I John Darling, Esq., SBN 156109
[email protected]
2 Patricia J. Wolfe, Esq., SBN 310750
[email protected]
3 HUNT ORTMANN PALFFY
NIEVES DARLING & MAH, INC.
4 301 North Lake Avenue, 71h Floor
Pasadena, California 91101-1807
5 Phone: (626)440-5200 Fax: (626) 796-0107
6 Attorneys for Petitioner V. Lopez Jr. & Sons
General Engineering Contractors, Inc.
7 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA
9 COUNTY OF SAN LUIS OBISPO
10 I I V. Lopez Jr. & Sons General Engineering Case No. 20CV-0652 w o o Contractors, Inc., a California corporation, a x 12 SUBMITTAL TO THE COUNCIL OF
F Petitioner, THE CITY OF PISMO BEACH ON
z 13 BEHALF OF V. LOPEZ JR. & SONS
VS.
0 >o `; 14 Date: March 7, 2023
Z o The City of Pismo Beach, a California Time: 5:30 p.m. 1 0 15 municipal corporation, Location: City of Pismo Beach, O Q W City Hall
16 Respondent. 760 Mattie Road
z z x Pismo Beach, California Woa „ 17 M
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Z 18 TO THE HONORABLE MAYOR AND COUNCIL MEMBERS:
19 The following is submitted on behalf of V. Lopez & Sons General Engineering 20 Contractors, Inc. (hereinafter "Lopez") in response to the City of Pismo Beach ("Pismo") staff 21 recommendation to debar Lopez from City projects and staff report in support of that 22 recommendation. Lopez requests that this submission, the exhibits attached hereto, any further 23 documents submitted by or on behalf of Lopez, and any recording of the related oral proceedings, 24 be maintained by the City and made part of the administrative record of this matter. 25 26
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SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
I TABLE OF CONTENTS
Page
2 3 I. EXECUTIVE SUMMARY....................................................................................................5 4 I1. INTRODUCTION..................................................................................................................8 5 A. The Parties..................................................................................................................8 6 1. The City of Pismo Beach ..............................................................................8 7 2. Pismo's Outside Consultants and its Construction Manager..........................9 8 3. V. Lopez, Jr. & Sons ......................................................................................9 9 B. The Project...............................................................................................................10 10 1. The Maintenance Portion of the Project.......................................................10 11 2. The Lift Station Project 10
Z j
ax 12 C. Relevant Project Factual Background......................................................................10 F
a w 13 1. The Bidding Phase and Investigation Into Lopez 10 Z
z >o `; 14 2. The Grover Beach Project............................................................................I I H a 6-
6 15 3. The Notice to Proceed..................................................................................I I x
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H Q o 16 4. Actual Project Duration................................................................................12 Z � z�
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x w " 17 5. May 1, 2020: Completion of the Projects: The Completion of the Maintenance and Lift Station Projects 17
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6. Overall Summary of the Thirteen Month Delay to Completion of the 19 Lift Station Project.......................................................................................18 20 7. Early September 2020: Pismo Finally Issues Its Final Working Day Calculation ...................................................................................................19 21 8. What Happened and Why We Are Here Today...........................................20 22 III. PROCEDURAL STATUS...................................................................................................23 23 A. The First Debarment Hearing: November 17, 2020; Pismo's Invalid 24 Debarment of Lopez.................................................................................................23 25 B. Pismo is Ordered to Rescind Resolution No. R-2020-094.......................................26 26 C. Discovery .................................................................................................................27 27 D. Pismo Removes the Remand Hearing from its City Council Agenda; Pismo and Lopez Agree to Mediation.................................................................................27 28 1448907.2 PJW 7568.002 2
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I E. The First and Only Mediation Session: December 13, 2022 ...................................28 2 F. Pismo Backs Out of Second Mediation Session; Pismo Sets a Second DebarmentHearing..................................................................................................28 3 IV. LEGAL STANDARD FOR DEBARMENT .......................................................................28 4 A. The Standard for Debarment in the State of California; the "Responsible 5 Bidder" Standard......................................................................................................28 6 B. THE 2000 MODEL PROCUREMENT CODE.......................................................29 7 C. OTHER MUNICIPALITIES IN THE STATE OF CALIFORNIA THAT HAVE DEBARMENT ORDINANCES..................................................................30 8 1. County of Los Angeles.................................................................................31 9 2. City of Oakland............................................................................................31 10 3. City of San Francisco...................................................................................32 � 11
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4. County of Alameda......................................................................................33 w oo � 12
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aF 5. City of San Diego.........................................................................................35 ZQ?
13 D. Instances Where California Courts Have Deemed Debarment of a >o `; 14 Contractor to be Appropriate....................................................................................36 Z " o
1 15 E. The Federal Context is Instructive...........................................................................37 OQ � W�
Z o 16 V. THE EVIDENTIARY RECORD DOES NOT SUPPORT DEBARMENT OF wa LOPEZ .................................................................................................................................38 x > 17
Z A. No Pismo Representative Had Any Issue with Lopez' Trustworthiness..................38 18 B. Stoehr and Reynolds' Allegations Do Not Rise to the Level of Debarment............41 19 B. Pismo's Bases for Debarment and Lopez' Responses Thereto.................................44 20 1. "Issue#1: V. Lopez Beginning Work Without Proper Planning":
21 Spyglass Park...............................................................................................45 22 2. "Issue#1: V. Lopez Beginning Work Without Proper Planning" - Pre-Cast Concrete Vault Installation............................................................47 23 3. "Issue#1: V. Lopez Beginning Work Without Proper Planning" - 24 Sunset Palisades Lift Station Bypass ...........................................................49 25 4. "Issue#2: V. Lopez Demonstrated a General Lack of Understanding of Municipal Sewage Pump Station Practice and Materials" —two 26 (2)versus four(4)plug valves on Plan Sheet C-107 ...................................51 27 5. "Issue#2: V. Lopez Demonstrated a General Lack of Understanding of Municipal Sewage Pump Station Practice and Materials" :
28 Pismo's incomplete electrical design, not a lack of understanding. .............53 1448907.2 PJW 7568.002 3
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
1 6. "Issue#2: V. Lopez Demonstrated a General Lack of Understanding of Municipal Sewage Pump Station Practice and Materials": Pismo's 2 failure to incorporate the 400 amp requirement into the plans at bid time, not a lack of understanding by Lopez. ................................................56 3 7. "Issue#3: V. Lopez Demonstrated a Lack of Understanding of 4 Public Works Process": the Actual Change Order Process..........................59 5 8. "Issue#3: V. Lopez Demonstrated a Lack of Understanding of Public Works Process": The "claim letter"; apparently Lopez was 6 debarred for having the temerity to protect its rights under the contract.........................................................................................................61 7 9. "Issue#3: V. Lopez Demonstrated a Lack of Understanding of 8 Public Works Process": Lopez was apparently debarred over delays issues on the project. ....................................................................................62 9 10. Pismo Improperly Seeks to Recover$392,437.75 at a Debarment 10 Hearing and/or Claims That as a Result of its Fiscal Loss—A Debarment of Lopez is Appropriate.............................................................64 � 11
z VI. CONCLUSION 65
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SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
1 I. EXECUTIVE SUMMARY
2 This is the story of a public works contract to provide the City of Pismo Beach with a new 3 and upgraded sewer pumping and distribution system. This is also the story of a project that was 4 riddled with deficiencies in its plans and specs from the onset. Lopez was the lowest monetary 5 bidder for the project. Lopez, a veteran and minority owned business has been performing public 6 works contracts on the Central Coast of California for over 40 years. Throughout the course of this 7 project, Lopez worked diligently, however, this was not an easy task due to the aforementioned 8 design deficiencies. Ultimately, Lopez found itself embroiled in a garden variety delay dispute 9 with Pismo. Delay disputes are par for the course in public works contracts. However, Lopez' 10 situation is anomalous insofar as this garden variety delay dispute somehow morphed into an 11 effort to debar Lopez and prevent them from bidding on Pismo contracts for a period of five years. w oo �
a x 12 Suddenly, and out of the blue, with no previous hints of such a harsh remedy, in November 2020 z13 Lopez, a contractor with a stellar reputation for delivering on its contracts, found itself facing OZz �>o w 14 debarment, the harshest of all remedies, and potentially the death knell for a public works � � o
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a 1 0 15 contractor.
z °z 16 As this submittal brief and the accompanying PowerPoint slide deck will demonstrate, � w �aH
x w " 17 simply put, debarment on these facts with the applicable legal standard is completely inappropriate Z 18 and without merit. Counsel for Pismo has confirmed that Pismo's second debarment effort will be 19 based on exactly the same grounds as the first debarment of Lopez that occurred on November 17, 20 2020. The Staff Report and the Staff s PowerPoint slides submitted to the City Council in support 21 of the Staff s Recommendation to debar Lopez do not remotely close to articulating an appropriate 22 basis for debarment based upon the applicable debarment standards explained below. The 23 debarment of Lopez should not have happened in the first place, and it certainly shouldn't happen 24 again. Potentially more concerning, is the fact that the Staff Report and the Staff s PowerPoint 25 slides at best do not come close to painting an accurate picture of what happened on the project. 26 The judge in San Luis Obispo reversed the first debarment by finding that the City Council 27 violated Lopez' constitutionally protected due process rights. Lopez was not given any 28 meaningful opportunity to defend itself against the inaccurate and misleading November 2020 1448907.2 PJW 7568.002 5
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I Staff Report and PowerPoint slides. As part of the judge's order reversing Pismo's first debarment, 2 she instructed Pismo that if they wanted to try to debar Lopez a second time they needed to be fair 3 with Lopez and give them an opportunity to respond in a substantive way to the Staff Report and 4 the Staff s PowerPoint slides.
5 Accordingly, counsel for Pismo and for Lopez agreed that several depositions were needed 6 to afford Lopez its constitutionally protected due process rights. As a result of taking these 7 depositions, Lopez is now able to demonstrate with compelling information that debarment was 8 never warranted in November 2020 and is even less warranted now. Lopez has also been able to 9 ascertain the real motive behind the Staff s recommendation to debar Lopez. Namely, that the true 10 motive in asking the City Council to debar Lopez was to put Lopez out of business, save Pismo 11 approximately $150,000, to create a public record indicating that Lopez owed Pismo over w oo �
w x 12 $300,000 and finally to assist an adjoining beach community, the City of Grover Beach, in its then z 13 active litigation involving Lopez.
oz `; 14 It is clear from the deposition testimony and from the contemporaneous Pismo Staff emails �
1 0 15 that Ben Fine, the Director of Public Works was predisposed against Lopez, did not want to award z °z 16 the contract to Lopez and waited until the project was completed to seek and obtain the City x w " 17 Council's blessing as to the debarment of Lopez without anything close to a sound factual or legal W
Z 18 basis to do so. This contention is supported b two principal things: 1 the lack of an legitimate pp Y p P g ( ) Y g�
19 basis to debar Lopez and (2)the lack of any contemporaneous meeting minutes, emails, from Staff 20 to Lopez during the project threatening debarment, threatening to terminate Lopez on the contract 21 or even alleging ANY of the issues asserted in the Staff Report and PowerPoint. Here, from this 22 factual record, it is clear that the grounds for debarment were concocted after the fact in an attempt 23 to put them out of business.
24 An additional curio was why the construction manager and designer tasked with finding 25 the "mess-ups" that could be attributed to Lopez for the purposes of debarment, was it in order 26 protect them from someone raising questions about this project? Moreover, why was the Pismo 27 Staff member perhaps most intimately acquainted with Lopez'work on the project, Russ Fleming, 28 Pismo's Utilities Manager, not involved in the effort to debar Lopez?As is demonstrated by the 1448907.2 PJW 7568.002 6
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I project record, Mr. Fleming was present on-site almost daily working closely with the Lopez team. 2 The depositions also reveled another hidden motive and a blatant conflict of interest on 3 how the Staff went about putting together their Report and PowerPoint slides in support of Lopez' 4 debarment. Without telling the City Council, the Staff had the designers of the project and the 5 construction manager, one in the same WSC, create the PowerPoint slides. The same entity that 6 was under contract with Pismo to design this project and to manage it in a way that would get it 7 completed on time and on budget, was put in the position of blaming Lopez for completing the 8 project 13 months behind schedule and cost a total of$433,940 more than planned which includes 9 more than $230,000 of change orders to Lopez for WSC's design screw-ups and an additional 10 $433,940 to the City designers for having to fix their design during the project. 11 Here, Occam's razor likely applies in this instance; the simplest explanation being the most w oo �
a x 12 likely one. Namely, that the Staff wanted to punish and exert payback upon Lopez. Lopez would z13 become the convenient scapegoat for a grossly delayed and ill-designed project. All that needed to oz w 14 be done was for Chad Stoehr, at Ben Fine's direction, to present some semblance of conclusory �
1 0 15 evidence to the City Council that would convince them to take the extraordinary step of debarring z Q z 16 Lopez. According to the deposition testimony of Pismo's employees, the City Council had never x w " 17 before taken such an extreme step. This debarment was the brainchild of Ben Fine and Chad Z 18 Stoehr and would exonerate and insulate them from any complaints regarding the excessive cost 19 and delay. Thus, debarring Lopez would be a zero-sum game from the perspective of Pismo. 20 However, there was a further benefit to this strategy. In one fell swoop, the debarment of Lopez 21 would not only solve Pismo's problem pertaining to the Lift Station Project, but it would also 22 potentially put them out of business, thereby eliminating them from Grover Beach's litigation 23 docket.
24 In the aftermath of the court mandated rescission of Pismo's Resolution authorizing the 25 November 17, 2020, Lopez and Pismo attended a mediation session in December 2022 in an 26 attempt to resolve their respective differences and damages claims. Lopez provided a plethora of 27 information to Pismo and its counsel regarding debarment was never warranted based upon their 28 project performance and damages owed to them by Pismo. However, rather than proceed to a 1448907.2 PJW 7568.002 7
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I second mediation date, instead, Pismo communicated to Lopez that they would be initiating a 2 second debarment effort on March 7, 2023.
3 We have now come full circle. As this submittal brief will demonstrate, in no way, shape 4 or form did Lopez'performance or conduct on the Maintenance and Lift Station Projects equate 5 with commonly accepted bases for debarment, whether at the Federal level or in the State of 6 California.
7 II. INTRODUCTION
8 A. The Parties
9 1. The City of Pismo Beach ("Pismo'
10 (a) Chad Stoehr, ("Stoehr") was involved in the development of the 11 design of the Project and acted as Pismo's Project Manager. Stoehr began working for Pismo in w oo �
a x 12 2013 and has worked there continuously since that time. He began as an Associate Engineer and z13 after about 3 years was promoted to his current title of Engineer. During construction, Stoehr was oz � w 14 on site 1-2 times a day, 5 days a week. Stoehr was responsible for reviewing payment requests � � o
1 0 15 and change order requests.
z Q z 16 (b) Benjamin Fine ("Fine"), Pismo's director of Public Works oversaw x w " 17 the work of Stoehr as it relates to the Project. Fine joined Pismo in November 2008 as an Z 18 Associate Engineer. He was made Interim Director of Public Works in October 2012. Fine was 19 appointed Director in January 2013. Stoehr reported directly to Fine. As Director of Public Works, 20 Fine is responsible for the Pismo facilities division, which includes streets, government buildings, 21 parks,pier,beach access and maintenance of all infrastructure, which includes the wastewater 22 treatment plant, the water booster stations, and the sewer lift stations. 23 (c) Russ Fleming("Fleming"), Pismo's Utilities Manager, had more 24 direct responsibility given his job title and duties and responsibilities therein with the maintenance 25 portion of the Project as will be further elaborated below. Fleming began working for Pismo in 26 2005. When Fleming was first hired by Pismo he worked as an Operator in training at the 27 Wastewater Treatment Plant. In 2006-07 he was promoted to Operator II. Subsequently, in 2008, 28 he became the Lead Operator and was called Operator/Mechanic. He held this position until 2012. 1448907.2 PJW 7568.002 8
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I However, in 2012, he moved to Idaho to care for his elderly parents. He was there in Idaho for 2 about a year and in 2013 he returned to Pismo as a Wastewater Systems Supervisor. In 2014,he 3 became and continues to be Pismo's Utilities Manager. In his current role, Fleming manages the 4 Water Department, the Wastewater Department and also manages regulatory compliance. 5 (d) Jason Takagi ("Takagi") has worked for Pismo since 2014 as an 6 Information Technology Manager. In this role, Takagi helps to modernize Pismo's systems, 7 increase cyber security and oversees computer-related systems for Pismo. Information Technology 8 played a minor role in the Project. In his deposition testimony, Takagi stated that he was not 9 involved in decision-making recommendations relative to V. Lopez & Sons in fall 2020. 10 2. Pismo's Outside Consultants and its Construction Manage I I As is usually the case for public works projects, Pismo hired outside design consultants to w oo �
w x 12 design each aspect of the Project. Water Systems Consultants ("WSC")was hired by Pismo to z13 design the Lift Station portion of the Project and became the design engineer of record for this OZz �>o `; 14 aspect of the Project. Pismo also hired WSC to be the construction manager, having oversight and � � o
1 0 15 to interface directly with the general contractor, Lopez, for this Project. The main person Q o 16 responsible to discharge WSC's duties and responsibilities as its construction manager, was Joshua Z � z�
x w " 17 Reynolds ("Reynolds"). Michael K. Nunley&Associates ("MKM")was hired by Pismo to Z 18 perform the design of the maintenance project. The person primarily responsible for MKM's role 19 in this project was Joseph Riemuth. Finally, Pismo hired Prousys, Inc. ("Prousys") to assist with 20 the SCADA integration portion of the Project. Prousys' representative on the Project was Aaron 21 Peri ("Peri"). Peri, an industrial electrician by training, in the past had worked on motor controls, 22 custom control systems and electromechanical relays. In 1998 he began to receive training on the 23 software side. Peri first worked for Prousys from October 2000 to 2008. He then left and ran his 24 own business from 2008 to 2015. However, Peri returned to Prousys in 2015 and remained there 25 until 2020. Prousys laid off Peri in February 2020. 26 3. V. Lopez, Jr. & Sons, ("Lopez")has been a general engineering contractor 27 performing almost exclusively public works construction for over 40 years in California. The 28 current owners and operators of Lopez are the two sons of the founder of Lopez,Vince Lopez, Jr. 1448907.2 PJW 7568.002 9
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
I His sons are named Vince and Butch. Lopez' superintendent was Doug Terry("Terry") and its 2 accounting person was Jen Espinosa("Espinosa").
3 B. The Proiect
4 On November 2, 2017, Lopez along with several other bidders submitted a competitively 5 bid public works proposal to Pismo. The contractors bidding on that were submitting bids for two 6 unrelated projects for Pismo which Pismo had combined into one project(the "Project"). 7 1. The Maintenance Portion of the Proiect
8 The smaller portion of the project was a maintenance project relating to Pismo's overall 9 sewage and sewer system (the "Maintenance Project"). The purpose of the Maintenance Project 10 was to complete deferred maintenance and improvements on various lift stations throughout 11 Pismo, including coating of wells, pump replacement and upgrading electrical panels. Previously, Z
a x 12 Pismo had sent out requests for bids to general contractors for this work and given the relatively z13 small size of the Maintenance Project, Pismo did not receive any bids. oz w 14 2. The Lift Station Proms
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0 15 The second and more significant aspect of the Project was to provide Pismo with a new z Q z 16 and upgraded sewer pumping and distribution system (the "Lift Station Project"). Before the � W ogz
x w " 17 commencement of the Lift Station Project, Pismo decided to combine the Maintenance Project and Z 18 the Lift Station Project into one project forbidding and contract award purposes. Ultimately, 19 Pismo determined that Lopez was a responsible and responsive bidder and awarded the 20 Maintenance and Lift Stations Projects to Lopez.
21 C. Relevant Proiect Factual Background
22 1. The Bidding Phase and Investigation Into Lopez
23 On November 2, 2017 Lopez was deemed to be the lowest monetary bidder on the Project. 24 In order to determine if they should award the contract to Lopez, Pismo conducted a robust 6 week 25 investigation into Lopez which included checking their references. After completing this 26 investigation, Pismo awarded the Project to Lopez on December 21, 2017. While the Project was 27 awarded under one contract, in the amount of$2,901,486.00 but from a billing standpoint it was 28 billed out on two different projects: (1)the Maintenance Project was $697,932.00; (2) the Lift 1448907.2 PJW 7568.002 10
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
I Station Project was $2,203,554.00. From a project scheduling standpoint, Lopez was required to 2 submit a schedule and update the construction schedule as if the Maintenance and the Lift Station 3 Projects were one project.
4 2. The Grover Beach Project
5 Contemporaneous to Lopez' work on the Pismo Beach Lift Station and Maintenance 6 Projects, Lopez was engaged in another public works contract in the City of Grover Beach, a 7 beach community directly to the south of Pismo Beach. Lopez had been awarded the contract for a 8 street rehabilitation and repair project on May 15, 2017. As this project moved forward, Lopez 9 documented many design flaws in Grover Beach's plans. As will be further elaborated below, this 10 ultimately led to a lawsuit filed by Lopez against the City of Grover Beach to get paid for its work 11 on the project.
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a x 12 3. The Notice to Proceed
z13 Lopez received a notice to proceed ("NTP") from Pismo such that the commencement of OZz �>o w 14 the Project for scheduling purposes was February 3, 2018. The Project was to be completed by � � o
P4 0 1 0 15 April 16, 2019. The total contract price at the commencement of the Project was $2,901,486.00. z °z 16 At the pre-construction meeting, Pismo and Lopez set forth the initial duration of the contract to � W �gz
x w " 17 be 300 working days. As indicated below, the original completion date for the contract was April Z 18 16, 2019. As it turned out, the Project ran behind schedule, as do almost all public works 19 contracts. The Maintenance Project was completed on January 9, 2020. Followed by the Lift 20 Station Project which was completed on or before May 1, 2020. 21 3. Contract Status
22 a. Notice of Award issued: 12i21/17
b. Notice to Proceed date to be discussed b UE1 23 i. Assumed NTP of 212118 f^t
c. Time for Completion —300 working days
24 i. Assumed Completion data of 4141W19
d. Liqualed Damages - $1,000 per calendar day for each and every day beyond the 25 time prescribed to complete the work.
26 Deposition Exhibit 13,Pre-Construction Meeting Agenda,Page 2 27 28
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1 4. Actual Proiect Duration
2 (a) Pismo's Project Designs Were Woefully Inadequate. 3 As it turned out, Pismo's design documents, consisting of the construction plans and 4 specifications proved to be incomplete and inadequate. Pismo's incomplete design resulted in 5 Lopez having to do extra work and being delayed in order for Pismo to get its work done and for 6 Pismo to make necessary decisions to address time and cost implications due to its inadequate 7 design. Both the Maintenance and the Lift Station Projects, were completed well past the original 8 agreed completion date of April 16, 2019. In fact, the Maintenance Project was not completed 9 until January 9, 2020 and the Lift Station Project the larger of the two projects, was not completed 10 until May 1, 2020.
11 (b) July 2019: Pismo and Lopez Begin a Garden Variety Dispute. w oo �
w x 12 After the original completion date of April 16, 2019 came and went, Pismo and Lopez, in z13 the summer of 2019,began to dispute who was responsible for the project delays. Interestingly, up oz `; 14 until mid-April 2019, Pismo had issued 15 amendments, a.k.a Change Orders to the contract �
1 0 15 adding $118,126.24 and 25 working days to the contract. By late June 2019, Pismo's position was z °z 16 that it was planning on assessing liquidated damages at the completion of the project. By early � W �gz
x w " 17 July it was becoming more and more clear that Pismo's electrical design necessary to allow the Z 18 Lift Station in a fully automated fashion as was intended by the design, had significant gaps. For 19 instance, the electrical engineer of record, knew as of September 2016, a year before this contract 20 went out to bid, that in order to make this Lift Station work properly the design had to have a 400- 21 amp panel. The problem was that they didn't include it in the bid documents. Lopez followed the 22 bid documents, however, subsequently, the electrical engineer of record realized that they had 23 made a mistake. He failed to include the 400-amp requirement into the contract documents for this 24 Project.
25 26
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SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
I 225-amp vs. 400-amp Issue
2 The Truth
3 • PG&E provides the power for Pismo Beach's Lift 4 Station
5 • In 2016, a year before the contract was awarded to Lopez, PG&E's designer and Pismo Beach's electrical
6 engineer (EEOR) agree a 400-amp panel is required 7 for the design of the new Lift Station
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SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V. LOPEZ JR. & SONS
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27 28
1448907.2 PJW 7568.002 14
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V. LOPEZ JR. &SONS
I These significant gaps would drive all of the project delays from July 2019 until May 1, 2 2020, when the Project was finally completed, approximately 13 months behind schedule. Lopez 3 in turn, took the position that Pismo's design was incomplete and that all of the project's delays 4 were the fault of Pismo. Shortly thereafter, in an about face to Pismo's position, it signed Change 5 Order 21 on July 22, 2019, which added 20 working days to the contract. The addition to the 6 contract was due to Pismo's incomplete electrical design for the lift station project. Lopez 7 objected to Pismo's arbitrarily adding only 20 days to the contract, which Lopez felt was 8 insufficient given the still incomplete electrical design. Pismo confirmed in writing that more time 9 would be given after the work referenced in Change Order 21 was completed. Additional 10 assertions of threatened liquidated damages by Pismo seemed to quiet down from that point Z
11 forward.
a x 12 Meanwhile, while the foregoing was transpiring, in Grover Beach, Lopez had filed a z13 lawsuit against the City of Grover Beach seeking to get paid for Grover Beach's design flaws. This OZz �>o w 14 lawsuit was only filed by Lopez after Grover Beach refused to mediate with them. � � o
0 15 (c) September 2019: Pismo Finally Realizes The Need For a SCADA z °z 16 Consultant.
� w �aH
x w " 17 Pismo did not have a SCADA consultant retained at the commencement of this Project, Z 18 even though the City's own bid and contract documents required that it hire a SCADA vendor. In 19 late September 2019, after being told by Lopez that Pismo was yet again lacking in its preparation 20 of what it needed to do to complete the Lift Station Project, Pismo finally realized that the contract 21 documents required it to hire a consultant to make the lift station work. The existing Supervisory 22 Control and Data Acquisition("SCADA")was outdated and needed upgrades and expanded 23 electrical panels for the new Lift Station to work. Pismo finally contracted with its SCADA 24 consultant on October 7, 2019. It took from October 7, 2019, to October 29, 2019, for Pismo's 25 newly retained SCADA consultant, Prousys to come up with a scope of work as to what Pismo 26 had to do to get the SCADA to work so that the new lift station could be finished. Pismo in good 27 faith, recognized that it was responsible for all of the project delays associated with this time 28 period.
1448907.2 PJW 7568.002 15
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
I Accordingly, Pismo unilaterally issued, Change Order 25 on December 17, 2019, which 2 recognized Pismo's exclusive responsibility for the delay to the Project as a result of not having a 3 SCADA contractor on board years earlier.
4 CHANGE ORDER
5 (Instructions Follow)
6 No 25
7 Project: Five Cities Lift Station improvements and Lift Station Maintenance Protect Date of Issuance December 17,2019
8 Contractor: V. Lopez Junior&Sans, Inc.
9 You are directed to make the fallowing changes in the Contract Documents. ❑escriptlon: NO COST CHANGE ORDER-Additional working. days for delays associated with 10 schedule of Citys SCADA integrator.
Purpose of Change Order: Delays associated with Cites SCADA integration, Delay by City began Z z 11 when Contractor completed work within the electrical cabinet. Delay ended when City integrator was ready for startup of the new lift station. Note, Contractor's V Lopez&Sons startup and testing submittal w oo �
a x ° 12 which is on the critical path had not yet been approved. Day delay began is 10.21.2019 an delay end is �d 12.12.2019,also refer to response to V.Lopez&Sons protest to Change Order No.25 dated 1.10.2020 N 13 Attachments:(List documents supporting change) Res onse to V. Lo2E&Sons protest to Change o w 14 Order No.25 dated 1.10.2020 and V.Lopez protest to Charge Order No. 25 � z � � o
H a ` Deposition Exhibit 142,Change Order 25,Page 1 15 O dxz�
16 Lopez protested Pismo's attempt to cut off its responsibility for delays to the Project as of Z rA
w a H 17 January 7, 2020 when it wrote a letter providing its reasons for disagreeing with Pismo. Lopez M
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Z 18 followed-up with a Notice of Protest on January 10, 2020 protesting Change Order 25 specifically. 19 Lopez followed the protest procedures in the contract in this regard. 20 (d) October 2019 through February 2020: Pismo's Lack of a Complete 21 Electrical Design
22 At the same time that Pismo was delaying Lopez's ability to complete the Lift Station 23 Project because of Pismo's delay getting its SCADA contractor on board, the Project was also yet 24 again delayed through the lack of Pismo's complete electrical design. PG&E is the local utility 25 that was providing 100% of the power for this project. In order to make the Lift Station Project 26 work correctly with the appropriate functionality contemplated by Pismo's design, Pismo 27 combined with PG&E knew as of 2016 that a panel upgrade, specifically a 400-amp panel, and 28 additional electrical upgrades would be necessary to get the lift station to function properly. Even 1448907.2 PJW 7568.002 16
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
I though Pismo knew or should have known that this was lacking in its design, as late as 2016, a 2 year before the contract was awarded to Lopez, and as early as 2013, Pismo completely dropped 3 the ball on this critical aspect of making the Lift Station functional. This resulted in Pismo 4 unilaterally issuing Change Order 26 on April 1, 2020, only after Lopez had performed the work. 5 Change Order 26 added 47 working days to the contract and$50,214.75 to the contract. Lopez 6 protested the number of working days added to the contract as being insufficient and reserved its 7 rights accordingly. Ultimately, unilaterally or otherwise, Pismo issued 33 change orders to the 8 Project thereby increasing the contract by the amount of$232,781.23. Through Change Orders 1- 9 33 the City also added a total of 158 working days to the contract. Attached as Exhibit "A" is a 10 summary of all 33 Change Orders issued for this Project. 11 5. May 1, 2020: Completion of the Protects: The Completion of the w oo �
a x o 12 Maintenance and Lift Station Protects
z13 The Maintenance Station was completed on January 9, 2020. The Lift Station Project was oz � w 14 completed on or before May 1, 2020. However, Pismo contends that the Lift Station was � � o
1 0 15 substantially complete on June 22, 2020. This is simply incorrect as will be explained below. z °z 16 Ultimately, the Project was completed on or before May 1, 2020, when the new Lift Station was � W �gz
x w " 17 made fully operational and the pre-existing lift station taken offline. Notably, since that point in Z 18 time, there have been no complaints about the quality of Lopez'work associated with this project. 19 On projects such as these, the owner, at least from its perspective, attempts to calculate the 20 number of delays to the project by providing periodic working day reports. After the new lift 21 station was operational, Lopez made it very clear that it just wanted to be paid its contract balance. 22 Lopez had previously put Pismo on notice that Lopez believed that it was entitled to delay 23 damages, however, Lopez had made it clear, including and through the summer of 2020, while it 24 was awaiting receipt of the final contract payment, that it would be willing to forego its delay 25 damage claim so long as Pismo was willing to forego its yet unquantified liquidated damages 26 claim.
27 28
1448907.2 PJW 7568.002 17
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
1 6. Overall Summary of the Thirteen Month Delay to Completion of the Lit 2 Station Project
3 Months after the Lift Station was fully operational, and therefore the Project was 4 completed, which occurred on May 1, 2020, Pismo unilaterally issued a Working Day summary to 5 calculate, from their perspective, who was responsible for the delays on the Project. In its 6 September 7, 2020 working day summary, Pismo admitted that it was responsible for all of the 7 delays for the original completion date of April 16, 2019 up to March 17, 2020. Subsequently, 8 Pismo contended that the Project was "substantially complete" on June 22, 2020. The contract 9 does not use the term "substantially complete" or "substantial completion". The only term used in 10 the contract to indicate when the Project is finished, is the word "completion". Based on what 11 actually happened on the Project, this Project was completed on May 1, 2020 when the Lift w oo �
a x 12 Station was operational. Under applicable law, a public works contract is completed when the z13 owner has beneficial occupancy of the Project. The Lift Station was fully operational as of May 1, OZz �>o w 14 2020. As a result, Pismo, the Owner, had beneficial occupancy of the Project as of May 1, 2020. � � o
1 0 15 Based upon the definition of"completion" set forth in Public contract code §7103(c) as a matter of z °z 16 law, this Project was completed on May 1, 2020 and not on June 22, 2020. x w " 17 As a result, the potential delay dispute between Pismo and Lopez is approximately less Z 18 than 6 weeks, from March 18, 2020 to May 1, 2020. From a big picture standpoint, Pismo has 19 already taken responsibility for 85% of the 13 month delay to the Project. The remaining 15% of 20 unallocated delay, from March 18, 2020 to May 1, 2020, is the period of delay in contention. 21 Lopez has already demonstrated through a robust critical path analysis that Pismo was responsible 22 for all critical path delays from April 16, 2019 through May 1, 2020. Pismo, through their conduct, 23 has as much admitted to the same. See for example the discussion of the electrical and SCADA 24 delays described above as reflected in Change Order 21, Work Directive 13, Change Order 25 and 25 Change Order 26. In perspective, Pismo attempted to debar Lopez by giving the City Council the 26 false impression through its PowerPoint slides that Lopez was responsible for ALL of the delays 27 on the Project.
28 1448907.2 PJW 7568.002 18
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
1 2 = Schedule Challenges
3 • The project experienced Sig nlfIcant delays resulting in= *The City extending the Contract time 159 days past the 300-day 4 contract time
• 459 days total
5 • 153`}6 of the original contract time
* V. Lopez provided 2-week look-a head schedules at each progress 6 meeting
• Itut was inconsistent with updating the overall project schedule 7 itWent several months between Updates
8 7. Early September 2020:Pismo Finally Issues Its Final Working Day 9 Calculation
10 Ultimately, some three months after the project was completed, on September 7, 2020, Z
I I Pismo issued its final working day calculation. Through this calculation, Pismo determined that a x 12 Lopez had delayed the project by 69 working days, and as a result, Pismo was entitled to $69,000 zG 13 of liquidated damages from Lopez. The contract contemplates $1,000 a day for contractor caused z >o w 14 delays as liquidated damages. Lopez immediately protested the owner's working day calculation. 0 0 15 In essence, Pismo, through its September 2020 calculation, determined that Lopez was responsible o G" 16 for the project delays from March 18, 2020 through June 22, 2020.
Zz
x w " 17 Interestingly, Pismo recognized its fault in all project delays from April 17, 2019 through Z 18 March 17, 2020, as Pismo's final working day calculation granted Lopez a contract time extension 19 for this period of the delay. In other words, even though Pismo's final working day calculation 20 was incorrect, Pismo did recognize contemporaneously, that it, not Lopez, was responsible for 21 more than 80% of all of the delays that occurred on this Project. Further, even though the Project 22 was actually completed, within the meaning of applicable California law, on or before May 1, 23 2020, through Pismo's final working day calculation, Pismo contended that the Project was not 24 completed until June 22, 2020. Pismo has been unable to explain how it came up with this 25 working day calculation in any meaningful way, because a meaningful explanation cannot be 26 provided from the operative facts.
27 28
1448907.2 PJW 7568.002 19
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
1 8. What Happened and Why We Are Here Today
2 (a) Events Leading Up to the Summer of 2020. 3 Leading up to the summer of 2020, Lopez had asserted a delay claim and was refusing to 4 sign Pismo's unilateral change orders without a reservation of rights. Lopez' contention, as 5 documented in the project record, was and is, that all of the delays in completing the Project from 6 the original planned completion date of April 16, 2019 through May 1, 2020 were 100% the 7 responsibility of Pismo. During the summer of 2020, Pismo contended that it would be assessing 8 liquidated damages but it had never articulated how much of the delay from the completion of the 9 project from April 2019 through May 2020 was its responsibility versus the responsibility of 10 Lopez from April 2019 through May 2020. Interestingly,between December 2019 through August 11 2020 Pismo unilaterally added over$90,000 to the contract price and also unilaterally added 88 w oo �
a x 12 working days to the contract time. This was done via Change Orders 25 through 33. Lopez z13 formalized its delay claim shortly after Pismo unilaterally issued Change Order 25 on or about OZz >>o w 14 December 17, 2019.
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1448907.2 PJW 7568.002 20
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
I (b) Pismo Finally Calculates and Apportions Delay Responsibili1y 2 Between Itself and Lopez.
3 M1
79 4 PrWlct: the titres L5 and Ls mal%wp [e
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5 Weekly Statement of Working Days lFeptlat nnnher 227 pronn e9trh Love:
Sark Wednesday.September9.2020 S22 AM
ltl' V.Losses 1--&Sons I. W.6-4(Soymerar' The loll OMN days do m co"a for the endln an: VV2a w RE.01lope.Da•Shadnent 1;'Jashua Reynolds' 6 aw•u ii a statement Nw rged yew R I>irat &E ylorvnq Day 5memmn tzz nn•912d 1 Mun 9 e9 Vpoaa cai kred wh—ndk-t,�•a.e Wftel. 7 v-aQ7e Tua avrk ptgra wnndaaed wbitaaY any compf r I not agree with they working A day statement attached. soW1-2(I Wed aro—kW-FO—Pdrred wbalanlially[eeap'ele
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foal days todrte 15g [e VlrrSetnpe aeath,W;Joshua Reyr"ds 10 —LY alei lnr~ 'M wr.ra.•r°}�sys 9 SrahjeQ WarlungOay Statement 177
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r� z Cmpund d.er°rcwrrprtsm ait51lo15 See attuhedworl'"tlay statement 1271w the purpose otopturing-1ting days that were mued as pan ofshange s/-I H aI Total apprrn.d rlmr rata'tlean d."Mhanae&L11—Mon 159 orders approved after the date at lutMential cemplehnnand the Wt imed mriling day stetemern Ite„a12a).WnS l� 12]a[50 rCLleetsu atetln the nlahtlan asawieletl wahrc Gi,l hh��..II Q O O Numam W aadltierul lvf ys due xu eontrr[s rrgaraWn 1F 1•ZI W pp 12 R..tard w`6, tar T— pan{cularthe wmmenls senian at the bottom. cognised hpSdayl.Pkueredewthe attached WaS,In ,� drys %waaapt lFM2pNsIarS a59
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a 9 Wnr Rdays remanlna N —'—'-- Regards, `l 13 cnnnoalnapperatlanlsd: Michael Goyrnerx,PS Z NS .77 _ammenry.L�.nd ld date of rnrnpleli-A.,be once edstd.
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Deposition Exhibit 79,Weekly Statement of Working Days Deposition Exhibit 125,Email from Butch Lopez to x 17 No. 127 Michael Goymerac
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Z 18 On September 8, 2020 WSC, on behalf of Pismo, transmitted working statement 127 19 which became the final working day statement from Pismo. Through this document, Pismo took 20 responsibility, meaning it did not attempt to assess liquidated damages against Lopez, for all the 21 delays on the Project from April 16, 2019 through and including March 17, 2020. However, in 22 this document, Pismo contended that the Project was not "considered substantially complete" until 23 June 22, 2020. By calculating the number of working days from March 17, 2020 to June 22, 2020, 24 Pismo contended that the Project was substantially completed' 69 days later than it should have 25 been.
26 This was the first quantification of any delay related damages asserted by Pismo, from the 27 ' The contract that Pismo drafted does not recognize the term"substantial"or"substantially complete". The 28 contract recognizes the word"complete"or"completion"to denote when the project is finished. 1448907.2 PJW 7568.002 21
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
I inception of the Project in 2018 through the completion of the Project in May 2020. Lopez 2 immediately protested following the dispute procedures in the contract documents. At that point 3 in time, Lopez assumed what had been brewing for some time, namely that there was a garden 4 variety delay dispute between it and Pismo. In the public works construction arena, it is not 5 terribly remarkable that a public entity attempts to assert liquidiated damages by threatening the 6 same. Typically what occurs is that the general contractor and the public entity will agree on some 7 adjustment to the contractor's final contract balance claims in exchange for the waiver of the 8 public entity's threatened liquidated damages. Once this agreement is rendered, the Project is 9 closed out and the parties move on. This was not what Pismo did or attempted to do in September 10 2020 months after the Project was fully completed. In fact, in its 41 year history, Lopez has never 11 been hit with an actual liquidated damages assessment. w oo �
w x 12 (c) Lopez Begins to Grow Increasingly Concerned that Pismo Will z 13 Attempt to Assert Liquidated Damages
oz � `; 14 As of early September 2020, Lopez was very concerned that Pismo might attempt to assert � � o
1 0 15 liquidated damages. For reasons inarticulate at the time, and for reasons explained in this submittal z Q z 16 brief and the attachments, Lopez was and is not responsible for any of the delays that happened on � w �aH
x w " 17 this Project. Having said that, when bidding on public works contracts in California, general Z 18 contractors such as Lopez are required to answer questions before their bid can even be accepted. 19 One of these key questions, which is essentially an eliminator from having your bid being 20 accepted, is whether you(meaning Lopez) have ever been assessed liquidated damages. This 21 fact, the possibility that Lopez would suffer a significant loss of revenue simply by virtue of the 22 fact that it would have to check a box that it had been assessed liquidated damages by Pismo, and 23 thereby lose the hope of being awarded further public works projects, was definitely lurking in the 24 back of Vince and Butch Lopez'minds as of early September 2020. In effect, Pismo was intent on 25 playing hardball. However, unbeknownst to Lopez at the time, Pismo was planning on taking it a 26 step further, and seeking to debar Lopez from bidding on any further public works with Pismo. In 27 fact, Stoehr and Reynolds had been hatching a plan to debar Lopez for some time before 28 September 2020.
1448907.2 PJW 7568.002 22
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
1 III. PROCEDURAL STATUS
2 A. The First Debarment Hearing: November 17, 2020; Pismo's Invalid 3 Debarment of Lopez
4 Behind the scenes, at Ben Fine's direction, Stoehr and Reynolds had been working on the 5 debarment of Lopez, from sometime in August 2020 through early November 2020. 6 Flom:Chad Stoehr
Sent:Friday,5eptember4,2020 155:54 PM
7 To:Joshua Reynolds;Michael Gaymerac
Subject:RE:VMS 4127-Contract Days Adjus nrm
Sensitivity.Nomml
8 9 Josh thanks a ton,I am Wing to incorporate hso staffreport and have to Ben by Monday 10 Chad
Z Sent from Work s=e ONE Boxer
kr ~ Oo �
ax 19 �2 12 On September 3,2020 at 554-57 PM PDT,Joshua Reynolds wmte. � x o �
13 �yy N
Z U z • Lade of equipment and tabor to properly perform bypass pumping.V.Lopez and their subcontrocror did not Z O w 14 have adequate equipment or labor to safely bypass the Sunset Palisades Lf t.out i m Tie f 1cw thr ocoh p Z 4. o system leaked mutt i A e t 1 rewllowed sewage to build up in the lif t st at on oM regi red p ty W s ornd a monitor the NJ stati m and asist *th byp= ui rgaty resat-ca. wit hat❑tyintervent1M tie lift st a 0 15 could have overfl o Ned pry effa•ts to mist V lopes at dhist i statl on mart dty se Nage cdl ecti on$yat Q W operators were unable to perform other requhed tasks. The diF fl d ry VPth the byp ss syct emertended t Q x q N 16 projectschedule.
Z V] z D a In late May 2019 V.Lopez Initi atedrehafflftati m d the Sunsa fitl saw Lift Stab onby Irstal ling o a bypass pumplhe system.However,the bypass system experienced leaks In the f i t ti rp x W 17 Citystaf f ass st ed V Lo an the plugs. pex ash pu rrp ng t he +� udl do+N7 norit vi rig t he syst a ma nd R od d n ��i guidance to get the bypass system funct I a ng The R od a na tit ht he bypass syst e m heart t hat i t t on H 18 several days longer to coat the wet welI then pianned and the City kept a presence on the site in order to respond to issues.
19 Joshua Reynolds,PE Deposition
20 jreynelds®wsc4nc.com Exhibit
Phone:(805)457-a833 x107 Ex.121
21 While:(805)215-0764
22 23
24 25
26 27
28 1448907.2 PJW 7568.002 23
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
I
Josh,
2 Mkfiael and Ijust spoke on this with regards to my recent quesWn about why the working days mnWrtirg was not makig serxe based on the date of substamal completion and counting back to extended date ofcorn>pletion 3 71ere is goang to be some chaW and I am goig to be adding some notes to WSD 4127 and wiI email you a copy to discuss.
4 Thanks
Chad
5 Ron t Michael Goymemc toga=rac@wsc-i xxcinN
6 Sent:Thursday,September 3,2020 826 AM
To:Chad Stoehr
Cc:Josi m Reynolds<ireMlds cn wsc-hc.coni-,
7 Subject:WDS#127-Contract Days Adjusunent
8 ltad,
9 C
Sce attached WDS#127 to adjust the contract days for CCOs approved before the substar W oompktion date but not 10 sued until after. Can yuu confirm what CCOs thcsc were for? Was it CC0 29 through 31? Let me know ffyou have any questions or comments regWitgthe wording tithe WDS. z11 T .s,
w ~ O o Michael Goymerae,PE
12 rnavmeroc(aZwso-ncoom
w o Deposition
0:805.457.8833 x123 De P
a 13 Q 951.264.0391 Exhibit
Gil exneciWSG.com Ex.121
¢ ow 14
0 04 0 15 Lopez had absolutely no idea that this was coming. Completely out of the blue, on Z Q z 16 November 5, 2020, Lopez was notified that it would be debarred as a "non-responsible bidder" on x " 17 November 17, 2020. Until receiving this notice, Lopez had received no prior indication that W
Z 18 Pismo was considering such an action, nor had Pismo brought any issues to the attention of Lopez 19 that would conceivably warrant this drastic measure. Notably, the Public Hearing Notice advising 20 Lopez of the impending debarment hearing did not indicate any information relating to the charges 21 being brought by Pismo. This was also the first instance where Lopez was made aware that Pismo 22 was improperly asserting "approximately" $322,500 in liquidated damages against Lopez for 23 delayed project completion. Nonetheless, Pismo's City Manager premised any agreement that 24 could prevent the public hearing from going forward on payment by Lopez to Pismo of half of the 25 illegal amount of$322,500.00 ($161,250.00), a release of any claims by Lopez to Pismo, and 26 Lopez' agreement to withhold from bidding on Pismo projects for a period of twenty-five (25) 27 years.
28 Subsequently, on November 12, 2020, the City Manager emailed counsel for Lopez and 1448907.2 PJW 7568.002 24
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
I enclosed a draft of the staff report and the proposed City Council resolution. Further, the staff 2 report was the first time that Lopez was apprised of the facts supporting Pismo's potential 3 declaration of Lopez as a non-responsible bidder.2 It bears repeating, that before this staff report 4 was distributed, Lopez had not heard of any of these "issues". Lopez had not been informed of 5 any of these issues during the period from January 2018 to October 2020 while the Project was 6 still ongoing. Moreover, no documentation was provided to support any credence for the 7 statements regarding Lopez' alleged deficiencies and errors. Additionally, on November 12, 2020, 8 a communication from Pismo threatened further action against Lopez by Pismo if Lopez did not 9 capitulate to the Pismo's demands for payment to it of money to which it was clearly not entitled. 10 Despite Lopez' request for additional time to prepare a meaningful defense, Pismo went 11 forward with this first debarment hearing on November 17, 2020. There, Pismo presented their w oo �
a x 12 case against Lopez highlighting the three main issues they had presented in the Staff Report. At z 13 the hearing, the City Manager, without supporting facts, attempted to justify Pismo's action as OZz �>o w 14 necessary and "to protect the public safety." However, neither during the Project's construction, � � o
P4 01 0 15 nor anytime thereafter, did the City Manager, or anyone else, indicate that the public safety was at z °z 16 risk, or that Lopez was doing anything that might jeopardize the public. Lopez pointed out facts x w " 17 that demonstrated the hearing was not warranted, was not authorized, deprived Lopez of its due Z 18 process, and was undertaken with improper motive, and was therefore, illegitimate. 19 Regardless, at the conclusion of the hearing3, the City Council, with scant questioning or 20 discussion, adopted Resolution No. R-2020-094 (the "Resolution"). The technical effect of the 21 Resolution was to bar Lopez from bidding on Pismo projects for five years. However, the 22 Resolution also contained a number of allegedly "factual" recitations, leading to the conclusory 23 branding of Lopez as a "non-responsible bidder". Among these recitations was the statement that 24 25 2 The staff report enumerated the"issues encountered with V.Lopez over the course of the project,"as follows: (1)V.
Lopez consistently initiated work items without proper planning prior to beginning the work; (2)V.Lopez 26 demonstrated a general lack of understanding of municipal sewage pump station practice and materials;(3)V.Lopez demonstrated a lack of understanding of public works process. 27 3 At the November 17,2020,public hearing,Lopez was given a mere eleven minutes to state its position,as well as a 28 five-minute rebuttal period.
1448907.2 PJW 7568.002 25
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I Pismo had been damaged by Lopez in an "approximate" amount of$322,500.00, and another 2 recitation that questioned Lopez' "public works competence". Notably, the Resolution only 3 addressed issues of delay with respect to the completion of the Project. 4 In each of their respective depositions, neither Mr. Fine nor Mr. Stoehr could ever recall 5 any instance where they had ever sought to debar a contractor, or had ever imposed liquidated 6 damages on a contractor, nor could they recall any instance in which the City Council did not 7 defer to a recommendation that they had made about a public works contracts. In essence, it 8 appears from their testimony that debarment was a foregone conclusion once they decided to put 9 the topic on the City Council Agenda.
10 From:Chad Shiula
U Seat:Tutsdav,November 10,2020 9090 PM
Z 11 To:Benjemut Fine
a Subject:V.LopexMon-Responsik)k BreakdownofDamages L7r C) o 12 5ensiti►'if3r:Normal
fJr x a0 �° o
13 Ben,
��yy N
Z "V Here is the hrcakdown for the$32ZSW:
¢ 0 � 14
Z Q o Construction Management WSC(Amendment 01):$0 90(1 o Construction Wriagement WSC IAmendmeFit#2);$49,000
R; U o 15 Construction Management WSC(Arne ndme nt 43):$0,645 Additional Engf nee ring Services 0uringConstrucQon WSC(Am endment47to WSCsdesign contrast):$15,39S OQ 16 CCO#n-SMn3120 working days @$1,000 per day($20,0001 and$2,263 additional cost)—see discussion in the section Z z labeled"lack of under3tandIng of PG&E standards"'within the staff re part,this change order was issued for the change to a W o a 400amp panel and the City was not ultimately obligated to issue this change order,it was issued to mai Mal n progress on the W ' n E 17 project and the electrical item was on the critical path.
W
Z� CC0#26-$97,214.75(47 wo rk ing days @$1,0Wperday(547,000)and$50,214,75addi bon aI cost)—see discussion I the 18 section labeled"poor pump controf panel assumptions"within the staff report,this change ordor was another that the City was not obi igated to issue but did so to maintain progress and the work was critical togettingthe project completed. 19 Total:$3T2,537.75
Chad
20 Deposition Exhibit 131,Email between Stoehr and Fine 21 Three days after the Pismo City Council voted to debar Lopez on November 17, 2020, the 22 City of Grover Beach filed a Motion for Summary Judgment against Lopez in the San Luis Obispo 23 County Superior Court. This was no coincidence.
24 B. Pismo is Ordered to Rescind Resolution No. R-2020-094 25 After significant briefing, on June 23, 2022, the Superior Court of the County of San Luis 26 Obispo granted Lopez' Writ of Mandamus and ordered Pismo to rescind Resolution No. R-2020- 27 094 that had declared Lopez a non-responsible bidder and barred them from bidding on public 28 works projects in Pismo for five years. The Court further ordered Pismo to hold a new hearing on 1448907.2 PJW 7568.002 26
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I remand that complied with due process no later than December 20, 2022. A true and correct copy 2 of the Court's June 23, 2022 Ruling as Exhibit "B." 3 Subsequently, on August 16, 2022, Pismo passed Resolution No. R-2022-074, in which 4 Pismo set aside Resolution No. R-2020-094, and calendared a new hearing date for December 20, 5 2022. However although the Court's order did not require it, Pismo set the new hearing date 6 simultaneously with the rescission of Resolution No. R-2020-094. 7 C. Discovery
8 In anticipation of the December 20, 2022 debarment hearing, and per agreement with 9 Pismo, Lopez took a limited number of depositions, that included the below individuals:
10 Benjamin Fine, Director of Public Works, City of Pismo Beach 11 Chad Stoehr, Engineer, City of Pismo Beach
w oo �
w x 12 Russell Fleming, Utilities Manager, City of Pismo Beach z13 Jason Takagi, Information Technology Manager, City of Pismo Beach OZz >o `; 14 Aaron Peri, Industrial Electrician, Formerly with Prousys, Inc. �
0 15 Pismo also made several substantial document productions. z °z 16 D. Pismo Removes the Remand Hearing from its City Council Agenda; Pismo � W ogz
x w " 17 and Lopez Agree to Mediation
Z 18 On November 7, 2022, both Lopez and Pismo signed a Joint Stipulation re: Mediation and 19 Extending Time for City of Pismo Beach to Hold Any Remand Hearing. A true and correct copy 20 of this Joint Stipulation is attached hereto as Exhibit "C." In light of the willingness of both 21 parties to attend a full-day mediation on December 13, 2022, Pismo removed the December 20, 22 2022 remand hearing from its City Council Agenda and agreed not to reschedule any such hearing 23 at that time. The parties further requested that the Court extend the time that Pismo might hold 24 any remand hearing until March 31, 2023 so that the parties could focus their efforts on resolving 25 this case.
26 Based on the foregoing stipulation, on November 9, 2022 the Court ordered that the last 27 day for Pismo to hold any remand hearing would be extended from December 20, 2022 to March 28 31, 2023. The Court further ordered that if Lopez were to seek a writ of mandate arising from any 1448907.2 PJW 7568.002 27
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I decision of Pismo following any remand hearing, the Court would set a briefing schedule and 2 hearing on the writ petition at a status conference to be held on April 17, 2023. If the parties are 3 unable to resolve the non-writ causes of action in their respective cross-complaints, the Court 4 would set a trial date at the April 17, 2023 status conference. 5 E. The First and Only Mediation Session: December 13, 2022 6 As agreed via Stipulation, on December 13, 2022, Lopez and Pismo participated in a 7 mediation session with Judge Tangeman at The Radovich Mediation Group offices in San Luis 8 Obispo. Unfortunately, this matter was not resolved at that mediation session. However, when the 9 first day of mediation adjourned on December 13, 2022, both parties agreed to participate in a 10 second day of mediation with Judge Tangeman on January 20, 2023. However, this second 11 mediation date was subject to the approval of the City Council. w oo �
a x 12 F. Pismo Backs Out of Second Mediation Session, Pismo Sets a Second z13 Debarment Hearing
oz � w 14 As contemplated in the November 7, 2022 Stipulation, Lopez and Pismo agreed that "a � � o
1 0 15 second day of mediation might be necessary in late January 2023," following the Pismo Beach z Q z 16 City Council's January 2023 meeting during which it was anticipated that the Council would x w " 17 consider in closed session the parties'positions following the December 13, 2022 mediation. After Z 18 the adjournment of the December 13, 2022 mediation,both parties had ostensibly agreed to 19 participate in a second mediation session.
20 Therefore, it was much to Lopez' surprise, when on January 17, 2023 they were informed 21 via their counsel that Pismo was not interested in participating in a second mediation session. 22 Furthermore, Pismo's counsel informed counsel for Lopez that the City Council intended to 23 proceed with a second debarment hearing on February 21, 2023. 24 IV. LEGAL STANDARD FOR DEBARMENT
25 A. The Standard for Debarment in the State of California; the "Responsible 26 Bidder" Standard
27 Under California state law, Public Contract Code § 1103 defines "Responsible bidder" as 28 "a bidder who has demonstrated the attribute of trustworthiness, as well as quality, fitness, 1448907.2 PJW 7568.002 28
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I capacity and experience to satisfactorily perform the public works contract". Various 2 municipalities, including Los Angeles County, Alameda County, City of Oakland, City of San 3 Francisco and San Diego have their own debarment ordinances that codify clearly delineated 4 standards relating to bases for debarment and the procedures and protocol inherent in debarment 5 hearings. However, here, in the absence of any such guidance in the City of Pismo Beach 6 municipal code, Pismo used the standard embodied in Public Contract Code and thereby sought to 7 debar Lopez based upon a theory of"non-responsibilityi4. 8 In order to characterize what constitutes "non-responsibility" or "irresponsibility" one must 9 look to the legal authority relating to the public bidding process, such as in City of Inglewood. In 10 City of Inglewood—L.A County Civic Center Auth. v. Superior Court(1972) 7 Cal.3d 861 the 11 Supreme Court concluded that the term nonresponsibility "includes the attribute of w oo �
w x o 12 trustworthiness, [but] also has reference to the quality, fitness and capacity of the low bidder z 13 to satisfactorily perform the proposed work." (Id. at 867)(Emphasis Added). oz `; 14 Responsibility is a well-covered idea in public bidding law. (Advanced Real Estate �
04 1 0 15 Services, Inc. v. Superior Court(2011) 196 Cal.AppAth 338, 351). "Responsibility, however, z °z 16 raises the touchy problem of subjective judgment. As explained in D.H. Williams Construction, x w " 17 Inc. v. Clovis Unified School District(2007) 146 Cal.App.41h 757, 763-764 (also in Great West Z 18 Contr v. Irvine Unified School District, 187 Cal.App.41h at 1456) determinations of responsibility 19 typically involve subtle administrative judgment, information received outside the bidding process 20 itself, and inherently carry at least some danger of arbitrary or erroneous determinations. This 21 "subjective judgment" and "subtle administrative judgment" is precisely the standard that Lopez 22 was held to by the Pismo City Council at the first debarment hearing on November 17, 2020. 23 B. THE 2000 MODEL PROCUREMENT CODE
24 In July 2000, at its annual meeting, the American Bar Association ("ABA")promulgated a 25 Model Procurement Code for State and Local Governments (the "2000 Model Code"). This 2000 26 27
4 The proper standard to be used for debarment by a government agency is the standard of non-responsibility 28 (see e.g. Stacy& Witbeck,(1995)36 Cal.App.41h 1074, 1080). 1448907.2 PJW 7568.002 29
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I Model Code replaced the 1979 ABA Model Procurement Code, which had been adopted in sixteen 2 states and in thousands of local jurisdictions. Section 9-102(2) of the 2000 Model Code provides a 3 standard list of causes for debarment of a contractor in the procurement context as follows:
4 • Conviction for commission of a criminal offense; 5 • Conviction under state or federal statutes of embezzlement, theft, forgery,bribery, falsification or destruction of records;
6 • Conviction under state or federal antitrust statutes; 7 • Violation of contract provision:
8 • Deliberate failure without good cause to perform in accordance with the 9 specifications or within the time limit provided in the contract; or 10 • A recent record of failure to perform or of unsatisfactory performance in accordance with the terms of one or more contract; provided that failure to 11 perform or unsatisfactory performance caused by acts beyond the control of w o o the contractor shall not be considered to be a basis for debarment; 12 ¢ ¢ F o • Any other cause to be so serious and compelling as to affect responsibility; and G 13
Zw • For violation of the ethical standards.
¢ ow 14
Z o The above-enumerated "causes for debarment" are notable because they have in effect a UA 15
O Q w been adopted by and are very similar to the municipalities in the State of California that have their z w °z 16 own debarment ordinances.
x > � aH 17
w
Z C. OTHER MUNICIPALITIES IN THE STATE OF CALIFORNIA THAT 18 HAVE DEBARMENT ORDINANCES
19 It is important to note, that while the City of Pismo Beach does not have specific 20 ordinances governing what constitutes debarment and the procedural framework for proceeding in 21 that regard, many other municipalities in the State of California have indeed promulgated their 22 own ordinances and regulatory frameworks to govern debarment of their public works contractors. 23 To a great extent, these municipal debarment ordinances are based upon the ABA Model Code. 24 This is only logical because of the potential for violation of a liberty interest and possible 25 due process violations. Additionally, and as these exemplar municipal ordinances indicate, 26 debarment is a severe remedy and therefore ought to be implemented only when a very specific set 27 of criteria are met.
28 1448907.2 PJW 7568.002 30
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1 1. County of Los Angeles
2 County Code Chapter 2.02 is the Debarment Ordinance for the County of Los Angeles. 3 This Ordinance provides the County with the authority to terminate contracts and debar 4 contractors when the County finds, in its discretion, that the contractor has engaged in certain acts, 5 including any of the following:
6 • Violated a term of a contract with the County or a nonprofit corporation created by the County;
7 • Committed an act or omission which negatively reflects on the contractor's quality, 8 fitness or capacity to perform a contract with the County, any public entity, or a nonprofit corporation created by the County, or engaged in a pattern or practice 9 which negatively reflects on the same;
10 • Committed an act or omission which indicates a lack of business integrity or business honesty; or
z 11
�" �" • Made or submitted a false claim against the County or any other public entity. w oo �
12 F In considering debarment, the County may consider the seriousness of the contractor's acts, x � �
13 Z omissions, patterns or practice and any relevant mitigating factor. z 14
o Such mitigating factors may also be taken into consideration, as follows:
6 15
H w • actual or potential harm or impact that results from the wrongdoing 16 Z rA
w o a ;, • frequency and/or number of incidents and/or duration of the wrongdoing; whether x w " 17 there is a pattern or prior history wrongdoing; whether there is a pattern or prior Z history of wrongdoing
18 • whether a contractor's wrongdoing was intentional or inadvertent 19 • the positions held by the individuals involved in the wrongdoing 20 2. City of Oakland
21 Another example of a municipality with specific set of criteria and conduct that warrants 22 debarment is the City of Oakland. In 2009, the Oakland City Council enacted the Debarment 23 Program contained in Oakland Municipal Code ("OMC") Chapter 2.12. There, Oakland 24 established an administrative process to disqualify or exclude businesses from consideration for 25 City contracts for a range of offenses and conduct. The list of designated grounds for debarment 26 under the City's debarment ordinance is extensive, including in part:
27 • Collusion in obtaining contract or payment;
28 1448907.2 PJW 7568.002 31
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1 • submission of false information in response to a request for bids or quote or in responses to solicitation or request for qualifications or proposals; 2 • submission of false claims as defined by state or federal law; 3 • judgment against the contractor establishing a violation of any civil or criminal law 4 against any government entity relevant to the contractor's ability to perform under a City contract;
5 • intentional failure to perform a City contract;
6 • fraud;
7 • violation of federal or state antitrust statutes;
8 • embezzlement, theft, forgery, bribery, making false statements, submitting false 9 statements, submitting false information, attempting to commit a fraud against the City, receiving stolen property, making false claims to any public entity obstructing 10 justice, fraudulently obtaining public funds, and many more 11 Debarment can be based on evidence of such wrongful acts relating to a contractor's w oo �
a x 12 dealings with or debarment by any other public agency. (OMC 2.12.050(A) through(V)). Finally, z13 grounds for debarment exist for "[a]ny other cause of so serious or compelling a nature that it oz � `; 14 affects the present responsibility of a contractor." � � o
0 15 3. City of San Francisco
z Q z 16 In the City of San Francisco, debarment is defined as "administrative determination against � w �aH
x w " 17 a potential bidder, or contractor declaring such potential bidder or contractor irresponsible and Z 18 disqualified from participating in a competitive process for city contracts or from entering into city 19 contracts for a period specified in the debarment order." (San Francisco Administrative Code, 20 Section 28.1(D).
21 A contractor shall be debarred upon a finding of willful misconduct with respect to any 22 city bid, request for qualifications, request for proposals, purchase order and/or contract. (San 23 Francisco Administrative Code, Section 28.3)
24 Willful misconduct may include, but is not limited to:
25 • Submission of false information in response to an advertisement or invitation for bids or quotes, a request for qualifications or a request for proposals; 26 • Failure to comply with the terms of a contract or with provisions with the 27 Administrative Code;
28 • Pattern and practice of disregarding or repudiating terms or conditions of city 1448907.2 PJW 7568.002 32
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I contracts;
2 • Failure to abide by rules and/or regulations adopted pursuant to the San Francisco municipal codes;
3 • Submission of false claims;
4 • Verdict,judgment, settlement, stipulation or plea agreement establishing the 5 contractor's violation of civil or criminal law against any government entity relevant to the contractor's ability and capacity to honestly perform under or 6 comply with the terms and conditions of a city contract; or 7 • Collusion in obtaining award of any city contract, or payment or approval thereunder.
8 (San Francisco Administrative Code, Section 28.3)
9 4. County of Alameda
10 In Alameda County, a Contractor may be debarred from doing business for any of the � 11
Z
following':
12 F • The Contractor has a judgment, settlement, stipulation, plea agreement, conviction, z 13 including a plea of nolo contendere, or civil judgment for any of the grounds listed below:
�o w 14
Z o • Embezzlement, theft, bid ridging, perjury, forgery, bribery, falsification or U 6 15 destruction of records, making false statements, tax evasion, collusion, O Q w receiving stolen property, making false claims, or obstruction of justice z °z 16 under any local, state or federal law or regulation � W ogz
x w " 17 • Any offense, action, or inaction indicating a lack of business integrity, Z business honesty, or employment discrimination 18 • Commission of fraud or a criminal offense in connection with obtaining, 19 attempting to obtain, or performing a public or private agreement or transaction
20 • Violation of Federal or State antitrust statutes, including those proscribing 21 price fixing between competitors, allocation of customers between competitors and bid rigging
22 • Commission of any other offense indicating a lack of business integrity or 23 business honesty that seriously and directly affects the Contractor's present responsibility
24 • Violation of the terms of any contract or transaction with the County or another 25 public entity so serious as to affect negatively the integrity of a County program, such as:
26 • A willful failure to perform in accordance with the terms of the contract or 27 28 s County of Alameda,General Services Agency,Debarment Policy 01-07-20 1448907.2 PJW 7568.002 33
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I transaction parameters
2 • A history of failure to perform or unsatisfactory performance in a contract or agreements and transactions with the County or another public entity 3 • A willful violation of a statutory or regulatory provision or requirement 4 applicable to a contract or agreement or transaction with the County or another public entity
5 • A Contractor submits materially false information related to doing business with 6 the County, including but not limited to:
7 • The Contractor's Enhanced Construction Outreach Program(ECOP) 8 • The County's Small Local Emerging Business (SLEB) Program 9 • The County's Construction Compliance Program (CCP) 10 • The County's prequalification or eligibility process z 11 • Any County program(1) relating to the participation in contracts by minority business enterprises and woman business enterprises, or(2) w oo �
w x 12 facilitating contract awards to small businesses, disabled veteran business or F social enterprises, or(3) other County procurement or contracting programs. 13 z Any of the following causes:
z �ow 14
o Any debarment by a federal agency or other public entity 6 15
Qw • Failure to pay a substantial debt, or a number of outstanding debts owed to z °z 16 any federal agency, state or local government, including the County, VD
w o a ;, provided the debt is uncontested by the debtor or, if contested, provided that x w " 17 the debtor's legal and administrative remedies have been exhausted.
Z 18 • The Contractor willfully breaches a material term of a Contract 19 • Violation of any local, state or federal law or regulation applicable to a Contract
20 • The Contractor provided substandard services,used substandard materials, 21 or failed to furnish or install materials in accordance with Contract requirements, even if the discovery of the defect is subsequent to acceptance 22 of the work and expiration of the warranty, if such defect is because of intentionally deficient or grossly negligent performance of the Contractor 23 • The Contractor has engaged in unlawful employment discrimination, as 24 evidenced by a court judgment or finding from a federal or state administrative agency
25 • The Contractor fails to pay state, federal or local minimum wages or fails to 26 comply with prevailing wage requirements
27 • The Contractor violates a material provision of any settlement of a Debarment action with the County or any other public entity 28 1448907.2 PJW 7568.002 34
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1 • Failing a Performance Evaluation
2 • Any other cause so serious or compelling in nature that it affects the Contractor's ability to perform Contract responsibilities. 3 5. City of San Diego
4 Finally, the San Diego Municipal Code ("SDMC") Section 22.0803(b) sets forth the 5 exclusive grounds for ordering permanent debarment: The City Council shall permanent debar any 6 bidder or contractor for a violation of Charter Section 97, and may permanently debar such bidder 7 or contractor for a conviction under federal or state antitrust statutes involving public contracts or 8 the submission of bid proposals, for any corrupt practices involving the administration or award of 9 a contract with the City, or permanent debarment of the bidder or contractor by another 10 governmental agency. There are also less severe grounds enumerated below that would rise to � ll
z
various periods of debarment—less than permanent debarment as follows:
w oo �
12 w §22.0807(b) Grounds for Debarment of Three Years or More x � �
13 z • The bidder or contractor willfully breaches a material term of a contract z �ow 14
• Violation of a local, state or federal law or regulation applicable to a 0 15 contract other than those identified in section 22.0807(a) z 16 • The bidder or contractor used substandard materials, or has failed to furnish w o a 6 or install materials in accordance with contract requirements, even if the x w " 17 discovery of the defect is subsequent to acceptance of the work and Z expiration of the warranty, if such defect is because of intentionally 18 deficient or grossly negligent performance of the contract 19 • The bidder or contractor submits materially false information pertaining to:
20 • the City's evaluation of the bidder or contractor as a Minority Business Enterprise, Woman Business Enterprise, Disadvantaged Business 21 Enterprise, Small Local Business Enterprise, Emerging Local Business Enterprise, or Disabled Veteran Business Enterprise
22 • the City's prequalification or eligibility process; or 23 • the bidder's or contractor's statement of gross income submitted under the 24 City's Minor Public Works Construction Project Program 25 • The bidder or contractor has not implemented its Equal Employment Opportunity Plan, or taken corrective action after sufficient notice by the City 26 • The bidder or contractor has engaged in unlawful discrimination in employment 27 • The bidder or contractor has received three or more final performance evaluations 28 with a rating of unsatisfactory in any three year period 1448907.2 PJW 7568.002 35
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1 • The bidder or contractor fails to pay prevailing or living wages, or fails to comply with the City of San Diego's Earned Sick Leave and Minimum Wage Ordinance 2 • The bidder or contractor violates a material provision of any settlement of a 3 debarment action
4 §22.0807(c) Grounds for Debarment of Two Years
5 A bidder or contractor may be debarred for two years if a bidder or 6 contractor has received two or more final performance evaluations with a 7 rating of unsatisfactory in any two-year period. 8 §22.0807(d) Grounds for Debarment of One Year
9 • The bidder or contractor made 2 or more claims of computational or other error in a bid to the City within a two-year period
10 • The bidder or contractor failed to timely submit bond, contract, insurance z 11 documents, or any other documentation required as a condition of award or w ~ o o performance of a contract.
12 ¢ ¢ F The above debarment ordinances are instructive, insofar as they delineate the wrongful x � �
13 z conduct that can potentially subject a public works contractor to debarment, the harshest of 14 14 z o remedies. While it is undisputed that Pismo does not have its own debarment ordinance, in the F. a � U A, 15
c4 a o
O Q w absence of such a regulatory framework, it is important and instructive to consider what standards z _� 16 other municipalities in California consider before debarring a contractor. The types of conduct and x > � aH 17
w
Z behavior that warrants debarment is corroborated by the limited case law in California addressing 18 when debarments have been upheld and the underlying conduct on the part of the contractors' that 19 led to their debarment.
20 D. Instances Where California Courts Have Deemed Debarment of a Contractor 21 to be Appropriate
22 At the state level, there are three decisions in California that highlight situations in which 23 courts have deemed debarment to be an appropriate; both of these instances involved extreme 24 conduct on behalf of a contractor. In Southern Cal. Underground Contractors, Inc. v. City of San 25 Diego (2003) 108 Cal.AppAth 533, the Court sustained the contractor's debarment. The Court 26 explained that debarment is imposed "as a result of wrongful conduct or violations of a public 27 contract or program." (Id. at 542.) There, the San Diego City Council found that grounds for 28 1448907.2 PJW 7568.002 36
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I debarment was appropriate on the basis of 4 separate grounds, including taking water from city 2 fire hydrants without paying for it; falsification of traffic permits; false claims for compensation 3 not owed to it; and misrepresentation of completed work on sewer laterals. (Id. 540). 4 Additionally, in FEI Enterprises, Inc. v. Los Angeles Community College District,6 "[t]he 5 evidence presented at FEI's debarment hearing demonstrated both "wrongful conduct" and 6 "violations" of the Labor Code, project labor agreements, and contractual requirements regarding 7 safety and supervision. (FEI, 2011 WL 3806028 at 5). In other words, contractors that do not 8 comply with prevailing wage requirements, safety requirements and security requirements may 9 properly be found to be not only untrustworthy but also unfit or even incapable of performing to 10 the standards demanded by a public contract. (Id.) 11 Finally, in Ogundare v. Department of Industrial Relations (2013) 214 Cal.AppAth 822 a w oo �
a x o 12 contractor petitioned the court for a writ of administrative mandate challenging the Division of z13 Labor Standards Enforcement ("DLSE") debarment order precluding him from bidding or working oz > `; 14 on public works construction projects for one year. The petition was granted. Subsequently, the � � o
01 0 15 trial court reviewed the administrative record and concluded that there was no credible evidence to z °z 16 support a finding that Pacific Engineering Company, the Contractor, violated prevailing wage x w " 17 laws with intent to defraud. (Id. at 824). Upon appeal by the DLSE, the Court of Appeal held that Z 18 substantial evidence supported DLSE's finding of intent to defraud. (Id.) 19 As is summarized below, the facts and circumstances of this Project do not come remotely 20 close to the facts and circumstances which warranted debarment in either So Cal,FEI or 21 Ogundare.
22 E. The Federal Context is Instructive
23 The Code of Federal Regulations makes it very clear that debarment is a drastic measure 24 and that it should only be used when absolutely necessary to protect the public interest and not for 25 the purpose of punishment. (C.F.R.9.402(b).) Furthermore, even if these is a cause for debarment, 26 27
6 Note that FEI v.Los Angeles Community College is not a published decision and is only cited herein for 28 informational purposes.
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I the Code states that such cause "does not necessarily require that the contractor be debarred; the 2 seriousness of the contractor's acts or omissions and any remedial measures or mitigating factors 3 should be considered in making any debarment decision." (Id.) 4 All of the foregoing examples of debarment ordinances and statutory authority, while not 5 directly applicable to Pismo, should give the City Council pause. "Debarment is a drastic 6 measure," and therefore it should never be taken lightly. Debarment is chiefly a tool to protect 7 public agencies from the egregious conduct and behavior of public works contractors. This is 8 logical,because engaging in criminal conduct and fraud demonstrate precisely the type of 9 malevolent behavior that the public and taxpayer fisc should be protected from. What does not 10 make sense, is to wield the extremely harsh remedy of debarment upon a contractor, when no such 11 behavior exists and cannot be established by any contemporaneous evidence whatsoever. � o
a x 19 �2 12 V. THE EVIDENTIARY RECORD DOES NOT SUPPORT DEBARMENT OF LOPEZ z13 A. No Pismo Representative Had Any Issue with Lopez' Trustworthiness. oz � w 14 Deposition testimony of all of the City representatives, including Stoehr, Fine and Fleming � � o
1 0 15 make it clear that no City representative had any issue with the trustworthiness of Lopez. 16 Deposition of Chad Stoehr, Page 42, Lines 8-12 z W z g Q. Do you have any negative feelings about anybody x w " 17 9 from Lopez?
Z 10 A. No.
18 11 Q. Did you think they were untrustworthy? 12 A. No.
19 Deposition of Russell Fleming, Page 102, Lines 21-23 20 21 Q. Do you think these guys are not trustworthy, 22 dishonest?
21 23 A. No.
22 Thus, this element of the debarment standard,by Pismo's own admission cannot be 23 satisfied. However, Pismo had some other standards for debarment that are not legally 24 recognized.
25 Deposition of Benjamin Fine, Page 40, Lines 22-23 22 . . . The standard is demonstrating a
26 23 lack of competency in the field.
27 Also from the depositions, we learned that Pismo did not seek to debar Lopez over 28 1448907.2 PJW 7568.002 38
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
I concerns about the quality of Lopez' work. Indeed, the deposition testimony of Messrs. Fine, 2 Fleming and Stoehr, clearly demonstrate that Pismo was happy with the quality of Lopez'work 3 and always has been.
4 Deposition of Russell Fleming, Page 91, Lines 4-14 4 Q. From the point it was operational, let's say 5 5 sometime in early May 2020, have you ever had to take 6 6 it--has it ever become non-operational, the lift 7 station, Five Cities Lift Station project?
7 8 A. No.
9 Q. So is it fair to say that the city had
8 10 beneficial occupancy of the lift station at some time in 11 early May 2020 based on what you've looked at and what 9 12 you can recall?
10 13 A. I mean, if you're seeing beneficial occupancy, 14 meaning we have use of it, I would say yes.
� 11
�. Deposition of Benjamin Fine, Page 41, Lines 15-22 a x o 12 15 Q BY MR. DARLING: Anything else? F 16 A Quality of work can be a factor. a w 13 17 Q Was it in this one? Zw 18 A The end product was satisfactory. , 14
Z 0 19 Q So it's not in this one.
H a 20 A The end product was satisfactory. p ¢ z 15 21 Q You mean the lift station works fine. 16 22 A To my knowledge, yes.
z � z�
� w �aH
x w " 17 Deposition of Chad Stoehr, Page 312, Lines 8-18 Z 8 Q. Mr. Fine testified he's happy with the end 18 9 product; it's just the way they went about doing the 19 10 project. That's kind of-- I know he said he's happy with 11 the end product from Lopez. I'm paraphrasing a little bit, 20 12 but I think fairly. It's just the way they went about 13 going on the project that showed incompetence.
21 14 I don't know if you share that view.
15 A. I do. I'm satisfied with the end product. 22 16 Q. So it's not a question of the quality of work; 23 17 it's just a question of how they got there?
18 A. That's correct.
24 Also, Messrs. Stoehr and Fine made it clear from their deposition testimony that the only 25 obligations that Lopez could possibly owe to Pismo, by definition, had to arise from whatever was 26 expressed in the contract between Pismo and Lopez.
27 Deposition of Benjamin Fine, Page 44, Lines 8-18
28 8 Q So you wanted to debar Lopez because the public 1448907.2 PJW 7568.002 39
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
1 9 entity went through trials and tribulations. Is that 10 fair?
2 11 A I wanted to debar Lopez because they were not 3 12 competent.
13 Q Okay. And you won't find competency, as you
4 14 just admitted that standard, in the contract.
15 Would you agree?
5 16 MR. BROCHARD: Objection, calls for a legal
17 conclusion, vague.
6 18 THE WITNESS: I would agree,yes.
7 Both Messrs. Stoehr and Fine admitted that Lopez did not breach any aspect of the 8 contract. This raises the obvious question, if it is not quality of work, it isn't trustworthiness or 9 anything to do with a breach of contract, why on earth did Pismo go out of its way to debar 10 Lopez? The only logical conclusion from this record is that Mr. Stoehr and Mr. Reynolds and 11 perhaps others, harbored some sort of animus towards Vince and Butch Lopez. Pismo's disdain w oo �
12 a w and desire to malign and cause financial harm to Lopez was expressed by Messrs. Stoehr and Fine Z 13 at their respective depositions. Both of them testified that they knew that by debarring Lopez, Z0 14 Lopez would suffer great financial harm.
v �
15 z Deposition of Chad Stoehr, Page 49 Line 8—Page 50 Line 1 8 Q. So whatever decision was made is it your
Z Q °z 16 9 understanding it was going to hurt Lopez beyond Pismo � w �aH
x w " 17 10 Beach if the city decided to debar Lopez as it relates Z 11 to bidding to other projects for the reasons you just 18 12 stated?
13 A. Define hurt.
19 14 Q. Well, when you check those two boxes and you 20 15 get disqualified and all you do is public works 16 construction, so you lose projects, that's what I mean 21 17 by that.
18 A. Yes.
22 19 Q. Okay. So the intention was to do what? To not 23 20 have Lopez bid anymore in Pismo Beach or to hurt Lopez 21 for other public works projects?
24 22 MR. NGUY: Calls for speculation.
23 THE WITNESS: The intent of doing it, to my
25 24 recollection, is to not have them bid on City of Pismo 25 Beach Public Works projects. That was the intent, to my 26 1 recollection.
27 Deposition of Benjamin Fine, Page 102, Lines 6-16 28 6 . . . This is one of the reasons you told 1448907.2 PJW 7568.002 40
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
1 7 the city council they should debar Lopez and Lopez 8 sending RFI 22 and getting a change order from you that 2 9 you signed warrants Lopez not getting public works from 3 10 other contractors -- from public entities, correct? 11 MR. BROCHARD: Objection, misstates testimony.
4 12 THE WITNESS: It protects us from having to do
13 business with Lopez in the future.
5 14 Q BY MR. DARLING: And protects other public 15 entities.
6 16 A It does that too.
7 8 Both of them testified that they wanted to debar Lopez in order that Lopez would not be 9 able to bid on any other public works contracts in the State of California. It appears that Mr. 10 Stoehr on behalf of Pismo and Mr. Reynolds, on behalf of WSC, to one degree or another, z11 convinced Fine, Pismo's Director of Public Works that the debarment was somehow a good idea. ax 12 B. Stoehr and Reynolds' Allegations Do Not Rise to the Level of Debarment a F Stoehr and Reynolds' specific allegations in favor of debarment presented to the Pismo W � 13
Zw City Council are not only inaccurate but even if true, do not in any way rise to the level of , 1 zoo 4
H a debarment. On November 17, 2020, Mr. Fine presented 23 PowerPoint slides in favor of having 0 15
O dxz�
16 the City Council declare that Lopez was a non-responsible bidder and thereby warranting Z J�
w a H 17 debarment. It is worth repeating, that the Staff Report in support of the debarment(Attached as M
W
1--1
Z 18 Exhibit "D") and the PowerPoint(Attached as Exhibit "E") summarizing the Staff Report do not 19 contain any information which would amount to a breach of contract by Lopez. 20 Possibly even more glaring is that there are no contemporaneous project records 21 supporting the contention that these bases for debarment were complained of by Pismo or were 22 brought to the attention of Lopez. In addition, Pismo never put any of these alleged problems with 23 Lopez'performance into the form of a Notice of Potential Termination of Lopez's Right of Further 24 Performance letter, also Pismo never made a demand on Lopez'performance bond surety, in effect 25 telling the surety with specificity that Lopez was failing miserably on the Project and that if it 26 didn't clean its act up, that Lopez would be terminated and the surety would be asked to complete 27 the Project on its behalf. Messrs Stoehr and Fine were asked about this lack of contemporaneous 28 documentation at their depositions, neither could offer any legitimate excuse why the November 1448907.2 PJW 7568.002 41
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
1 17, 2020 basis for debarment were not contemporaneously documented by Pismo or WSC during 2 the course of the Project.
3 Deposition of Benjamin Fine, Page 74 Line 17—Page 75 Line 17 Q In your mind, before you supported the idea of 4 18 debarment, did you think maybe I should just pick up the 5 19 phone, it's getting pretty nasty on the job, and call 20 the owner of this company and let's talk; I'm not happy; 6 21 can we work this out?
22 Did you think about that?
7 23 A No.
24 Q And why--what was the reason you didn't want 8 25 to try to do that?
9 1 A To my recollection, Chad had had many
2 conversations.
10 3 Q And Chad assured you what? That it's a lost 4 cause?
Z 11 5 A I don't recall.
w ~ o o 6 Q I guess my next question, are you saying you a x 12 7 told Chad tell Lopez if they don't get their act a 13 8 together we're going to debar you, before the notice Z '? 9 went out?
�o w 14 10 MR. BROCHARD: Objection, vague as to time. z 0 11 THE WITNESS: Before the notice went out, H a .W6 6 15 12 absolutely not.
OQ �
z 16 Deposition of Chad Stoehr, Page 56, Lines 8-19 W a H 17 8 So if Lopez during the course of the project M
W 9 violated a contractual issue like particular Z 18 10 specification section of governing city standard, you 11 would have noted that?
19 12 A. Or my construction management consultant. 20 13 Q. And that would have been in the staff report to 14 debar Lopez?
21 15 A. Could have been.
16 Q. Do you know whether the bases to debar Lopez 22 17 were a violation of any contractual obligation you 18 understood Lopez had?
23 19 A. I don't know.
24 25 When asked if Lopez'performance during the Project was so terrible that debarment was 26 warranted why didn't Pismo instead simply terminate Lopez' right of further performance and 27 bring on Lopez'performance bond surety, the answer given by Fine was that it would have been 28 inconvenient to do so. In fact, a contemporaneous email Mr. Fine wrote just before Lopez was 1448907.2 PJW 7568.002 42
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
I informed that it would be debarred is very telling. On September 21, 2020, some 2 months before 2 the debarment hearing, Mr. Fine wrote to Mr. Stoehr: "Chad, are they done?Are we ready to go to 3 counsel for Notice of Completion and Notice of Non-responsible Bidder?" 4 PIP&= RM�MiRLiL
Senk Mori[ny,Sept=&er 21,2020 10:3 7�8 AM
Subject:V.Lopez
6 semitivi :mom-al
7 Chad
8 Are they done? Are we ready to go to council for notice of wrnpletion and nm-responsive bidder? 9 Tluflks
Ben
10 BeniamIn A. 171ne, PE
Dlreclor of Public Works/City E-iginenr
U 11 CikynfPIan0QkadI
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Z13 Deposition Exhibit 124,Email between Fine and Stoehr z �ow 14
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Clearly, Pismo, as indicated by Mr. Fine had gotten what it wanted, a fully upgraded and N
p ¢ x z 15 100% functioning sewer lift station and updated maintenance facilities, now it was time to hurt zQoW �
z 16 Lopez and try to ruin them financially. The truth is, from this record, Pismo never had any real x woa „ 17
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Z questions about Lopez'performance or the quality of its work. They apparently were upset and 18 embarrassed that the Project took over a year longer to complete than they had planned that it 19 would and cost $200,000 more than it should have. Somebody had to pay, it wasn't going to be 20 Fine's, Stoehr's or WSC's reputation, it was going to be Lopez, the two Mexican brothers from 21 Santa Maria who are good enough to mow the lawn and fix the sewer in Pismo but not good 22 enough to get paid as a legitimate business contractor. In fact, Stoehr seemed to be happy that 23 they were finally able to do something to hurt Vince and Butch Lopez. On the day the debarment 24 hearing notice was made public, Chad Stoehr wrote in an email gleefully "Wow, let the battle 25 begin."
26 27
28 1448907.2 PJW 7568.002 43
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
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w and PowerPoint slides would have received input from counsel regarding the proper standard for Z 18
debarment. The Staff Report and the PowerPoint slides without saying it, tacitly imply that Lopez 19 didn't possess the necessary competence to perform public works contracts. While this is indeed a 20 standard for debarment, based upon this record, the specific allegations of incompetence and 21 Lopez' responses thereto, and what is put forth in this regard by Pismo does not rise to level of 22 competence such that debarment could ever be warranted. 23 B. Pismo's Bases for Debarment and Lopez' Responses Thereto 24 We invite Pismo to provide any contemporaneous documentation in support of its various 25 bases for debarment. We have found none. The lack of anything close to a threat of debarment, a 26 48-hour notice to cure, a demand on Lopez' performance bond surety on any issue let alone the 27 "bases for debarment" speaks volumes as to the improper facts and circumstances asserted by 28 1448907.2 PJW 7568.002 44
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
I Pismo to justify the debarment. At this moment, we would like to call upon the City Council to 2 consider and contrast where debarment is appropriate (See So Cal; FEI, infra) versus what 3 happened on this Project, where the idea of debarment should have been immediately dismissed. 4 At best, there was a dispute about delay damages that should have been handled between Pismo's 5 Public Works Department representatives and Lopez. The only logical conclusion is that via the 6 vehicle of the first debarment hearing, Pismo's representatives deliberately sought to harm Lopez 7 and teach them a lesson. Now, Lopez faces the same punitive measure in the form of this second 8 debarment hearing.
9 1. "Issue#1: V. Lopez Beginning Work Without Proper Planning": Spyglass 10 Park
z 11 Y. -
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o w 14 + Excavated •-- Sept. 25, 2015
x 15 ■ Parts for repair not ordered :
o Q W + Area closed for 14 weeks
w o g z ■ Filled —Jan. 2, 2019
x > Ma � 17
z ■ Re-excavated March 2019 t
18 ■ Park rents $25/hour - -
19 ■Average income $300/month
20 ■ Approximate lost rental $1,800
21 Deposition Exhibit 133,Benjamin Fine's PowerPoint, Slide 156 22 This issue involves Spyglass Park. The scope of work required an excavation to expose 23 underground piping and then to make needed improvements and tie in efforts at that location. The 24 contract documents contained no limitations on the amount of time an excavation was to be 25 opened. Lopez executed this aspect of the work 100%within the industry standard for this type of 26 work. In order to figure out what work had to be done underneath the ground, the ground first had 27 to be dug up and excavated. Only after this excavation was completed, could Lopez ascertain 28 1448907.2 PJW 7568.002 45
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V. LOPEZ JR. &SONS
I exactly what was needed, after looking at the condition of the subterranean piping. There was no 2 limitation on this aspect of the work as to how long an excavation could remain open. 3 Nevertheless, this issue came up in the meeting minutes. Pismo had the opportunity to tell Lopez 4 to close the excavation and come back and finish the work after the needed materials were shipped 5 to the jobsite. Pismo decided not to, and the work was completed. There is no word in the 6 contract documents Pismo can point to, to indicate that the manner and method in which Lopez 7 executed this work violated its contractual obligations to Pismo. 8 These meeting minutes could not be more clear. Pismo chose to allow the excavation to 9 remain open because they did not care about it at the time. It is almost ridiculous to contend that 10 Pismo could have made some rental income of a very small aspect of the park during the time the z 11 excavation was allowed to remain open. Nevertheless, in other aspects of the contract documents, w x o �2 12 Lopez was not expressly limited as to how long an excavation could remain open pending 13 Z '? u 211 M111M UAWS0;PLUG Okv($AHD VrJ VOMON At PARK Robert C4mdn(WSC) Z DWLL d the fi[t obit the Plug VAm Rw the d an rw on d Z ° `: 14 sloe and Ihit the srte has been exurated in eves€00 pathdolg E a o on Me exdLing PCB+F M mid 09 90 a thr t]ryvML Axi to,gat c4 a 1 0 15 bi<tto the{ItyvAhd IV"ditefQFV* . If CIty fin6 Jhit VIaxeLovetfvLGSM angal+kg Qw date to be to long of a lead crtyr may dlfe€t Loper to tri ON o 16 r2-211
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Z 18 shipment of needed materials to complete the work in question. See, for example, the following section of the contract documents:
19 Deposition Exhibit 15,page 74.
20 21 1.6 CONTRACTOWS USE OF SITE
A_ Lmt use of Site to allow:
22 1. Work byCity.
2. Ass to RV storage yard by RV storage yard owner and en ploytes 23 1._ WORK SEQUENCE
24 A. Construct[[Tort in order to keep the existing lift station operational until the new lift station and 25 force main is coaxpkted. Coordinate coustrixtion 3cbt&T4e and operations uith C:ity- 26 Deposition Exhibit 4,Project Specifications,April 2016 27 Pismo invented this as a basis to debar Lopez because Pismo wanted to financially ruin 28 Lopez, and they have come close to doing so. This, like the other examples to follow,pale in 1448907.2 PJW 7568.002 46
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
I comparison to the type of nefarious, and almost despicable, activity the contractors were engaged 2 in in the SoCal,FEI and Ogundare cases, discussed infra. 3 2. "Issue#1: V. Lopez Beginning Work Without Proper Planning" -Pre-Cast 4 Concrete Vault Installation
5 ��tr
6 Issue #�: V. Lo ez �e innir-f� work
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7 without proper planning
■ Plan details 18-in square sump in the bottom of the �� ■ 8 concrete vault
+ The plans do not specify the means or methods
9 • Normal process is to submit a Request for
10 Clarification (RFC) prior to initiating the work if there is confusion
11 ■ On March 19, 2019, V. Lopez drilled a round hole in �• Z the bottom of the sump
w oo �
a x o 12 ■ Then asked for a detail to allow for a functional F waterproof installation,
w 13 ■ Additional time and costs to the City
Z w • Proper planning would have identified the need for Z > 14 this sump and incorporated it into the precast vault �• 15 157
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16 w o a Deposition Exhibit 133,Benjamin Fine's PowerPoint, Slide 157 17 M
Z This particular colorfully-drafted"basis" for Pismo's debarment is yet another example of 18 an improper basis upon which to seek debarment. The contract documents allow the contractor to 19 execute this portion of the work however they deem appropriate. It is referred to as the 20 contractor's means and methods.
21 This particular scope of work required Lopez to provide a subterranean concrete vault to 22 allow the pumping system and piping system therein to function properly. There is no dispute in 23 this record as to whether Pismo got exactly what it bargained for on this aspect of the work, to wit, 24 a fully functioning concrete vault with a proper sump system. What Lopez chose to do to execute 25 this portion of the work as part of its means and methods was pretty simple. It had a company 26 precast 90% of the concrete vault offsite. "Precast"means they pour and form the concrete away 27 from the project location. Once that work is done, the precast vault is delivered to the jobsite and 28 1448907.2 PJW 7568.002 47
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
I laid in place. Lopez decided to leave the sump area of the vault open, and not precast it offsite. 2 Hence, the round hole. Lopez did not want to take a chance that the city's existing piping system 3 was inconsistent with what was provided on the drawings as to the location of the piping. In 4 effect, Lopez wisely allowed for a large opening as a fudge factor, in case the existing piping was 5 inadequate or not where it was supposed to be. After the precast vault was installed, the proper 6 dimensions of where to tie in the sump needed to be provided by Pismo. There is nothing wrong 7 with that, and it is not a violation of the contract to have done it this way. In fact, if Lopez had the 8 entire vault precast offsite, and the piping connection point with the sump did not work, Lopez 9 would have legally been entitled to a significant change order to break apart the precast portion of 10 the vault to make it fit. Instead, Lopez, as an experienced public works general contractor, 11 understood that when you are tying into existing utilities, the City's plans are frequently wrong. w oo �
a x 12 The fact that there are 33 change orders on this project—most of them involving inaccuracy on the z13 plans and specifications -properly proves Lopez's prescient decision to precast only a portion of OZz �>o w 14 the vault.
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0 15 Lopez installed this sump system within 100% of compliance of the contract documents. z °z 16 The fact that Lopez decided to effectuate this scope of work as any prudent general contractor x w " 17 would, shows their acumen.
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Z 18 There is nothing in this particular basis that warrants debarment. However, the fact that 19 Pismo would even go with this anemic effort further demonstrates the ill-intent of Pismo to 20 purposely injure Lopez. Pismo's project personnel knew all along that the City Council would 21 rubber-stamp the first debarment.
22 23
24 25
26 27
28 1448907.2 PJW 7568.002 48
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
1 3. "Issue#1: V. Lopez Beginning Work Without Proper Planning" -Sunset 2 Palisades Lift Station Bypass
3 "', --- - - ,
Issue
4 #1: improper planning
_
• Late May 2019,V.Lopez installed bypass pump system at Sunset 5 Palisades Lift Station
• Bypass system leaked —
• V.Lopez had no contingency plan
6 • City staff had to: 1
• Assist V.Lopez with pumping the wet well down
7 • Monitor the system
• Provide guidance to get the bypass system functioning 8 • Impacts to project
• It took several days longer to coat the wet well than planned 9 • Required the City to keep a presence on the site in order to respond to issues
• Impacts to staff
10 • Regular duties
• impact to other projects
U 11 • Backlog
w ~ O o In
a xSO 12 Deposition Exhibit 133,Benjamin Fine's PowerPoint, Slide 158 13 14 -- �
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24 Deposition Exhibit 133,Benjamin Fine's PowerPoint, Slide 159 25 26 This slide,presented by Pismo, contains false information. Pismo represented to its City 27 Council that the "bypass system leaked." That is simply a false statement. When it was submitted 28 by Pismo personnel to the City Council, they knew it was a false statement. As a matter of law, 1448907.2 PJW 7568.002 49
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
I Pismo is required to report these leaks and spillages from their sewer system. The regulatory 2 agency shows not one leak during the time Lopez was working on this project. Moreover, as 3 confirmed by Fleming during his deposition, there was no leak at this bypass tie-in work. 4 Deposition of Russell Fleming, Page 38, Line 8—Page 38 Line 20 8 Q. Okay. So what happened?
5 9 A. Um, I remember the line was still live, I 6 10 believe they thought it was isolated so they had 11 made a saw cut and they realized that it was still live, 7 12 and so until they could figure out how to stop the flow, 13 it's just going to keep going. That's my recollection 8 14 of that particular one.
15 Q. And so what did the vac truck do that day, if 9 16 anything?
10 17 A. We kept up with the flow coming out of the 18 pipe.
z 11 19 Q. Just taking it so it didn't spill? x 20 A. Right
w oo � 12
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z13 What happened was pretty simple, and is another example of Lopez acting as a prudent Z
14 general contractor. Lopez needed to have a vacuum truck on-site during this type of a bypass,just P4 04 0 15 in case something went wrong and there was a potential for a sewer spill. Lopez told Pismo that z Q 16 "it is cheaper to have one of your trucks on site in case something happens. We are happy to pay x w " 17 for it." Pismo provided the truck and saved money by not having Lopez charge them for it.
Z 18 Nothing even close to amounting to defective workmanship, or a breach of contract, occurred at 19 this bypass. The work was completed. Lopez had the City's vacuum truck on-site just in case on 20 that day. This is less than a$500 issue and does not in any way rise to the level of debarment. 21 Interestingly, there are no contemporaneous records from Pismo indicating to Lopez that if Pismo 22 puts a vacuum truck at any particular location, that it would, years later, result in Pismo attempting 23 a debarment.
24 25
26 27
28 1448907.2 PJW 7568.002 50
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
1 4. "Issue#2: V. Lopez Demonstrated a General Lack of Understanding of 2 Municipal Sewage Pump Station Practice and Materials"—two Q versus four L4) plug valves on 3 Plan Sheet C-107
4 slue #2: Lack v un e - Ong municipa
5 sewage pump station practice and materials
6 0 Sept. 2018 V Lopez interpreted plans to replace only one set 7 of the existing plug valves
8 "the picture" suggested that there was only one set of plug valves
9 M Notes on the plans clearly show two for a total of four plug 10 valves.
z II * Municipal lift stations almost always include two pumps w ~ o + Provide redundancy in case of failure
w x c,) 12
a F To keep the project moving, V. Lopez was compensated for a �� N 13
o w 14 the cost: of replacing the other two plug valves 60 Z ¢ a o Deposition Exhibit 133,Benjamin Fine's PowerPoint, Slide 160 F :!. -U A
a o 15 This issue is a perfect example of why there were 33 change orders and over $200,000 QN 16
z °z added to the contract. City Plan Sheet C-107 does not have a call out for four plug valves. Rather, x woa „ 17
M
w the piping leading up to the pumps was incorrectly listed on the plans. Lopez submitted an RFI on Z 18
this issue. There is nothing in the detail or the construction notes or anywhere in the contract 19 documents which says that plug valves are needed for both pumps. One of the pumps is a primary 20 and one of the pumps is a backup. All that Pismo had to do was draw its construction plans 21 accurately and write its construction notes with clarity. The fact that Pismo violated the Spearin 22 Doctrine in this regard only means that yet again its design professionals had errors and omissions 23 in the plans and specifications at bid time.7 In no fair world could Lopez be debarred for naturally 24 25 7 As adopted by the California Supreme Court,the"Spearin Doctrine" stands for a proposition that:
26 A contractor of public works who,acting reasonably,is misled by incorrect plans and specifications issued by the public authorities as the basis for bids and who,as a result,submits a bid which is 27 lower than he would have otherwise made,may recover in a contract action for extra work or expenses necessitated by the conditions being other than as represented. [Citations] This rule is 28 mainly based on the theory that the furnishing of misleading plans and specifications by the public 1448907.2 PJW 7568.002 51
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V. LOPEZ JR. &SONS
I assuming that Pismo's plans were accurate and assuming that it would install two plug valves 2 instead of four. Having said that, Lopez installed four plug valves even though the plans did not 3 specify the extra plug valves. Yet again, Pismo got everything it wanted, and both the 4 Maintenance and Lift Station Projects are functioning perfectly, as intended. This is hardly the 5 stuff of debarment. But it is indicative of an effort to try to put Lopez out of business by debarring 6 them.
7 CONSTRUCTION NOTES-
ITEM �icBCRtPT10v
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STANDARD DETAILS PLACED AQNNBT UNDTS"MM
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3 REMOVE AM DKIA=Oc 6V OW.IRON FOWR-"N
10 PtPE WTK PESTIOXIM JONTS W SFMfrATM
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1 1 :\ RREr3YE NA REKACE BYPASS CONYECTM PER .
F~-� Pi l� 11 ma' 01
s/ cwr+nii'►v1\LL rels araclncA-n0N8 rTKM awrno
w o q 12 0 RFIMOVEFxianNG SUMP LVAL:OKrRO.SYSTEM AHD MONMXW3 SYS791.FURN'SH AND INSTALL
o FLOAT LEALCONTROLSPERSPEaFICATIO" - ���II F 6COTIOH 407310 FROV110t 1 P1. $TOTAL 2 FLOA:a FORGACHPLIMPIO%IOFF}AND IFLOATFORNION _
[� 13 ALAPM.ELEVATIONS OF FWAT27n 4 ETFfA2M�DN z r1EW MATH CnY STAFF
w T RBMOVE AND DISPOSE OF EX.WIND KLMY&4ES.
Z o w 14 FUMSEN AND INSTALL PLUG VALVES PER ly SP MMATION SECn0N 40W2C
" z REOOOAF PIPING AND VALVES PER SPECIW-AT
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19 20
21 22
23 24
25 26 body constitutes a breach of implied warranty." 27 (Souza,57 Cal.2d at 510-11;see also Howard Contracting,Inc. v. G.A.McDonald Construction Co.,(1998) 71 Cal.App.4th 38,48;Los Angeles Unified School District v. Great American Insurance Company,(2010)49 Cal. 28 4th 739,744).
1448907.2 PJW 7568.002 52
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
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ZDeposition Exhibit 2,As-Built Plans for Lift Station Maintenance Project,Sheet C-107 z how 14
5. "Issue#2: V. Lopez Demonstrated a General Lack of Understanding of � � � 15
O Q w Municipal Sewage Pump Station Practice and Materials":Pismo's incomplete electrical design, Z I 16
17 not a lack of understanding.
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Z 18
19 - Issue #2: Lack of understan ing of municipal 20 sewage pump station practice and materials
• The technical specifications for the Five Cities Lift Station 21 project addresses general pump station controls operations. , 22 • Two paragraphs appeared to be in conflict regarding how the f` floats are to operate if the PLC(programmable logic controller) ' 23 goes down
• The PLC is intended to operate the pumps based on input 24 from the submersible level sensing transducer
• Backup operation is provided by mechanical float switches. 25 • Rather than submitting an RFI or RFC,V. Lopez, its 26 subcontractors, and suppliers moved forward with fabrication and installation of the control panel rased on a loose - 27 interpretation of one section of the specifications, without consideration of other paragraphs in the same section. 162 28 Deposition Exhibit 133,Benjamin Fine's PowerPoint, Slide 162 1448907.2 PJW 7568.002 53
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
I _
Issue #2: Lack of understanding of municipal
3 sewage pump station practice and materials
4 e Their interpretation—that there would be no independent float back up—is an unconventional way of controlling the pumps for a critical 5 asset like a sewage lift station.
• V. Lopez's abnormal assumption and failure to submit an RFC _ 6 resulted in:
• Additional delays and inefficiencies
7 • Additional project management and inspection costs 8 April 20,2020-change order for$50,214.75 and 47 working days to: -
9 • Modify the incorrect installation that was completed • Complete the configuration in accordance with the project 10 specifications and industry standard practices. 463
U
Z 11 Deposition Exhibit 133,Benjamin Fine's PowerPoint, Slide 163 V. ~ oo �
a x ° 12 It is somewhat remarkable that Pismo even attempted to assert this issue as a basis for a ° 13
z w debarment. One would think that if Pismo agreed to add $50,000.00 and almost 50 working days z0 14 to the contract for this obvious design deficiency Pismo would never assert this as a basis for 0 15 debarment.
z c) 16 CHANGE ORDER
W o a (Inabuc6one Follow)
x w " 17 No 25
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19 You we rmbcmd to mans t,a fang utQ,%uv rn the c antra.auum ter.u.
Ducrlpmr! Llecb*W mogificaUons mwwclstad whi RFT-29.I,u tal4oW s wCD 913 and ris City WNW up CQR 99- — -
20 PUrpaw of Chaage Dldor. Prvvida f tAVldual C9t1t4tehne 4nd ioLr a drF}erenl rsuR7 Bnd rewire 0 kola m ao tltiB MCC -yna 913.Mcclificatlona to the exlsran rpat eratfons eddrdnn of a C46c Adair rand LIL 5a9A orrd 8984 rvpecCurYle6albsg ai andasuras F�*Gerlr mari<ed uP Cflfii tr CCO anat,7 21 Ow T requre-f tl L 690A h:p•abon IebH.ng tasx wi`,90l b6 ger,.HMiY.IF FagLir fid.Ihon V_Lonez a smm wD tie compensated vlia an Eddttonei CG4 le follow upon ref�dpl or pald krvatasu tam UL.Sac OMKN&d letter For Furipw axp b na;on of_4hen4es:n wn=price End time_ 22 Attiehmanu;(Lift daturn•nts support ng thong•) C'H pro.mlded letter.exacuted Wcb rt3 prd Ci mahced up CORO'9.
23 woP.trac7 Fuca Prim to this Change Order Corwart Time Prim to tfra Cganp ordV $ 3,1144 ou.i3 -- __497 nays
24 Net increaso(Cocreasel of thtE Change 4rcae tie;cdhavtpe ct ttim Crkn Ne Order, — 5 50,2?4,75 47 days
25 ConGrac Price with Aa approved Chsnga ordors Cortmd Tlmw wtl W;approved Chorga Orders:
$ 3,0%.3"Ja 454 dayl
26 '11m amounl atxi tme prov?ded in this am brad chum order are a FLA Erd finat a'mxd end satlalaau*w of 91 WMs and lime dimv4y End ttdireclly rela*d pnd as ot1rerc4alms re ad hereto Ere herby"-ved_ The 27 Omtr#Ct[tf h$y raviuwed 114 pfWs aired sptsakakns raJwod la this change order and all ct'brges therela are omumled forth Li9 att3ClrtlentlarWad Wlachrnar.tA'
28 1448907.2 PJW 7568.002 54
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
I The incomplete electrical design came up later in the Project, at the same time that Pismo 2 was delaying the completion of the Project because they did not have a SCADA contractor under 3 contract. Lopez' team pointed out to Pismo that without the necessary electrical sensors and floats 4 within the system the Lift Station could experience undetected sewage spills which could not be 5 addressed remotely. This issue was first raised in RFI 29 on October 23, 2019. Pismo's design 6 professionals responded which resulted in a subsequent RFI 26.1. In fact, Pismo issued a work 7 directive for this particular scope on December 10, 2019. 8 WORT{DiREC nVE CHANGE
9 (Instructions Fallow)
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Z W O Dafrcrohon: Task f 0rd T09k 2 u desaihad above Qo w 14 Purpose of Work Dlrecllve Change: Task 7 ana task 2 as do&utw above Zoo
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21 If tho CNknge irIVOILM an rmxta g,NO If Inc changu wwotwes an i-rueaw,the PsOnabac s rrqurd is not to w excaeced —Mated*r e s not io be oxtneded 22 vahoul Wt w auMor¢aWn. wthow ftrdw auu,dwion .r
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24 TOP: Ergkreer City Enginan Dn rtarw Put■n Works 25 Deposition Exhibit 62,Work Directive Change 13 26 Lopez did not agree with the work directive because it did not provide them with sufficient 27 compensation and sufficient additional working days to address the scope of the design 28 deficiencies in Pismo's contract documents. Ultimately, the work was done, Pismo paid for the 1448907.2 PJW 7568.002 55
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
I work, and now Pismo wants the time and the money back from Lopez. Pismo unilaterally issued 2 Change Order 26 on April 1, 2020. The highlighted language in the change order below 3 demonstrates that Pismo cannot go back and revisit this change order and claim the time and 4 money associated with the change order are damages to Pismo. 5 This is yet another illustration of a purported basis for debarment which is nothing more 6 than a thinly veiled effort to give the City Council political cover to debar Lopez so that Pismo's 7 employees could economically ruin Lopez.
8 6. "Issue#2: V. Lopez Demonstrated a General Lack of Understanding of 9 Municipal Sewage Pump Station Practice and Materials": Pismo's failure to incorporate the 400 10 amp requirement into the plans at bid time, not a lack of understanding by Lopez. z
w ~ o o i2 4 issue #2: Lack of understanding of municipal w x 1.2
a � � N 13 sewage pump station practice and materials Z � W¢ • V. Lopez interpreted the electrical portion of the project plans and Z o w 14 specifications to call for a new 225-amp residential electrical panel to replace z W o the existing 200-amp electrical panel at the Five Cities Lift Station 15 + PG&E handout package for the service relocation called for a 201-400 amp c4 dxZ
O z 4 commercial service
H Q o ¢ 16 + Plans and specifications placed all responsibility on the Contractor for:
Z
w a H 17 • The electrical service relocation
M
Z • Communicating/confirming PG&E requirements for the service relocation 18 + July 22, 2019— change order for costs ($2,283) and 20 working days + Maintain progress on the project since the electrical work was on the 19 critical path and V. Lopez was refusing to work
20 • Resulted in additional project management and inspection fees to the City IN ac
21 Deposition Exhibit 133,Benjamin Fine's PowerPoint, Slide 164 22 This particular"basis" for debarment may be one of the more egregious examples of 23 outright dishonesty. It is certainly an example of yet another Spearin Doctrine problem caused by 24 Pismo. Yet again, Pismo, during the course of the Project issued an amendment to the contract 25 taking 100%responsibility for the cost and time associated with its design error. Only after the 26 Project was completed and Pismo had a fully functioning Lift Station and had received the 27 upgraded maintenance it sought did Pismo's representatives begin making up stories to try to ruin 28 Lopez.
1448907.2 PJW 7568.002 56
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V. LOPEZ JR. &SONS
I This particular issue involves PG&E, Pismo's electrical engineer and Pismo's 2 representatives including Stoehr. PG&E provides 100% of the power feed for the Lift Station and 3 for the Maintenance Project. Pismo began design work on this Lift Station Project in 2013. It 4 hired an electrical engineer to work with the engineering team from PG&E. Fully a year before 5 Pismo sent out its plans and specifications to all of the bidders, Pismo through its electrical 6 engineer knew that a 400 amp panel was necessary. Lopez miraculously was given all of the 7 backup, including emails going back seven years proving this fact, during the course of the 8 Project. Thus, the "story"that Pismo's employees have concocted for the City Council about a 9 residential panel and everything else is utterly false. There was an obvious error by the electrical 10 engineer of record to put into the plans for a 400 amp panel so that Pismo could get the type of 11 power utilization to make the Lift Station work and satisfy PG&E's requirements. Pismo knew all w oo �
w x 12 of this when it issued Change Order 21 on July 22, 2019. Lopez, at the time, did not agree that z13 only 20 working days should be added to the contract. In email correspondence the parties agreed OZz �>o `; 14 that if additional working days needed to be added they would be added. At no point during the � � o
1 0 15 Project did anybody from Pismo ever claim that anything associated with this issue, which is z VDz 16 encapsulated in Change Order 21 reflected upon Lopez' incompetence or would be the basis for � W �gz
x w " 17 debarment. Like everything else, Pismo lied in wait, waited until the Project was completed and Z 18 made up a story to try to put Lopez out of business. Clearly, even attempting to raise this as a basis 19 for debarment demonstrates ill will and dishonesty, not only to Lopez but to the citizens of Pismo 20 and to its City Council.
21 22
23 24
25 26
27 28
1448907.2 PJW 7568.002 57
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
e #3: V, Lopez
2 p demonstrated a lack
3 of understanding of Public Works
4 process
5 ■ Failure to request compensatory days when submitting 6 change order requests
7 + Submitted a claim for extra working days after change orders s
had been finalized
+ Failed to accelerate work effort to recover the project 9 schedule
10 z 11 lea
~ Deposition Exhibit 133,Benjamin Fine's PowerPoint, Slide 165 w oo � 12
w x ono
¢ F We are not exactly certain what Pismo was getting at with this slide. What we can say 13 w� c
Za with certainty is that the allegations in this slide bear no relationship whatsoever with the ¢ � ,ow 14
Z
H a x ¢ contemporaneous records of this Project,just like everything else in this unwarranted and invalid � a1 o 15
¢ z G--
debarment effort. The fact that Lopez followed the change order process and the claims process HW
H � C, 16
Z Z."D
W a H 17 under the contract simply meant that Lopez was following the contract. This cannot be a basis for M
W
1--1
Z 18 debarment. Read fairly, Pismo's representatives are asking City Council to debar Lopez for a 19 second time because Lopez had the temerity to submit a claim on a project that was delayed by a 20 year because of Pismo's inadequate design documents. 21 22
23 24
25 26
27 28
1448907.2 PJW 7568.002 58
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V. LOPEZ JR. &SONS
1 7. "Issue#3: V. Lopez Demonstrated a Lack of Understanding of Public 2 Works Process": the Actual Change Order Process
3 rzz��
4 I . Lopez demonstrated a ack
5 of understanding of Public Works
6 process
7 0 Multiple times throughout the project, V. Lopez provided change order proposals
8 • with a proposed cost increase
9 f no request for additional working days
10 ' staff informed V. Lopez multiple times that its change order proposal should include
11 a proposed cost and additional working days to complete the a x 12 additional work
13 w¢ c
Z Deposition Exhibit 133,Benjamin Fine's PowerPoint, Slide 166 14 Z Lopez incorporates by reference its comments to the immediately preceding Pismo slide. 0 15
H Q o ¢ � 16 Lopez followed the change order procedures in the contract. The fact that Lopez refused to sign Z Z,,c
o a 17 change orders it did not agree with is not a basis for debarment within the meaning of So Cal and w
Z 18 FEI infra.
19 20
21 22
23 24
25 26
27 28
1448907.2 PJW 7568.002 59
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V. LOPEZ JR. &SONS
1 74FIssue �3--V Lopez demonstrated a lack3
of understanding of Public Works
4 process
5 • The change order form includes the following disclaimer:
6 • "The amount and time provided in this contract change 7 order are a full and final accord and satisfaction of all costs and time directly and indirectly related and all other claims 8 related hereto are hereby waived. The Contractor has 9 reviewed the plans and specifications related to this 10 change order and all changes thereto are accounted for..." 167 aG
U
Z 11 Deposition Exhibit 133,Benjamin Fine's PowerPoint, Slide 167 G7r Oo �
a x 12 Lopez agrees that the change order form used by Pismo includes waiver language as 13 Z W¢ indicated in Pismo's slide. This is precisely why Lopez refused to sign any change order z
Z 0 14 beginning with Change Order 25 all the way through Change Order 33. The only party that is Ewa
x a o 15 trying to circumvent change order language in this case is Pismo, not Lopez. This is discussed � Q � Wn 16
z N°z more fully below in Pismo's "Fiscal Loss slide". x woa „ 17
M
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Z 18 (Instructions Follow)
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19 Pr*Ct' Ft"C+rres Un rpbdun koprouemens rW i.&&mfla,n JlUfr"mriewPreoct 20 Dwa of laumxw becombgr 17 al
contredor: V La Iziunlor&Sons.hx.
21 YDW are clk*c to make the foJkwtrip dunW in Uv Contract D0[um#n4.
DaarripllDri: NO COST+*iM GE D RDaii.A IGICoW wyr,jng daya for gakn assaciMa d wilh 22 WN5dure_4 Ws SCADA inl airx_ _
Pufpo a of C win Order Deb 83sDciated with 's A In stow- Delay by ci, 23 ' 'ConmKtor Corroeted wWk within the elect6cel csbinet. DeLw arkded when Cdy inA"Or wa# MMY for Panue of the now IM stntion_Nole,Conr'aC a fV Lopaz&SOMI AWN D and A5 bng.submitlni which is on tho crMjr� pain mm not Jxeerr a d. 24 Day
d is 10_28.2019 a rmJ daiay and Is 12.12 19
llrtacllmenls:(Lis dommanie nopprikq change}
25 The anx"nl W Urria provided in tt,s contract"rNe order are a full and final accord and satlsfadk?n c f a'-1 26 wsts♦ rOJ thm0 dl CdY Ynd irdlf9Cdty related and ell ol'w Maims relsioa hereto are henry warned. The Cantr tar has reviewed tho ptsm arrd spat f�dated to;his Change order arid a.i c+rarVn thereta are 27 wCOWted for in&*artachm0frt l$beled"Aftachmet;t A' 28 Deposition Exhibit 62,Change Order 25
1448907.2 PJW 7568.002 60
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V. LOPEZ JR. &SONS
I In fact, Pismo's Director of Public Works, Fine, gave appropriate deposition testimony on 2 this issue below.
3 Deposition of Benjamin Fine, Page 129, Line 23 —Page 130 Line 9 23 Q And it says a full and final accord and 4 24 satisfaction of all costs and time directly and 5 25 indirectly relating and all other claims relating hereto 1 are hereby waived.
6 2 Do you think this is just only the contractor's 3 giving things up or are you giving things up too? So 7 4 this is just for the contractor; it's not for the city. 5 A No.
8 6 Q It is or it isn't?
9 7 A It's for both.
8 Q Both ways.
10 9 A Yes.
v 11 S. "Issue#3: V. Lopez Demonstrated a Lack of Understanding of Public ax° 12 Works Process": The "claim letter aarently Lopez was debarred for having the temerity to z13 protect its rights under the contract.
Zd Ojo ' 14 ... ,. _ . ....._.
a � � L Claim Letter
x 10 15
Z Q o 16 • January 7, 2020 — V. Lopez submitted a letter seeking 120 z� working days
x w " 17 • Based on needing additional days for each executed change Z 18 order
• Made claims that limiting sections of the Contract Documents 19 did not apply because its delay claim "declares void any 20 arguably exculpatory contract clauses..."
• The City Attorney responded to this claim, although V. Lopez has 21 insisted on this and since submitting the letter, V. Lopez refused to sign working day statements or contract change orders with the 22 stated contract days.
23 24 1ee
25 Deposition Exhibit 133,Benjamin Fine's PowerPoint, Slide 168 26 As Lopez has been contending for some time, yes, there was a dispute regarding who was 27 responsible for the delays on this Project, during the Project and thereafter. The fact that Lopez 28 and the audacity to disagree with Pismo's tactics as evidenced by its insistence that Lopez sign 1448907.2 PJW 7568.002 61
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
I unilaterally determined time adjustments from Change Order 25 forward, is not a basis under any 2 rational standard for debarment. If Pismo would like to convince a jury that Lopez delayed the 3 Project, then by all means they can do so. Lopez welcomes that opportunity should it come to 4 that. However, a garden variety dispute about delay damages is an improper basis to try to debar a 5 contractor with 41 years of experience.
6 9. 'Issue#3: V. Lopez Demonstrated a Lack of Understanding of Public 7 Works Process": Lopez was apparently debarred over delays issues on the proiect. 8pop-
9 Issue #3: V. Lopez demonstrated a ack
to of understanding of Public Works
11 process
w oob
12 May/June 2019 staff had concerns of timeline
o �
z W 13 •June 29, 2019 staff memorialized these concerns in a Q 0 >o w 14 letter to V. Lopez ,
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d[enWrtlonvrWNu��.mca.snudwe.�tn¢unc.,.x mom,of carom lrc wmm.m.e Mr 169 19 Deposition Exhibit 133,Benjamin Fine's PowerPoint, Slides 169 20 21
22 23
24 25
26 27
28 1448907.2 PJW 7568.002 62
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
I ..__2 F7_,4�� 5chedu?e �hal�enges 3 • The project experienced significant delays resulting in:
4 • The City extending the Contract time 159 days past the 369-day contract time
5 ■ 459 days total
6 • 153% of the original contract time
7 • V. Lopez provided 2-week look-ahead schedules at each progress 8 meeting
• But was inconsistent with updating the overall project schedule 9 • Went several months between updates
10 z 11 170
a x ° R 12 Deposition Exhibit 133,Benjamin Fine's PowerPoint,Slides 170 a 13 —
W p Zr z _
ow 14 - Schedule Challenges
_-------..
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� a �o 15 •
o Q W V. Lopez built the schedule linearly
z z 16 •Creating a single-track critical path x > � aH 17
W • When it became apparent V. Lopez was not going to complete the z 18 project on-time
19 • No effort was made to perform multiple tasks 20 • Or otherwise recover the project schedule
21 • This resulted in the city assessing V. Lopez 69 days of liquidated 22 damages for a total of $69,000
23 fry
24 Deposition Exhibit 133,Benjamin Fine's PowerPoint,Slides 171 25 The fact that there was a dispute regarding who was responsible for the delays for the 26 Project is not a basis for debarment. What is interesting is the fact that Pismo took responsibility 27 for 80% of the delays to the Project. In its final working day calculation, working day statement 28 127, Pismo refrained from attempting to claim liquidated damages from April 16, 2019, the 1448907.2 PJW 7568.002 63
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
I original completion date, to March 17, 2020. Pismo granted a time extension to Lopez for this 11 2 month delay in the Project. However, Pismo has attempted to assert liquidated damages against 3 Lopez for the working days from March 18, 2020 to June 22, 2020. As the critical path analysis 4 slides from Mr. Nolting attached hereto as Exhibit "F" illustrate, the Project was actually 5 completed on May 1, 2020. Also, Pismo, not Lopez, is responsible for all of the Project delays 6 from the original completion date of April 16, 2019 through and including May 1, 2020. Whether 7 or not Pismo disagrees with this critical path delay analysis is beside the point. Based upon 8 applicable law, it is simply not the case that just because an owner is unhappy with a delay to the 9 completion of the Project that debarment is somehow warranted. It is not and certainly was not 10 warranted under these circumstances where Pismo has accepted 80% of the delays as being their U 11 responsibility.Z p ty.
w oo �
12 10. Pismo Improperly Seeks to Recover$392,437.75 at a Debarment Hearin, z13 and/or Claims That as a Result of its Fiscal Loss—A Debarment ofLopez is Appropriate.
Q O > `; 14
a Q 15 FisCa! Liss
Z16 The total approximate financial loss to the City as a direct result of V. Lopez is z � °z� `° p
o a H 17 $323,437.75 comprised of the following:
W Construction Management Amendment#1 $69,900.00 Z 18 Construction Management Amendment#2 $49,000.00 Construction Management Amendment#3 $69,645.00 19 Additional Engineering Services Amendment#7
$15,395.00
20 CCO #21 - additional costs $2,283.00
CCO #26-additional costs $50,214.75
21 Subtotal (Direct Costs) $256,437.75
22 CCO#21 - 20 working days @ $1,000/day $20,000.00 CCO#26-47 working days @ $14000/day $47,000.00
23 Totalloss $323,437.75
24 25 172
26 Deposition Exhibit 133,Benjamin Fine's PowerPoint,Slide 172 27 It appears that Pismo's employees are once again attempting to dangle this purported 28 "Fiscal Loss" slide in front of the City Council to provide yet again more political cover for the 1448907.2 PJW 7568.002 64
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V. LOPEZ JR. &SONS
I City Council to rubber stamp the efforts of Pismo's representatives to ruin Lopez. The contract 2 documents do not contemplate, nor does the law contemplate, this type of damage calculation. 3 Even if it did, there is no causal relationship between Lopez' conduct on the Project and these 4 purported losses. The losses were caused by the inadequate plans and specifications that Pismo 5 paid its designers to prepare, nothing more and nothing less. What is inserted below is the relevant 6 language from the four amendments to Pismo's contracts with its design professionals. These 7 amendments were all necessitated because Pismo's plans and specifications violated the Spearin 8 Doctrine.
9 As to the attempt by Pismo to reverse the time and money Pismo agreed to give Lopez 10 through Change Orders 21 and 26, those alleged damages are also not contemplated by the 11 contract or any existing law. Pismo signed these change orders during the course of the Project. It w oo �
w x 12 cannot go back and try to reverse them. Interestingly, there is not one piece of paper of z13 contemporaneous record from Pismo to Lopez telling them that when Pismo signed any of these OZz �>o `; 14 amendments or signed any of these change orders they would be used as a basis for debarment or � � o
1 0 15 used as a basis to attempt to claim damages. This Fiscal Loss slide is like all of the other slides, a z 16 made up story. It is not supported by what happened on the Project, not supported by the contract x w " 17 Pismo drafted and not supported by applicable law.
W
Z 18 VI. CONCLUSION
19 Based upon the foregoing, it is clear from this set of facts and the relevant legal framework 20 that in no way, shape or form is debarment against Lopez warranted. Debarment is intended to 21 protect the public, not to be wielded as a punitive measure against public works contractors, or 22 perhaps even more alarmingly, to be utilized as a tool to facilitate leverage in other ongoing 23 litigation. Therefore, the City Council should not adopt a resolution declaring Lopez a non- 24 responsible bidder.
25 26
27 28
1448907.2 PJW 7568.002 65
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS
I DATED: February 21, 2023 HUNT ORTMANN PALFFY
NIEVES DARLING & MAH, INC.
2 3
4 By:
JOHN DARLING
5 Attorneys for Petitioner V. Lopez Jr. & Sons General 6 Engineering Contractors, Inc.
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1448907.2 PJW 7568.002 66
SUBMITTAL TO COUNCIL OF CITY OF PISMO BEACH ON BEHALF OF V.LOPEZ JR. &SONS