal Clean Water Act. The suit seeks $4.3 million in fines and civil penalties. County Commissioners John Griffith, Nikki Whitty and Gordon Ross were named as defendants.

The plaintiffs claim MasTec removed vegetation, inadequately protected streams from soil erosion, and allowed lubricants used in drilling to seep into the streams after fractures developed in rock below stream beds.

The Coos Bay World newspaper reported that MasTec stopped working as the general contractor on the project in December 2003. On Jan. 7, the county notified the company that it was in default on its construction contract and that the county would take over if it did not resume work.

MasTec, a publicly-traded corporation, responded with a lawsuit, demanding $32 million to complete the pipeline project. The county rejected MasTec’s demand and asked the company to go back to work. In April the county took over the project.

On May 24, the Coos County Board of Commissioners selected Rockford Corp of North Plains, Oregon, as the new contractor. Rockford, a unionized firm with extensive experience in Oregon, was awarded an emergency contract to complete the project for $9 million.

That cost could go higher, Knop said, if the contractor finds it has to replace pipe improperly installed and already in the ground.

At this stage, the county reportedly has spent about $31 million.

“Coos County learned the hard way what you get when you hire an out-of-state, non-union, low-ball contractor,” said John Endicott, business manager of Tualatin-based Plumbers and Fitters Local 290. “Unfortunately, this will be an expensive lesson for us taxpayers. But the lesson is clear: we need stronger state laws to screen out irresponsible and inexperienced firms and give preference to contractors who hire well-trained Oregon workers, pay fair wages and benefits, and get the job done right. The first time.”

According to The World newspaper, three union firms were considered to finish the project, including Henkels & McCoy, which is constructing the NW Natural gas distribution system in Coos Bay and North Bend; Snelson Company from Sedro-Woolley, Wash., which has experience working in environmentally sensitive areas; and Rockford.

County attorneys told the newspaper a diligent search was conducted to identify “competent, highly qualified gas pipeline construction firms that could take over the pipeline project and complete it in a safe, cost-effective, environmentally safe manner.”

That, said Endicott, is what the county should have done initially.

County voters passed a bond measure by a narrow 51 percent margin in 1999 authorizing up to $27 million in bonded debt for construction of the main transmission line from the Williams natural gas pipeline in Roseburg to Coos Bay. It was supposed to be ready in December 2003.

Public officials have cited the lack of natural gas a primary reason businesses don’t locate in Coos County.

NW Natural will ship and distribute natural gas to customers there and has agreed to spend $12 million to construct distribution systems in Myrtle Point, Coquille, Coos Bay and North Bend. The network will be ready by the end of the summer, The World reported.

© Oregon Labor Press Publishing Co. Inc.