HomeMy WebLinkAbout06 - Balboa Island Bayfront RepairsCITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No. 6
January 24, 2006
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Public Works Department
Frank Tran, P.E.
949 - 644 -3311 orftran @city.newport- beach.ca.us
SUBJECT: BALBOA ISLAND BAYFRONT REPAIRS —AWARD OF CONTRACT NO.
3796
RECOMMENDATIONS:
1. Approve the plans and specifications.
2. Adopt the Resolution, attached hereto as Exhibit A, rejecting Highland
Construction, Inc.'s bid because Highland is a non - responsible bidder.
3. Award Contract No. 3796 to the second low bidder, Fleming Environmental, Inc.,
for the Total Bid Price of $382,994.00, and authorize the Mayor and the City
Clerk to execute the Contract.
4. Establish an amount of $39,006 to cover the cost of unforeseen work.
DISCUSSION:
At 10:30 a.m. on November 23, 2005 the City Clerk opened and read the following bids
for this project:
TOTAL BID AMOUNT
$374,975.00
$382,994.00
$393,300.00
$442,000.00
$521,950.00
$523,200.00
$585,600.00
$647,395.00
BIDDER
Low
Highland Construction, Inc.
2
Fleming Environmental, Inc.
3
Beador Construction Co.
4
Cody Engineering, Inc.
5
Damon Construction, Inc.
6
GCI Construction, Inc.
7
Zusser Company, Inc.
8
Alliance Streetworks, Inc.
TOTAL BID AMOUNT
$374,975.00
$382,994.00
$393,300.00
$442,000.00
$521,950.00
$523,200.00
$585,600.00
$647,395.00
BALBOA ISLAND BAYFRONT REPAIRS - AWARD OF CONTRACT NO. 3796
January 24, 2006
Page: 2
The low total bid amount is 6.26 percent below the Engineer's Estimate of $400,000 and
was submitted by Highland Construction, Inc. ( "Highland ").
Resection of Highland's Bid.
In addition to determining the lowest bidder, staff is required to review the lowest
bidder's qualifications to determine whether the low bidder is "responsible." Specifically,
Charter Section 1110 provides that contracts on public works that exceed Thirty
Thousand Dollars ($30,000.00) must be awarded to the lowest "responsible" bidder.
In Highland's bid submittal, the only prior project reference cited by Highland was
related to work performed for the California Department of Transportation ( "Caltrans ").
Staff contacted Caltrans to determine Highland's qualifications and was informed that
Caltrans had recently determined that Highland was a non - responsible bidder and
rejected its bid for three (3) separate contracts.
Specifically, on May 21, 2005, John C. McMillan of Caltrans made a preliminary
determination that Highland was a non - responsible bidder. Mr. McMillan also found that
Highland "engaged in a consistent pattern of abuse, harassment and intimidation of
Department personnel and refused to follow contract procedures for prosecuting the
work, resolving claims, and following the chain of command." A copy of the May 21,
2005, correspondence is attached hereto as Exhibit B.
On June 6, 2005, a hearing was conducted before Administrative Law Judge William O.
Hoover ( "Judge Hoover") of the Office of Administrative Hearings ( "OAH ") to determine
whether Mr. McMillan's preliminary determination should be upheld. After considering
the testimony and evidence submitted by Caltrans and Highland, Judge Hoover
determined that Highland was a non - responsible bidder ( "OAH Determination ")
because: (1) Highland refused to acknowledge the authority of the resident engineer; (2)
Highland refused to comply with established procedures for resolving claims and
disagreements; (3) Highland and its employees repeatedly threatened Caltrans'
employees; (4) Highland demonstrated a lack of trustworthiness essential to the good
faith and fair dealings implied in every contract; and (5) Highland's conduct resulted in
increased administrative burdens in excess of Caltrans' experiences on similar
contracts. A copy of the July 29, 2005 OAH Determination is attached hereto as Exhibit
C. The transcript and exhibits from the hearing will be available for review at the City
Council meeting.
On August 19, 2005, Caltrans determined that Highland was a non - responsible bidder
and that its bid for three (3) Caltrans' contracts should be rejected ( "Caltrans'
Determination "). A copy of the Caltrans' Determination is attached hereto as Exhibit D.
Based on the information obtained by staff, on December 5, 2005 the City notified
Highland that it had made a preliminary determination that Highland was a non -
responsible bidder. Highland was notified of the evidence in the City's possession that
reflected upon Highland's responsibility and was given eleven (11) days to submit any
rebuttal or other evidence.
BALBOA ISLAND BAYFRONT REPAIRS - AWARD OF CONTRACT NO. 3796
January 24, 2006
Page: 3
On December 13, 2005, Highland submitted a letter disputing the preliminary
determination and other documents it claimed rebutted the evidence in the City's
possession. A copy of Highland's correspondence is attached hereto as Exhibit E. The
other documents submitted by Highland will be available at the City Council meeting.
After reviewing all of the evidence, staff recommends that the City Council adopt the
Resolution rejecting Highland's bid on the basis that Highland is a non - responsible
bidder. Specifically, pursuant to Public Contract Code section 1103 a "responsible
bidder" is "a bidder who has demonstrated the attribute of trustworthiness, as well as
quality, fitness, capacity, and experience to satisfactorily perform the public works
contract." In determining what constitutes a responsible bidder, it is clear that the term
encompasses far more than technical skill or proficiency. Rather, the City Council must
determine whether Highland has also demonstrated attributes of trustworthiness,
defined as integrity, ability and good character, quality, fitness and capacity to perform
the work. It is staff's opinion that Highland is a non - responsible bidder, as defined by
Public Contract Code section 1103, for the following reasons:
1. Caltrans' Determination: All of the references set forth in Highland's bid
submittal relate to Caltrans' projects. In the past, Highland has almost exclusively
performed work for Caltrans. On August 19, 2005, less than six (6) months ago,
Caltrans determined that Highland was non - responsible and rejected its bid for three (3)
separate contracts. Given that: (a) Highland has not provided the City with other
references besides Caltrans; (b) Highland has performed almost all of its work
exclusively for Caltrans; (c) Caltrans has recently determined that Highland is non -
responsible; and (d) no evidence has been presented which shows that Highland is now
a responsible bidder, the City should reject Highland's bid because Highland is a non -
responsible bidder.
2. OAH Determination: On July 29, 2005, Judge Hoover upheld Caltrans'
preliminary determination that Highland was a non - responsible bidder. In making this
determination, Judge Hoover considered the testimony of Highland's officers and
employees, declarations from Caltrans' employees, and numerous exhibits. In staff's
opinion, the City Council should find Highland is a non - responsible bidder and reject its
bid because an independent third party determined less than six (6) months ago that
Highland was a non - responsible bidder and no new facts have been presented which
would alter that determination.
3. City's Zero Tolerance Policy: The City has a "Zero Tolerance" anti-
violence policy when it comes to violence in the workplace. Violence, of course,
includes verbal abuse as well as physical assaults.
Based on the record, staff has determined that Highland has a long history of allowing
its officers and /or employees to verbally abuse and intimidate Caltrans' employees. For
example, based on the record, staff has determined that: (a) on or about October 2,
1998, Mr. Mike Ahmadi, who is listed in the bid as the person who inspected the site
and who was determined by Judge Hoover to be the owner of Highland, told Caltrans'
employees that sometimes he would become so frustrated that he wished he could take
a machine gun and wipe out all of Caltrans; (b) on or about February 4, 2002, Mr. Mike
BALBOA ISLAND BAYFRONT REPAIRS - AWARD OF CONTRACT NO. 3796
January 24, 2006
Page: 4
Ahmadi called Mr. Richard Joludow, of Caltrans' a jackass; (c) in the Spring of 2002, Mr.
Mike Ahmadi yelled and used profanities at Ms. Nahid Baghbanian of Caltrans' while
she was having lunch with friends and has admitted that he told her "you think you are
tough shit" at the lunch; (d) on September 13, 2004, Mr. Mike Ahmadi used curse
words, was abusive and intimidating during a meeting; (e) during August 2004, Mr. Mike
Ahmadi was removed from a project because of his behavior; (f) during a meeting on or
about September 20, 2004, Mr. Mike Ahmadi informed Mr. Kevin Tran of Caltrans' that
"[i]f you smile again, I'll kick your ass out of this office;" (g) on September 30, 2004,
Scott McKenzie removed Mike Ahmadi from a project due to his violent behavior on
September 13, 2004; and (h) on April 5, 2005, Kristi Stelle of Highland, wrote a letter to
Tony Harris of Caltrans' accusing Bob Pieplow and the likes of him of criminal behavior
and as being ignorant and incompetent.
Mr. Mike Ahmadi does not see anything wrong with calling people names or using
profanity. At the hearing before Judge Hoover, Mr. Mike Ahmadi stated that there was
nothing wrong with calling people ruthless and incompetent. While some use of
profanity may be used in the construction industry, Mr. Mike Ahmadi uses profanity to
intimidate and verbally threaten employees. Throughout the OAH Hearing, Mike
Ahmadi was unapologetic for his behavior and there is no indication in the submitted
material that Mike Ahmadi or Highland will change its business practices in the near
future. In fact, in Highland's December 13, 2005, correspondence, Highland claims that
Mike Ahmadi actions are justified by Caltrans' behavior.
In staff's opinion, the foregoing pattern of behavior justifies a finding of non -
responsibility. Further, to maintain a non - hostile work environment and to protect its
employees, staff recommends not awarding the contract to Highland.
4. Non - Responsible: In addition to the foregoing, it is staff's opinion that
Highland is non - responsible because Highland's conduct has resulted in increased
administrative burdens to owners of projects that have hired Highland. The Caltrans'
employees who have worked with Highland have noted in their declarations that
Highland has a history of requiring a disproportional amount of Caltrans' management
resources resulting in increased administrative burdens to owners of projects that have
hired Highland.
Further, Highland has a history of refusing to acknowledge the authority of the owner's
representatives and employees on projects which Highland has worked. For example,
Mr. Kausi Amuthasakaran noted in his declaration that on one occasion Highland
directly disobeyed the direction of the resident engineer thereby creating an unsafe
roadway condition that was prolonged for months by their refusal to follow the resident
engineer's direction to remedy the situation. Similarly, Mr. Ken Bocchicchio has stated
that Highland routinely bypassed the resident engineer and contacted Mr. Bocchicchio
without giving the resident engineer an opportunity to address the question or concern.
Additionally, Highland does not comply with established procedures for resolving claims
and disagreements. For example, in Peter Chan's declaration he states that Highland
frequently engages in letter campaigns to falsely present the facts of disputes to the
Governor's office and ignores established contract dispute /claim administration
processes. In John Hancock's declaration, he states that when he asked Ms. Kristi
BALBOA ISLAND BAYFRONT REPAIRS -AWARD OF CONTRACT NO. 3796
January 24, 2006
Page: 5
Stelle of Highland if she complied with the claims requirements set forth in the contract,
she stated that the contract was "just a guideline" and not something to be followed.
5. Work Experience
Finally, given that Highland has performed primarily Caltrans' projects which are
predominantly freeway projects, staff feels that Highland does not have sufficient
experience in dense residential environments such as Balboa Island. The nature of the
proposed work requires special knowledge of close quarters construction and phasing.
The project also requires extensive coordination with the residents and staff to
successfully complete the work. Highland's work experience does not indicate any
experience in these areas of expertise.
Award of Contract to Second Lowest Bidder.
The second low bid amount is 4.25 percent below the Engineer's Estimate. The second
low bidder, Fleming Environmental, Inc. ( "Fleming "), possesses a California State
Contractors License Classification A as required by the project specifications. Fleming
has satisfactorily completed a bayfront repair project for the City. Therefore, staff is now
recommending that the City award the project to the second low bidder, Fleming.
This project consists of construction of new concrete sidewalk and the installation of
area drains and 6 -inch diameter PVC drain pipes at selected locations along South Bay
Front between Sapphire Avenue and Marine Avenue, West Grand Canal Walkway
between Park Avenue and North Bay Front, and entire East Grand Canal Walkway.
Surface drainage will be designed to drain toward the public bulkhead and will convey
the surface runoff for below grade discharge into the nearby street end catch basins.
The deteriorated sidewalk panels at North Bay Front between Marine Avenue and West
Grand Canal will also be removed and reconstructed.
During construction, in order to provide adequate curing time to support pedestrian
traffic, the sidewalk at construction areas will be closed for a few hours until they are
ready for public use. Pedestrians will be detoured to the nearby alleys and sidewalks
during these closures.
Per the Contract Specifications, the Contractor will have 50 consecutive working days to
complete the work. The construction will be scheduled to start on February 13, 2006.
Environmental Review:
This project is categorically exempt from the provisions of CEQA per Section 15301(c),
since the project consists to the improvements of existing sidewalk that did not impact
any environmental resources. A Notice of Exemption has been filed with the County
Clerk.
BALBOA ISLAND BAYFRONT REPAIRS -AWARD OF CONTRACT NO. 3796
January 24, 2006
Page: 6
Public Notice:
The Notice Inviting Bids was advertised in the City's official publication and in
construction industry publications.
Affected residents will be noticed periodically during the course of the project as
necessary.
Surveying Services:
Surveying services are included within the construction contract.
Funding Availability:
There are sufficient funds available in the following accounts for the project:
Account Description
Tide & Submerged Land
Tide & Submerged Land
Prepared by:
Frank Tran, P.E.,
Associate Civil Engineer
Account Number Amount
7231- C5100314 $382,850.00
7231- C5100835 $39,150.00
Total: $422,000.00
Submitted by:
WG. Badum,
is Works Director
Attachments: Exhibit A - Resolution
Exhibit B - Caltrans' letter dated May 21, 2005
Exhibit C - OAH Determination
Exhibit D - Caltrans' Determination
Exhibit E - Highland letter dated December 13, 2005
Exhibit F - Project Location Map
Exhibit G - Bid Summary
EXHIBIT A
RESOLUTION NO. 2006-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
NEWPORT BEACH REJECTING HIGHLAND
CONSTRUCTION, INC.'S BID FOR CONTRACT NO. 3796
BECAUSE HIGHLAND IS A NON - RESPONSIBLE BIDDER
AND AUTHORIZING THE MAYOR AND CITY CLERK TO
ENTER INTO AN AGREEMENT WITH FLEMING
ENVIRONMENTAL, INC., FOR CONTRACT NO. 3796
WHEREAS, on November 23, 2005, the City Clerk opened and read the bids for
the Balboa Island Bayfront Repairs, Contract No. 3796 ( "Contract ");
WHEREAS, the low bid was submitted by Highland Construction, Inc. ( "Highland ");
WHEREAS, Charter Section 1110 provides that contracts on public works that
exceed Thirty Thousand Dollars ($30,000.00) must be awarded to the lowest responsible
bidder;
WHEREAS, Public Contract Code Section 1103 defines a "responsible bidder" as
"a bidder who has demonstrated the attribute of trustworthiness, as well as quality,
fitness, capacity, and experience to satisfactorily perform the public works contract;"
WHEREAS, in assessing whether Highland's bid for the Contract should be
rejected on the basis that Highland is a non - responsible bidder, the City obtained the
following documents, without limitation, which have been provided for review to the City
Council and are deemed to be incorporated into the Administrative Record relating
hereto:
1. Letter of John C. McMillan to Highland dated March 21, 2005;
2. Letter of Mike Ahmadi to John McMillan dated March 29, 1995;
3. Reporter's Transcript of Proceedings dated June 5, 2005;
-1-
4. Binders 1 through 3, Bates Stamp Numbers CT HC 00001 — CT HC
01342 submitted by the California Department of Transportation at
the Office of Administrative Hearings ( "OAH ") proceeding on June 5,
2005;
5. Binders 4 through 6 submitted by Highland at the OAH Hearing on
June 5, 2005;
6. Letter of Bradley A. Raisin to Judge William O. Hoover; Closing Brief
of Highland; Declaration of Mike Ahmadi; Declaration of Kristi Stelle;
Declaration of Earl Fukomoto and Declaration of Craig A. Sorensen,
and supporting documents all submitted to the OAH on or about
June 13, 2005;
7. OAH Decision of Judge William O. Hoover dated July 29, 1995;
8. Letter of John C. McMillan to Highland dated August 19, 2005;
9. Determination of Bidder's Responsibility and Findings for Award of
Contracts No. 07- 1661A -4, 07- 4J2704 and 11- 266404 of Mark Leja
dated August 19, 2005;
10. Petition for Writ of Mandate dated August 31, 2005;
11. Bid submittal of Highland dated November 23, 2005;
12. Letter of Bill Patapoff to David Ahmadi dated December 5, 2005;
13. Letter of Kristi Stelle to Aaron C. Harp dated December 13, 2005;
and
14. Employee Policy Manual "Zero Tolerance" policy.
-2-
WHEREAS, all of the information provided by Highland and Caltrans including,
without limitation, the bid, transactional documents, correspondence, briefs, declarations
and other information provided to the City and retained in the files of the City, its attorneys
and /or consultants, is hereby incorporated by reference into the Administrative Record
and is available upon request; and
WHEREAS, the City has determined that Highland's bid for the Contract should be
rejected because Highland is a non - responsible bidder and the Contract should be
awarded to Fleming Environmental, Inc.
NOW, THEREFORE, the City Council of the City of Newport Beach resolves as
follows:
Section 1: Highland's bid for the Contract is hereby rejected because Highland
is a non - responsible bidder, as defined by Public Contract Code section 1103, for the
following reasons:
A. On August 19, 2005, Caltrans determined that Highland is a non-
responsible bidder and rejected its bids for three separate contracts.
B. On July 29, 2005, the Honorable William O. Hoover of the OAH determined
that Caltrans' preliminary determination that Highland was a non - responsible bidder
should be upheld.
C. The only prior references submitted by Highland as part of Highland's bid
submittal for the Contract related to projects performed for Caltrans who has determined
that Highland is a non - responsible bidder.
-3-
D. The City has a "Zero Tolerance" anti - violence policy when it comes to
violence in the workplace and Highland has shown a history of allowing its officers and /or
employees who have routinely verbally abused and intimidated Caltrans' employees.
E. Highland's conduct has resulted in increased administrative burdens to
owners of projects that have hired Highland.
F. Highland has a history of refusing to acknowledge the authority of the
owner's representatives and employees on projects which Highland has worked.
G. Highland does not comply with established procedures for resolving claims
and disagreements.
H. The Project entails replacement of sidewalk and drains along Balboa Island
walkway located in a residential neighborhood with access along narrow streets and
alleys. The Project will have to be accomplished in close quarters between the residential
property and a beach front bulkhead and will require the contractor to perform the work in
cooperation with residents and visitors to the area. Highland's only references are for
work with Caltrans and Highland has not performed work in areas with similar space and
location limitations.
I. Highland has not submitted evidence that it has become a responsible
bidder since it was found to be a non - responsible bidder by Caltrans and /or Judge
Hoover.
Section 2: This Resolution shall not prohibit Highland from bidding on future
projects.
ME
Section 3: The Contract shall be awarded to the second low bidder, Fleming
Environmental, Inc, and the Mayor and City Clerk are hereby authorized to execute the
Contract.
Section 4: This Resolution shall take effect immediately upon its adoption by
the City Council, and the City Clerk shall certify the vote adopting the Resolution.
ADOPTED this day of 2006.
ATTEST:
LaVonne Harkless,
City Clerk
Don Webb, Mayor
-5-
EXHIBIT B
STATE OF CALIFORNIA BUSINESS TRANSPORTATION AND HOUSING AGENCY ARNOLD SCHWARZENECCER CoWng
DEPARTMENT OF TRANSPORTATION
DIVISION OF ENGINEERING SERVICES
OFFICE ENGINEER, MS 43
17273011 STREET
P.O. BOX 168041
SACRAMENTO, CA 95816 -8041
PHONE (916) 227 -6300
FAX (916) 227 -6151
TTY (916) 227 -8454
March 21, 2005
Highland Construction, Inc.
133 North Pixley Street.
Orange, CA 92868 .
Dear Mr. Ahmadi:
VIA FACSIMILE: (714) 538 -5157
PwT.or3 ,
`'
a;,
Flesyourpower!
Be energy effielem!
This is to advise you that the Department has.determined that Highland Construction
( "Highland ") is not a responsible bidder and is therefore ineligible for award of Contract
07- 1661A4.
If Highland accepts this determination, then the determination of non - responsibility is final as
to this contract. if Highland wishes to refute this determination, it is entitled to submit
written evidence in rebuttal to try and establish that it is a responsible bidder. The
Department will then meet with Highland to go over the evidence presented and hear any
statement Highland wishes to make to try and establish its responsibility. This meeting will
be conducted before an Administrative Law Judge ( "Judge ") in Sacramento on a date to be
determined after receipt of your response. The proceedings will last one day and will be
recorded. All of the evidence prepared by the Department and by Highland will be submitted
to the Judge prior to that meeting.
The Judge will consider the evidence presented by both parties and make a recommendation
to the Chief Engineer, or his designee, as to whether Highland is a responsible bidder. The
Chief Engineer will then consider the Judge's recommendation along with all the evidence
provided by the parties and decide whether or not Highland is responsible and eligible for
award of this contract. His decision will be the Depafinent's final determination on this
issue.
Please advise the Department in writing by. March 28, 2005, as to whether or not you wish to
submit evidence and meet with the Department before a Judge to rebut the Department's
determination that Highland is non - responsible. If Highland elects to submit evidence and
attend a meeting before a Judge to try and rebut the determination of non - responsibility,
Highland must submit its complete written response, including supporting documentation, if
any, to the Department no later than April 18, 2005.
"Calrran.r inpmm mobidly arrou California"
CT HC 00001
Highland Construction, Inc.
March 242005
Page 2
Highland's -bid currently expires on March 25, 2005: If Highland elects to proceed with a
responsibility meeting, it will, be necessary for Highland to extend its bid. Highland will
receive a request for the bid extension by separate letter:
BASIS FOR DETERMINATION
1. Standard
The Department is required by law to award public works contracts to the lowest,
responsible bidder. A "responsible bidder" is one who "has demonstrated the attribute of
trustworthiness, as well as quality, fitness, capacity, and experience to satisfactorily
perform the public works contract." Public Contract Code §1103. The Legislature found
this definition to be declaratory of.existing law and that establishing a system to evaluate
the "ability, competency and integrity of bidders on public works projects" would be in the
public interest and would result in project of the "highest quality for the lowest costs."
Stats.1999, Ch. 972. "Responsibility" requires a demonstration of trustworthiness. .Id,
"Trustworthy" is defined as "worthy of confidence, dependable." Websters 9`h Collegiate.
An "attribute of trustworthiness" includes reliability and is essential.to the good faith and
fair dealing required in every contract.
2. Prior communication regarding Highland's responsibility.
Highland was the lowest monetary bidder for contract 07- 1661A4. On February 11, 20059
the Department sent a letter to Highland advising that the Department questioned whether
Highland was a "responsible bidder' in light of incidents on recent contracts in Districts 7
and 12. In its letter, the Department relied on findings that Highland's key representative,
Mike Ahmadi, behaved in a disorderly and improper manner. which recently resulted in his
removal from the work. on Contract 07- 4111104 and Contract 12- OC2404. The letter
noted that after his removal from the work, Highland did not respond to requests to
designate an authorized representative to act. as superintendent on these projects.
Furthermore, on Contract 12- OC2404, Highland failed to prosecute the work and failed to
secure the project as required by the contract. Finally, the contractor failed to follow
dispute resolution procedures established in the contract.
On February 15, 2005, Highland responded that it had completed numerous contracts for
the Department in less than the allotted time. Highland also acknowledged it had
Problems on Contracts 07- 4H1104. and 12- OC2404 as well as Contract 07- 458904 which
was not mentioned in the Department's letter. Highland then. stated that the "issues" on
these three contracts were due to design errors, lack of experienced Department personnel
and the Department's "refusal" to write change orders and make payments. Highland then
stated that (1) neither Highland nor its employees had ever threatened Department
employees, (2) Highland always prosecuted the work in accordance with contract
provisions, (3) no project ever lacked a superintendent and (4) Highland always used
"Callrans improves mobiliry arross Califnmia"
CT HC 00002
Highland Construction, Inc.
March 21, 2005
Page 3
dispute resolutions established in the contract. Highland also listed Department personnel
who would allegedly attest to Highland's "experience, integrity and professionalism."
3. Investigation and Record
Upon receipt of Highland's February 15 response, the Department undertook further
investigations and collected additional information, a copy of which will be sent to you
under separate cover due to the volume of materials. The Department has relied on all of
the documents and declarations collected in this matter (the "record ") in reaching its
determination of non - responsibility.
Since this record is too large to discuss in detail, we have highlighted certain incidents and
correspondence which are particularly egregious examples of Highland's actions.
However, material not .specifically mentioned herein was still considered. In any
proceeding on Highland's responsibility, the Department reserves the right to, and will, go
over other documents in the record even though, they have not been mentioned in this
letter.
We also direct your attention to Exhibit A, attached hereto, which summarizes pertinent
parts of the record. That exhibit identifies certain documents in the record and includes a
reference number for each document which is listed in the farthest left -hand column of the
Exhibit. Citations to "Ref. No." in this letter refer to those reference numbers listed in
Exhibit A.
4. Companies owned. by Mike Ahmadi.
Highland Construction, Inc. (Highland) and M. Ahmadi Construction & Engineering
Company (MACE) are both owned.and operated by Mike Ahmadi. Mr. Ahmadi also
frequently acts as the representative at the work site for these two companies as well as its
representative in dispute resolution meeting with the Department. Both companies also
employ Kristi., Stelle. The Department considered information about both of these
companies in assessing Highland's responsibility for award of this contract. The findings
discussed herein are equally applicable to Highland and to MACE.
5. Contracts awarded to companies owned by Mike Ahmadi.
The Department's records show that since May 2001, the Department has awarded'a total
of eleven major construction contracts to Highland or MACE. This number does not
include contracts valued at less than $120,000 which are commonly referred to as "Minor
B" contracts.
"Caltrans improves mabilily across California"
CT HC 00003
Highland Construction, Inc.
March 21, 2005
Page 4
As summarized in the table below, eight of these major contracts have been awarded in
the past year. At the time of award, the Department estimated that eight of the contracts
would be completed in 100 working days or less. Highland bid nine of the contracts at
less than $650,000. Most of the projects awarded to Highland have, been relatively
small projects.
Upon receipt of I-Tighland's February 15 letter, the Department reviewed the files for each
project and/or discussed the project with Department personnel who had been assigned to
work on them. Based on its document review and employee interviews, the Department
reached the conclusions described below.
FINDINGS
The record shows that Highland consistently abuses, harasses, threatens and intimidates
Department employees and ignores contract requirements. A review of the project files
indicate that on eight of the eleven contracts awarded to Highland/MACE since 2001,
Highland engaged in a consistent pattern of abuse, harassment and intimidation of the
Department's employees and has refused to follow contract procedures for prosecuting the
work, resolving claims, and following the chain of command.
A. Highland. does not prosecute the work in accord with the provisions of the contract
and was untruthful in its letter of February 15, 2005 when it claimed otherwise.
All of the Department's construction contracts consist of plans, Standard Specifications,
Special Provisions and the contractor's bid price. This is clear from a reading of Standard
Specification 1 -1.09 which defines the "contract" as the "written agreement covering the
performance of the work" and that the "contract shall include... plans specifications,
i. This column notes which of Mr. Ahmadi's companies was awarded the contract. "HL" refers to Highland
Construction and "MACE" to M. Ahmadi Construction.
"Callrons improves mabilay aerost Califr�rma"
CT HC 00004
Dist.
EA
Award
Date
Bid'
Amount
Work
Description
Co;
Est.
WDs
1
07
458904
5/8/01
500,325
Replace Portland concrete
MACE
70
2
07
4H2804
5 /10/01
646,795
Construct, install, modify drain
MACE
60
3
07
020474
10/03/02
2,055,139
Soundwalis
MACE
280
4
07
4H1004
5 /Dd /04
420,250
Repair edge drain
HL
190
5
07
4H1104
5/13/04
208,070
Construct masonry wall.
HL
120
6
12
OC2404
5/14/04
405,445 -
Resurface highway
HL
40
7
07
2N8124
5/18/04
144,480
Construct approach slab
HL
90
8
08
OA4004
7/15/04
190,960
Replace joint seal assembIX
HL
90
9
08
438114
8/31/04
484,890
Realign to create T intersection
HL
100
10
08
IA2104
9/29/04
344,840
Replace aluminum joint seals
HL
80
11
12
OH0024
09/29/04
1,529,830
Resurface existin highway
HL
30
Upon receipt of I-Tighland's February 15 letter, the Department reviewed the files for each
project and/or discussed the project with Department personnel who had been assigned to
work on them. Based on its document review and employee interviews, the Department
reached the conclusions described below.
FINDINGS
The record shows that Highland consistently abuses, harasses, threatens and intimidates
Department employees and ignores contract requirements. A review of the project files
indicate that on eight of the eleven contracts awarded to Highland/MACE since 2001,
Highland engaged in a consistent pattern of abuse, harassment and intimidation of the
Department's employees and has refused to follow contract procedures for prosecuting the
work, resolving claims, and following the chain of command.
A. Highland. does not prosecute the work in accord with the provisions of the contract
and was untruthful in its letter of February 15, 2005 when it claimed otherwise.
All of the Department's construction contracts consist of plans, Standard Specifications,
Special Provisions and the contractor's bid price. This is clear from a reading of Standard
Specification 1 -1.09 which defines the "contract" as the "written agreement covering the
performance of the work" and that the "contract shall include... plans specifications,
i. This column notes which of Mr. Ahmadi's companies was awarded the contract. "HL" refers to Highland
Construction and "MACE" to M. Ahmadi Construction.
"Callrons improves mabilay aerost Califr�rma"
CT HC 00004
Highland Construction, Inc.
March 21, 2005
Page 5
special provisions.... ". The contract indi -sputably includes the Standard Specifications.
Nevertheless, Highland has advised Department staff that Standard Specifications are not
part of the contract but are merely guidelines. See Declaration of John Hancock.
Highland's view, that the Standard Specifications are merely advisory, is clearly reflected
in its behavior. Highland routinely ignores and refuses to acknowledge or comply with
contract requirements:
1. Refusing to acknowledge the authority of the Resident Engineer.
For instance, the Specifications state that the Engineer has authority over the project.
(Std. Spec. 5 -1.01, "Authority of the Engineer"); However, Highland and its
representatives routinely ignore the Resident Engineer ("RE ") and seek to discuss
issues, problems and claims with the RE's management without first discussing them
with the RE. For example; see Declarations of Nahid Baghbanian, para 7 -9; Ken
Boccicchio, para. 7; Scott McKenzie, para. 7 and Kausi Amuth, para 9 and 9.
A good example of highland's refusal to acknowledge the RE has any authority is
found in the correspondence for Contract 07-4H1004. Highland advised the RE that
utility lines were in its way and they would not be responsible for damage.to said
lines. The RE advised they were responsible for any damage to the lines, but should
be able to work around. them. After several exchanges on this issue, Highland
claimed they were concerned for the safety of their workers. Thereafter, the RE
postponed a pte- construction meeting to look into the issue. Highland refused to
accept the meeting was postponed, showed up anyway and insisted it take place.
Subsequently, Mike Ahmadi and Kristi Stelle of Highland authored a barrage of
letters about this cancelled meeting insisting it was not up to the Department to decide
whether a meeting could be postponed. [See Contract 07- 4H1004 correspondence
May - June).
2, Refusing to comply with contract requirements for resolving claims and
disagreements.
The Standard ..Specifications set forth the process for paying for extra work not
originally included in the work and also the process for settling claims that arise due
to disagreement about whether work is extra or not. See Std. Spec. 4 -1.03, 4- 1.03A,
4- 1.03D. After working on eleven contracts, Highland is well aware of these
requirements which have been rcpeatedly pointed out to them by Department
employees. However, Highland shows continuing disregard for these requirements.
Highland regularly demands payment for work it considers extra and threatens to halt
work, refuses to perform specific work it considers extra and often insists on payment
for all outstanding claims before it will agree to continue performance of the contract
"Ccat'.Mc improve' mubi &y across Ctdifumia"
CT HC 00005
Highland Construction, Inc.
March 21, 2005
Page 6
at all. Highland has even demobilized and left the project before acceptance. See .
Declaration of Kausi Amuth and Exh. A, Ref. Nos. 8 and 10.
The following paragraphs are just a few examples from the record of Highland.'s
refusal to comply with contract provisions and prosecute the work in accord with
contract requirements.
a. Contract 12- OC2404: In May 2004, Highland was awarded Contract 12- OC2404
for $405,000. Shortly after award, it became clear this project could not be
constructed as designed. When the Department did not accept the solution
proposed by Mike Ahmadi, he became abusive, insulting and slanderous. He
refused to continue working until he was paid what he thought be was due.
Subsequently he was removed from the work. Shortly thereafter, the contract was
terminated per Standard Specification 8 -1.11, "Termination of Contract ". Upon
termination, the contractor is still subject to certain requirements, including that
he secure the project before demobilizing and dispose of unused material as
directed by the RE.
After termination of this contract, Highland refused to complete the work as
required by Std. Spec. 8 -1.11 in direct violation of the contract requirements.
[See Exh. A, Ref. No. 13, Letter from Highland to Pieplow, 'Be advised if these
issues, including the overhead, are not resolved shortly and amicably, we will
demobilize and slap Caltrans with the biggest lawsuit ever." ; and Ref. No. 20,
Lotter from Highland to Baniheshemi, "But of course, in the screwy world of
Chris Mokus' Caltrans, the removal of "debris" is more important than the lives
and safety ± 300,000 daily commuters! What a shame! "]
b. Contact 08- 438114: In August 2004, the Department awarded Highland Contract
08-438114 for $385,000. The Special Provisions of the contract clearly stated that
a Storm Water Pollution Prevention Plan (SWPPP) was required for this contract
and that it must be approved by the Department before work could begin.
Highland argued no SWPPP was needed. The RE ordered one be submitted.
Highland refused and the argument extended over several weeks. This is reflected
in the files and the sworn testimony of Fred Khosrowabadi. See Declaration of
Fred Khosrowabadi. Mr. Khosrowabadi was one of the Department employees
listed by Highland as a reference.
Highland also advised the Department that since the Department had failed to
resolve "numerous issues" on the project, Highland had "cancelled all work for
the above- mentioned project." [See Exh A, Ref. No. 28, Letter from Highland to
Khosrowabadil
"Calt=Y improves mobility arrn.rs Caliifomio"
CT HC 00006
Highland Construction, Inc.
March 21, 2005
Page 7
Contract 12- OH0024: In September 2004, the Department awarded Highland
Contract 12- OH0024 for $1,529,830. Highland ignored the Resident Engineer's
directions. Highland routinely refused to comply with the Department's requests
to clarify or correct submittals. See Declaration Kausi Amuth. When Highland
disagreed with the Resident Engineer about whether work was included or was
extra, Highland did not follow the order of the Resident Engineer to complete the
work and file a claim later. [See letter from Amuth to Highland dated Nov. 18,
20041. Instead, Highland demobilized and left the work in an unsafe condition
before the project was completed. [See Exh.A, Ref. No. 8 and Declaration of
Kausi Amuth.] This was the most serious example of Highland's refusal to
prosecute the work in accord with the contract requirements.
Kausi Amuth was the Resident Engineer for this project and provided a sworn
declaration in support of these facts. The Department notes that Mr. Amuth is one
of the persons Highland lists as a reference in its February 15`h 2005 letter.
d. Even in its February 15, 2004 letter responding to the Department's concerns
regarding Highland's responsibility, Highland alleges problems with the
Department employees and than states that
"Upon our insistence to be paid for the work performed and/or the appropriate
Change Orders be processed before we start work on additional work that was
not part of the original contract,..," [emphasis added]. (See Feb. 15, 2005
Letter, Highland to McMillan, page 2).
This statement is itself evidence that Highland intentionally fails to follow
contract procedures. As described above, the contract does not permit a
contractor to "insist" on being paid before doing work ordered by the Resident
Engineer. See also Declaration of Peter Chan. Given the number of contracts
awarded to Highland, it.is well aware that this behavior breaches the contract.
B. Highland and its employees have repeatedly threatened Department employees and
Highland misrepresented that fact in its letter of Feburary 15, 2005.
In its letter of February 15, 2005, Highland claimed that none of its employees had ever
threatened Department employees, The Department considered this an especially
important consideration and investigated that statement. The Department has concluded
that Highland's claim is untrue.
The Department's employees are subject to the attached Department's policy on
"Workplace Violence" (Director's Policy DP -18, effective May 1, 1998) which
"Cdvmis improves rv,bility arross California"
CT HC 00007
Highland Construction, Inc.
March 21, 2005
Page 8
emphasizes that the Department is to protect its employees and has zero tolerance for
threats, violence, harassment, and intimidation. The policy, defines intimidating
behaviors to include shouting, slamming doors, and throwing objects. While the
Department is only authorized to take action against its own employees who engage in
such behavior, the Department obviously also has an interest in protecting its employees.
For this reason, the policy requires that Department employees report suspicious behavior
and actions by non - employees (including assaultive talking, belligerent, intimidating and
threatening behavior) to their supervisors, California Highway Patrol or. others:
Employees have complied with the policy directive and reported Highland's behavior to
their supervisors.
Mr. Ahmadi has been physically threatening in several instances as described in the
following paragraphs.
a. Contract 12- 040504: ln`October 1998, Mike Ahmadi met with Departm ent employees
James Roldan, Lee Haber, Ken Bui and Tran Dang to .discuss contract change orders
for Contract 12- 040504. During the meeting, as throughout the pendency of the
project, Mike Amadi displayed anger. At one point, he stated that he wished he could
machine gun" down Caltrans employees. The Department participants found this
statement threatening and worrisome. James Roldan, who is no. longer employed with
the Department; documented the incident at the time in a transmittal to.his supervisor.
(See Declaration of Lee. Haber and attached e -mail; Declaration of Ken Bui;
Declaration of Tran Dang and Exh, A, Ref. No. 43).
b. Minor B Contract 12- 12A0695: In spring 2001, the Department awarded Highland a
Minor B contract. Throughout the project, Mike Ahmadi exhibited unprofessional,
angry, insulting and abusive. behavior to the Department's employees. After the
project was completed, in Spring 2002, Mike Ahmadi encountered the Senior
Engineer who had supervised the Resident; Engineer on the project. At a restaurant,
lie publicly insulted her and called her names causing her to feel threatened enough,
that she and.her friends felt compelled to leave the restaurant to get away from him.
She reported the incident to her supervisors and the police were contacted. (See
Declaration of NahidBaghbanian and Exh. A, Ref. No's 44 -47).
c. Contract 07- 4H1104: In May 2004, the Department awarded Contract 07- 4H1104 to
Highland. During the project, Mike Ahmadi continued his pattern and practice of
insulting and abusing the Department's employees. During a meeting on September
13, 2004 to discuss the project, Mike Ahmadi became so abusive that the
Department's representatives sought to. terminate the meeting. Thereafter, Mike
Ahmadi physically approached the Department manager so closely that he raised a
tablet in front of his face to preserve some distance. He felt threatened enough to
request the police be called and reported the incident to his supervisor. (See
"Caltrnns improve mobility ¢crow California"
CT HC 00008
Highland Construction, Inc.
March 21, 2005
Page 9
Declarations of Om Garg, Kelvin Tran and Scott McKenzie and Exh. A, Ref. No. 21).
Subsequently, on September 20, 2004, another meeting was held with Mike Ahmadi
to advise him that his behavior during the September 13 meeting would not be
tolerated and he would be removed from the work if he continued to engage in such
unacceptable behavior. During the course of the meeting, Mike Ahmadi turned to one
of the Department's employees and stated that if the employee smiled again, Ahmadi
"would kick his ass." (See Declaration of Kelvin Tran, paragraph 6). Mike Ahmadi
was removed from the work shortly thereafter.
The Department finds that Highland representatives have indeed threatened
Department employees, physically and otherwise, and moreover that Highland lied
about that fact in its letter of February 15 when it claimed it had never done so.
C. Highland habitually displays a lack of trustworthiness essential to good faith and
fair dealing implied in every contract.
A review of the record shows that multiple Department employees in different districts
working on various projects have had to terminate calls and meetings with Mike Ahmadi
due to his insults, shouting and anger. Managers have repeatedly become involved in
trying to address this behavior. In each case, Highland consistently alleges that all
Department employees at all levels of staff and management in all Districts are
incompetent, inexperienced, unintelligent and lacking in expertise..
In its correspondence and its personal dealings with Department employees, Highland
routinely engages in name - calling, insults, inappropriate displays of anger, and
intimidation. Highland does not hesitate to denigrate and question the integrity of any
Department employee who disagrees with Highland's demands. Neither does it hesitate
to make its allegations to all levels of management within and outside the Department. In
accord with the Department's "Workplace Violence" policy, multiple employees have
reported assaultive talking, abuse, cursing, foul language and intimidating and threatening
behavior as evidenced in the examples below.
a. Contract 07- 020474: In October 2002, MACE was awarded Contract 07- 020474 for
$2,055,139. Throughout this project, Mike. Ahmadi consistently abused the
Structures Representative, Lawrence Okoye and the Resident Engineer, Ben
Ghafghazi. During a meeting in November 2002, between Highland and Department.
representatives Mike Ahmadi became angry, rude, insulting and intimidating. The
Resident Engineer advised him that if he did not behave he would be removed from
the work, Mr. Ahmadi claimed he could not be removed because he owned the
company. (See Exh. A, Ref. No. 28).
" Caltranr improver mobility cows Califonda"
CT HC 00009
Highland Construction, Inc.
March 21; 2005
Page 10
Thereafter on January 27, 2003, the Resident Engineer sent a letter to Highland
detailing further instances of insulting conduct and advising he would be removed if
the behavior did not stop. [See Exh: A, Ref. No. 34. Letter. from RE to Highland
detailing abuse and threatening to remove Ahmadi from the work;. Ref. No. 38, Ltr
from Highland to Department referring to Mr. Okoye; "He thinks he is King 'Zulu'
and this is a third world Country and he.can do anything he wants." ; Ref No. 31, "He
flew into another one of his cussing rage,.I ended the conversation with civility. ";
Ref. No. 41, Doug Failing, Director District 7 to Highland "Unless you are willing to
act in a. civilized manner. when attempting to resolve discrepancies and disputes
regarding your contract, refrain from acting in this unacceptable manner toward
Caltrans employees, and apologize to Mr David Njoya and Mr. Lawrence Okoye,
Structures Representative, for the statement made in your letter of November 20,
2003, there will be no District Claim Meeting. "]
A review of the project files, including Mr. Okoye's diary. for this project reveals that
Mike Ahmadi was continually abusive throughout this project to the point that Mr.
Okoye felt' another representative should be assigned to finish the job because Mike
Ahmadi refused to communicate with Mr. Okoye. (See Exh. A, Ref. No. 33 and
Diary entry for January 13, 2003).
b. Other examples: Highland's behavior was not unique to this contract. Use of foul
language, yelling, insults and displays of anger creating a hostile work environment
are apparently the norm for Highland representatives. This behavior is discussed in .
nearly all the Declarations included in the record. A few other examples of this
unacceptable conduct are drawn from Exhibit A;
• Ref. No. 5 Department to Highland, "I take exception to being called a jackass at the
Glendale office this morning.."
• Ref. No. 14 Ltr from Highland to Behrooz Pierzadeh "A sack of rocks has more sense
and experience in this business than you and Chris Mockus. ";
• Ref. No. 17, discharging Mike Ahmadi from the work on Contract 12- OC2404,
"...discharge Mike Ahmadi for. his improper manner and unprofessional conduct."
• Ref. No. 21, Letter from McKenzie to Highland removing Mike Ahmadi from the
work on Contract 07- 4H1104, "Mike Ahmadi became abusive in that he yelled, used.
inappropriate language and displayed anger.,."
• Ref No. 25 Highland to Doug Failing, District 7 Director, "Only a `fool' would resort
to making a judgment/accusation, having heard only one side of the story";
"Calfranr improver mobility across California"
CT HC 00010
Highland Construction, Inc.
March 21, 2005
Page 11
Ref. No 32, Okoye Diary, referring to Mike Ahmadi, "Mike burst into a stream of
cussing prompting me to end the conversation" .
Ref. No. 34, Ghafghazi to Highland, "You called Mr. Okoye an `asshole' and
proceeded with stronger words... You referred to State engineers as 'Jackass
Inspectors', 'Stupid Inspectors', 'F * * *" State Designers, etc..."
The record is replete with examples of this behavior. Department employees are consistently
and repeatedly subjected to harassment, abuse, insults, and intimidation. Highland routinely
threatens to — and does- elevate issues inappropriately, repeatedly and reports Department
employees to their management for alleged incompetence. In other words, Highland
threatens to cause Department employees problems if they do not comply with Highland's
demands. Highland does not hesitate to denigrate and question the integrity of any
Department employee who disagrees with it. For example, by letter dated May 2, 2003 to
Peter Chan, Ms. Kristi Stelle of highland insulted Ben Ghafghazi by stating, "We highly
recommend, for the protection of the public, that Caltrans have him ( Ghafghazi) seek
psychiatric treatment." (Exh. A Ref. No. 35)
The Department finds this behavior proves a lack of trustworthiness essential to good faith
and fair dealing which supports a determination of non- responsibility:
D. Contracting with Highland has resulted in an administrative burden and cost far in
excess of that encountered on projects of similar size, scope, value and complexity.
The record reflects repeated instances where Highland's behavior makes it difficult; if not
impossible, to resolve the issues and problems that inevitably arise on a construction project.
This is true even when Highland has raised a legitimate concern. As already discussed,
Highland routinely refuses to deal with the Resident Engineers and repeatedly elevates the
same issue to all levels of management in an attempt to bully the Department into acceding to
its demands. See Declaration of Peter Chan.
Multiple parties testified that the volume of correspondence generated by Highland which
repeatedly raise the same issues make administration of Highland's contracts more
burdensome, time - consuming and expensive than that normally found on projects of like size
and value. The volume of correspondence was particularly striking given that nearly all these
projects were less than $650,000 and 100 days. Yet Highland often wrote multiple letters on
the same issue in a single day.
The administrative burden imposed by the necessity of addressing the constant demands and
abuse by Highland's representatives results in an administrative expense that is
disproportionate to that encountered on projects of similar complexity and value. Most of
-Caltron.a improves mubWry aero.as California"
CT HC 00011
Highland Construction, Inc.
March 21, 2005
Page 12
the projects awarded to Highland are relatively small, yet multiple meetings, calls and letters
all repeating the saute issues require an undue amount of time and attention.
Evidence of this routine practice can be found in the correspondence and declarations
attached hereto. For instance, see Declarations of Fred Khosrowabadi, paragraphs 8 and 9
discussing the volume of correspondence, that every issue was an argument; time and effort
to address: Declaration of Nahid Baghbanian paragraph 8 noting they met with Ahmadi ten
times and that it is unusual to have multiple meetings on a project of this size; Declaration of
Chris Mockus referring to Highland's "letter writing campaign" and that the time and effort
to deal with Highland far exceeded the normal level; Declaration of Scott McKenzie,
paragraph 5 that during the administration of Highland contracts he spent an unusually large
amount of time responding. to Highland which was unreasonable given the projects and far
exceeded that which was normal: Declaration of Ken Boccicchio in accord.
CONCLUSION
Based on Highland's record, only some of which has been specifically mentioned in this
letter, the Department concludes that Highland is not a responsible bidder because it is
unprofessional, untrustworthy and unfit to perform public works contracts. The record
indicates that the representatives of Highland Construction consistently display considerable
personal animosity toward the Department's employees and repeatedly ascribes dishonorable
motives to those employees. Highland's altitude and behavior have affected its contract
performance. It has demonstrated a clear inability to conduct business in a professional
manner without resorting to insults, personal attacks, threats and intimidation.
Disagreements, disputes about contract requirements and claims are part of any construction
project. A'responsible bidder can be recognized by the manner in which he.responds to such
situations. Here, Highland is unable to competently resolve such issues. Highland invariably
responds by disparaging the Department's employees and generating voluminous
correspondence on the same issue directed to multiple levels of authority within and outside
the Department. Highland also exacerbates the situations by engaging in such offensive
behavior that phone calls and meetings are often terminated due to the inability of Highland
representatives to behave in a civil and professional manner. This makes it difficult, if not
impossible, to resolve disputes.
Highland has repeatedly demonstrated an intentional disregard for contract requirements and
procedures, displayed an intentional failure to comply with contract terms, shown that it lacks
the capacity to complete projects in a competent manner and that is has no ability to
competently resolve disputes. Highland's behavior has exhibited an absence of the
trustworthiness essential to good faith and fair.dealing implied in every contract,
"Colrrmu impranermobihrya r"s California'
CT HC 00012
Highland Construction, Inc.
March 21, 2005
Page 13
The Department concludes Highland is not a responsible bidder. Highland may seek to rebut
this determination in accord with the procedures described at the beginning of this letter.
Otherwise, the determination of non - responsibility will be final:.
Sincerely,
d
JOHN C. MCMIILLAN
Deputy Division Chief
Division of Engineering Services,
Office Engineer
Enclosures
"CaUtwu improves maiway arrow California"
CT HC 00013
EXHIBIT C
AUG -03 -2005 WED 09 :32 AM OAR .,AC FAX NO. 1916c1j6439 P. 03
BEFORE THE
DEPARTMENT OF TRANSPORTATION
STATE OF CALIFORNIA
In the Matter of the Determination of
Non - Responsibility of:
HIGHLAND CONSTRUCTION, INC.
Re: Contract No. 07- 1661A4
OAH No. N2005030840
PROPOSED DECISION
Administrative Law Judge (ALJ) William O. Hoover, State of California, Office of
Administrative Hearings heard this matter on June 6, 2005, in Sacramento, California.
Kathryn T. Papalia, Deputy Attorney, Department of Transportation, represented the
Department of Transportation (Department).
Raisin & Kavcioglu, Attorneys at Law, by Bradley A. Raisin, Attorney at Law,
represented Highland Construction, Inc. Also present were Mike Ahmadi, Owner, and
employees bavid Almmadi and Kristi Stelle.
Documentary and oral testimony was received, however, the matter could not be
concluded in the time allotted. In lieu of further live testimony, the parties agreed that
respondent could submit declarations. The parties likewise agreed to the submission of
written closing argument to be received not later than June 24, 2005. Respondent's
declarations and closing argument were received by the Office of Administrative Hearings
on June 14, 2005, and marked as Respondent's Exhibit J. The declarations were admitted
into evidence, however, the closing argument was not admitted. The Department's written
closing argument with various attachments (A -E) was received at the Office of
Administrative Hearings on June 20, 2005, but not received by the ALJ until June 22, 2005.
It was marked as States Exhibit 5. With the exception of Attachment A, which was admitted
into evidence, none of the remaining documents were admitted. The ALJ took official notice
of the contents of Attachment C. The matter was deemed submitted on June 22, 2005.
AUG -03 -2005 WED 09:32 AN OA[l oAC FAX N0, 1916�cJ6439 P. 04
FACTUAL FINDINGS
1. Highland Construction, Inc. and M. Ahmadi Construction & Engineering
Company (MACE) (respondent) are both owned and operated by Mike Ahmadi. Mr.
Ahmadi frequently acts as the representative at the work site for these two companies as well
as its representative in dispute resolution meetings with the Department. This proposed
decision considered information about both companies and the findings are applicable to
both.
2. Since May 2001, the Department has awarded a total of eleven major contracts
to respondent. Three of the contracts awarded between May 8, 2001 and October 3, 2002,
went to MACE, and the remaining eight contracts awarded between May 4, 2004, and
September 29, 2004, went to Highland. This number does not include contracts under
S 120,000, which are known as "Minor B" contracts and not subject to the State Contract Act.
The estimated time for completion of these major contracts varied from 30 -280 days with
eight estimated at 100 days or less, The value of the contracts varied from $144,480 -
$2,055,139, with nine valued at less than $650,000.
3. In February 2005, the Department solicited bids for proposed Contract No.
07- 1661A4. Respondent submitted the lowest bid, in the amount of $3,432,995. Under the
Public Contract Code, the Department is required to award contracts to the lowest
responsible bidder.
4. On February 11, 2005, the Department notified respondent by letter, of its
concern that respondent was not a responsible bidder in light of incidents relating to Contract
Nos. 07- 4H.1104 (awarded May 13, 2004) and 12- OC2404 (awarded May 14, 2004).
Respondent had been removed from both projects for "disorderly" and "improper" behavior.
The letter Airther noted that respondent failed to designate an authorized representative after
his removal on both projects. Additionally, as to Contract No..12- OC2404, respondent
"failed to prosecute the work," "failed to secure the project as required by the contract" and
"failed to follow dispute resolution procedures established in the contract."
5. Respondent responded by letter dated February 15, 2005. The letter
acknowledged problems with the two contracts and referenced problems with a third as well
(Contract No. 07- 458904). The latter mentioned contract was not addressed in the
Department's letter. Respondent attributed the problems to a variety of sources and generally
denied any wrongdoing.
6. Upon receipt of respondent's letter and additional investigation, this matter
was assigned to John C. McMillan, Deputy Division Chief, Division of Engineering
Services, Office of the Engineer. On behalf of the Department, Mr. McMillan reviewed
voluminous materials relating to respondent's conduct on the above - mentioned contracts,
and other contracts as well. On March 21, 2005, he rendered a written preliminary
determination that focused primarily on the above- mentioned contracts. Mr. McMillan
found that in eight of the eleven contracts respondent "engaged in consistent pattern of
abuse, harassment and intimidation of Department personnel and has refused to follow
AUG -03 -2005 WED 090j AN OAH oHC FAX NO. 19163,j6439 P. 05
contract procedures for prosecuting the work, resolving claims, and following the chain of
command." He concluded that respondent was not a responsible bidder on the contract at
issue.
7. The purpose of the present hearing is to provide respondent an opportunity to
rebut the Department's preliminary determination and to present evidence of his
qualifications.
THE CONTRACTS,
8. Contract No. 07- 458904: awarded to MACE- May 8, 2001 for $500,325, to
replace Portland concrete (70 Work Days (WD)). This project involved the replacement of
highway approach slabs, a routine operation that required removal of old slabs, excavation
and pouring of new slabs. The project did not present any unusual circumstances. The
dispute arose out of respondent's contention that he should receive more money because the
extra depth of the underlying cement treated base removed, required him to pour extra
concrete to a claimed depth of 20 inches. This set of circumstances did not amount to a
different site condition or design error. Respondent was paid for the "aggregate base"
actually poured, at the contract unit price and wanted, but did not receive, an increase in the
unit price based on the increased quantity of "aggregate base" used. The dispute continued
into 2004.
On February 4, 2002, at a meeting held to discuss the above issue, respondent accused
a Department representative (Richard Joludow), who attended soley to explain the
Department's position, of lying and referred to him as a "jackass." Mr. Joludow only
remained at the meeting for 10 minutes due to respondent's behavior, but prepared a letter
addressed to respondent in which he decried respondent's conduct and stated that he "will try
one more time" to explain the Department's reasoning in denying respondent's request to
adjust the contract unit price.
In an Apri l 5, 2004 letter under respondent's letterhead, addressed to Tony Harris,
Chlcf Deputy Director of Transportation and signed by Kristi Steile, office manager,
Department personnel ( "Bob Pieplow and the likes of him ") were accused of criminal
behavior and described generally as ignorant and incompetent.
In his written response, Respondent admits calling Mr. Joludow a "jackass," but
considers itjustified based on the difficulties he experienced with the Department and its
personnel on this project.
9. Contract No. 07- 020474: awarded to MACE on October 3, 2002, for
$2,055;139 to install of soundwall (280 WD). Disputes arose on this project in several areas
the most significant of which involved water that seeped into drilled pile holes after a storm,
and removal of part of a retaining wall. The RE for this project was Ben Ghafghazi, the
Structural Representative was Lawrence Okoye and the Senior Transportation Engineer was
David Njoya. As a result of his behavior respondent was threatened with removal from the
project.
AUG -03 -2005 WED 09:33 All OAH SAC FAX NO. 19160,66439 P, 06
The disputes and interactions between respondent and Department personnel on this
project were numerous and ongoing and resulted in a voluminous paper trail. While
respondent asserted that the problems arose out of design errors, the failure to prepare timely
contract change orders (CCO) and delayed payments; the real problem centered on
respondent's working relationship (or lack thereof) with Okoye. Over an approximately one -
year period, beginning shortly after award of the'contract, respondent regularly engaged in
name- calling, personal insults and other forms of verbal abuse directed at Okoye. The
occasions are too numerous to recite, however, an encounter occurring on or about December
20, 2002, is typical of respondent's overall conduct and attitude towards Okoye. The
following occurred during a phone conversation discussing cost estimates: "Then Mike
[respondent] launched into a stream of expletives and started telling me where I could stick
my estimate. In the interest of civility I ended the conversation."
Per Okoye, at a meeting on October 1.2, 2002, respondent's `curse words at our
higher management was so intense that Ben Ghafghazi threatened to have [respondent]
removed from the project at which [respondent] laughed, saying he could not be removed
from the project because lie is the contractor."
By January 2003 respondent would not speak to Okoye, Okoye noted that respondent
refuses to sign change orders or do any work until a change order is executed, thereby
causingjob delays. Okoye expressed a desire to be replaced in order to "get the job going
again.
In a letter to respondent, dated January 23, 2003, memorializing a requested meeting
with him by respondent on November 22, 2002, Ben Ghafghazi noted that respondent mostly
complained about Okoye, referring to him as an "asshole" and worse. Mr. Ghafghazi then
noted that "[i]n the course of disussion, you lost your temper and began cursing State
employees and how their incompetence is costing you money all the time. You referred to
State engineers as "Jackass Inspectors ", "Stupid Inspectors ", "F * ** State Designers..."
Ghafghazi noted that when lie informed respondent that authority to release certain funds
needed to be authorized by a supervisor, respondent began using the "F * * *" word towards
Ghafghazi, prompting him to end the conversation. The letter advised respondent that his
conduct was unacceptable and that if continued would result in respondent's removal from
the project.
In a reply letter dated November 20, 2003, and addressed to David Njoya, respondent
referred to Njoya's previous letter as "rubbish." The letter goes on to accuse him of
"ourright lying" and states "[i]t appears to me that you have your head up where the sun does
not shine..." Similarly, in an earlier letter to Njoya, dated October 23, 2003, respondent
used the term "utter incompetence," referring to Okoye's skill level.
Respondent's written response to the Department's allegations consisted of a single
paragraph that attributed project difficulties to "design errors and other problems." It makes
no reference to any of the behavior matters described above. At hearing respondent denied
using abusive language towards Njoya, but admitted calling him "incompetent." Respondent
testified that it is "not important calling people names." While his relationship with Okoye
AUG -03 -2005 WED 09:33 AM OAH 10 FAX NO. 19163c ,)6439 P. 07
was the subject of testimony, it related mostly to respondent reference to him as "King
Zulu." While that reference may not have been uttered with any racial overtones, it
demonstrates a lack of sensitivity and good judgment. There was no competent evidence
produced in rebuttal to any of the foregoing as it relates to respondent's conduct.
10. Contract No. 07- 4H1004: awarded May 4, 2004, for $420,250 to repair edge
drain (190 WD). This contract involved the removal and replacement of concrete and the
plans specifically called for existing utility Lines to be protected in place.
After award of the contract, respondent claimed the lines were in his way and that he
would not be responsible for damage to them. He was advised that lie would indeed be
responsible for any damage to the lines, but was advised that he should be able to safely
work around them.
Respondent then asserted that the lines created a "very dangerous working
environment' and wanted them relocated (or removed and reinstalled after removal of the
concrete). This caused the Resident Engineer (RE) to postpone a scheduled pre - construction
meeting to look into respondent's assertions. However, respondent refused to accept the
postponement, claiming it was a delaying tactic, showed up at the meeting location and
insisted it take place.
June 1, 2004 letter to Scott Mckenzie from respondent's office manager Kristi Stelle,
using respondent's letterhead, relating to Mr. Moussa's phone call to reschedule a pre -
construction meeting set for June 2. The rescheduling was opposed by Ms. Stelle, and the
conversation escalated to the point that Mr. Moussa "raised his voice at an intolerable level
and used foul language" at her. Ms. Stelle stated that she told Mr, Moussa that lie was a state
employee and expected to conduct Himself in a professional manner; and that she would not
tolerate that sort of behavior from hum or continue the conversation if he did not act
professionally. She further stated that "[w]e expect to be treated in a professional manner
and with respect during the time we are conducting our business with the [Department]."
Mr. Moussa sent respondent a two letters each dated June 1, 2004. One letter advised
respondent that the Department did not believe a safety issue existed and instructed him to
proceed according to the plans. The second letter was more insistent regarding respondent's
contractual responsibilities and raised the question of whether or not respondent was capable
of performing the contract. Respondent was ordered to cease contract related work
immediately and not mobilize to the job site "until further instructions." The letter advised
that the June 2, 2004 meeting was postponed until the issue was resolved. Although the
letter was identified as a "Termination of Contract," the language in the body of the letter
clearly does not reflect that.
However, respondent interpreted this letter as a termination of the contract (even at
hearing). He maintained that position despite a June 2, 2004 letter from Massod Akbarian,
RE, that specifically addressed the safety issues raised by respondent, informed him that he
could start work and advised him that the pre - construction meeting was scheduled for June 7.
The issue of the postponed and rescheduled pre - construction meeting generated excessive
AUG -03 -2005 WED 09:33 AN OAH ,)AC FAX NO. 19163cs6439 P. 08
and unnecessary letters from respondent, regarding the appropriateness of the cancellation of
the June 2, 2004 meeting, and other matters unrelated to the "safety issue." This, in turn,
triggered Department responses involving numerous personnel at various levels of
supervision. Respondent conditioned his attendance at the June 7 pre - construction meeting
upon the attendance of Scott Mckenzie, Chief, Office of Construction, Field East, to discuss
multiple issues. After being advised by Mr. Mckenzie that the matters respondent wished to
discuss would detract from the purpose of the meeting, respondent declared he would not
attend, stating that he had already attended a pre - construction meeting on June 2.
Respondent's various correspondences to Department personnel were insulting and displayed
a great deal of animus, as the following examples indicate: a letter to Mckenzie- "Your letter
contains nothing but rubbish;" to Mckenzie's supervisor Peter Chan- "[Mckenzie is either
doing this; distorting and ignoring the facts, fabricating lies;, knowingly and deliberately,
which constitutes harassment at the very least which is against the "law."; to Chan regarding
the temporary suspension of work pending a pre - construction meeting- "[e]ven a mentally
retarded person would have a better reasoning and rational than this] What are they
smoking ?"
Respondent's written response to the Depart ment's allegations reiterated his
complaints against the Department on this project, but did not address respondent's conduct.
11. Contract No. 07-4141104: awarded May 13, 2004, for $208,070 to construct a
masonry wall (120 WD). The dispute in this matter centered on work done at the request of
the Construction Engineer Om Garg, upon assurances that CCOs would be issued to pay for
the work. In fact, Garg had been misinformed by staff that sufficient funds were available
for the project without the need to make a formal request for supplemental funds. After
discovery of this 'fact, supplemental funds were requested. This circumstance delayed
payment to respondent.
At one point, a temporary suspension of work was called due to design and funding
issues. This prompted a request from respondent for a meeting to discuss and resolve these
and other issues related to the project. On September 13, 2004, at a Department office,
respondent and David Ahmadi met with Garg and Kelvin Tran, the RE. During the course of
the meeting respondent became increasingly upset and began using "'foul language."
Respondent was abusive and intimidating and Garg recessed the meeting to give respondent
a chance to calm done. As the parties were leaving the room, respondent continued to shout
and yell and approached so closely to Garg that he placed a writing pad in front of his face to
avoid eve contact. He walked to his office and respondent followed, talking loudly. Garg
asked Tran to call the police, but Tran persuaded respondent to leave. Garg noted that while
disagreements between the Department and contractors are sometimes "heated," it is
"unusual for a contractor to be so abusive and intimidating."
On September 20, 2004, a second meeting was held at respondent's request. The
same individuals with the addition of Scott Mckenzie and a Hadi Moradi attended this
meeting. During this meeting, Mckenzie advised respondent that his behavior was
unacceptable and that he would be discharged from the project if it continued. Respondent
AUG-03-2005 WED 09:33 AN OAH oAC FAX NO. 1916ocJ6439 P. 09
`-
became angry during this meeting as well and stated to Tran "If you smile again, I'll kick
your ass out of this office."
On September 30, 2004, Mckenzie notified respondent by letter that he (Mike
Ahmadi) was being discharged form the project. The specific basis for the action was the
conduct described at the September 13, 2004 meeting. Mckenzie indicated his willingness to
discuss with respondent the reasons for the action and any request for reinstatement.
Respondent's written response to the Department's allegations focused on Garg's
erroneous representations about the issuance of CCOs. Respondent admitted that he raised
his voice and shouted, but did not address the specific allegations. At hearing respondent
reiterated that he raised his voice but denied the incident as described by Garg, David
Ahmadi offered no specifies but generally agreed with respondent. Respondent's denials are
not persuasive and fail to rebut the preliminary findings of the Department.
12. Contract No. 12- OC2404: awarded May 14, 2004, for $405,445 to resurface
highway ($40 WD) This project essentially required the removal of existing concrete slabs
and pouring of new ones. Respondent received notice to proceed with the work on June 23,
2004. The project was terminated by the state on September 8, 2004, due to funding, design
and other considerations_ Respondent early on identified several constructability issues,
which needed resolution before the contract could proceed. The time allotted was one such
issue. Respondent offered proposals including using faster setting concrete. This proposal
was investigated, but ultimately rejected as too expensive. Respondent sought payment
related to the accompanying delays, which led to confrontations with Chris Mockus, the area
Office Chief responsible for the project.
On July 28, 2004, respondent called Mockus to discuss the project. In the course of
the phone call respondent resorted to profanity and became verbally abusive towards
Mockus. Other than a June meeting, this was only the second time that Mockus had ever
spoken to respondent on this contract. In a letter dated July 29, 2004, respondent was
advised by the RE (Majid Banihashemi) that respondent's behavior was unprofessional,
unacceptable and would not be tolerated. Respondent was also advised "any future
occurrence... will result in your immediate removal from the contract."
From the date of the July phone conversation respondent continued to verbally attack
Mockus in letters to Department personnel. Among other things, the letters accused Mockus
of "utter incompetence" and of "having his head up where the sun does not shine." Other
Department personnel were similarly accused of "utter incompetence." By letter dated
August 17, 2004, the RE informed respondent that Mike Ahmadi was discharged from the
contract for "his improper marcher and unprofessional conduct." Even after his discharge the
verbal attacks on Mockus continued. Even though the state terminated the contract
respondent still had the responsibility to secure the project. It failed in that responsibility.
Respondent's written response to the Department allegations did not address his
behavior in regard to Mockus, but offered criticisms of him instead. At hearing respondent.
AUG -03 -2005 WED 09:33 AN OAN bHC FAX NO. 1916136439 P. 10
used the opportunity to tall: about the problems with the project, but did not address his
behavior towards Mockus and his discharge from the project.
13. Contract No. 08- 438114: awarded August 31, 2004, for $484,890 to do a
relalignment to create a T intersection (100 WD). The essence to this dispute and allegation
is the fact that respondent chose to dispute the requirement placed on him to prepare and
submit a Storm Water Pollution Protection Plan ( SWPPP), even though it was clearly called
for in the Special Provisions. He kept insisting that the contract only called for a Water
Pollution Control Plan (WPCP). Respondent did comply but grudgingly and the SWPPP
submitted required several amendments and corrections, causing delays in the project startup.
The Senior Construction Engineer (Fred Khosrowabadi) responsible for supervision
of the project noted in his declaration that respondent's failure to comply with the Special
Provisions regarding the submission of the SWPPP extended over several weeks, and that the
project could not begin without an approved SWPPP. Respondent also claimed the SWPPP
was not part of the contract and, therefore, wanted to be paid extra for its preparation.
IN'lnenever any issue arose it "resulted in an argument [with respondent] and required a great
deal of time and effort to address." Respondent refused to sign change orders until he got
everything he demanded. The amount of correspondence generated by respondent was
"upwards of 60 letters, which is way above the normal trend." Further, "[t]he time invested .
in the administration of this contract was also way above the norm as compared to other
projects of similar complexity.
As for respondent's letter of December 14, 2004, asserting that it had `cancelled all
work for the ... project" due to failure by the Department to "resolve `numerous issues'."
Based on the available record respondent did complete the work and performed additional
work besides. This particular finding is not sustained and is considered rebutted.
t4. Contract No. 12- 0140024: awarded September 29, 2004, for $1,529,830 to
resurface existing highway (-30 WD). Total payments under the contract were
approximately $1.8 million. The dispute in this matter was largely over the removal and
replacement of dowels, which respondent asserted were not part of the contract. Respondent
insisted on a CCO before doing what he considered extra work, despite being ordered by the
RE (Kausi Amuthasakaran (Amuth)) in letters dated November 17 and 18, 2004, "to'
immediately replace the dowels in the Concrete Barriers..." The RE, further directed in the
November 18 letter that respondent "complete the work as requested and protest
accordingly." Respondent eventually completed the work, but only after a CCO had been
written. As respondent noted in his written response to the Department's allegations
"Finally, Caltrans wrote the C.C.O. and we performed the work."
Armuth's declaration noted that he spent excessive and unreasonable amounts of time
responding to correspondence and phone calls from respondent, which created an
administrative burden not commensurate with similar projects. He also noted that
respondent is first and only contractor he has worked with that "does not acknowledge the
direction of the resident engineer." Respondent disobeyed a direction from the engineer
creating an unsafe roadway condition that persisted for months due to his refusal to remedy
AUG -03 -2005 WED 09 :34 Ali OAH bAC FAX N0, 19163co6439 P. 11
the situation. Respondent failed to follow protest procedures when he disagreed with the
RE's direction (Standard Specifications 4 -1.03A ) and instead demobilized and left the job
site. Disputed items were elevated to the next level of supervisor without notice.
Respondent's testimony at hearing was that he had to wait for the CCO.and that the
project was ultimately completed satisfactorily. Respondent's and Kristi Stelle's testimony
on this matter were not persuasive and did not rebut the allegation.
15. Respondent's conduct relatumg to two other contracts, was also addressed in
the preliminary determination.
A. Contract No. 12- 040504: In October 1998, during a meeting with
several Department employees (James Roldan, Lee Haber, Ken Bui and Tran Dung) to
discuss CCOs, respondent became angry. According to the declarations of Lee Haber and
others, respondent stated that "he sometimes wished he could take a'machine gun' and shoot
everyone at Caltrans." Haber related that it was his experience that respondent routinely
became angry and yelled at Department employees. Haber noted that even if respondent was
correct, matters could not be discussed in a civil tone and respondent's behavior diverted
attention from the issues.
This finding was not contested.
B. Contract No. 12- 12A695: This was a minor contract awarded in 2001.
According to a declaration from Nahid Baghbanian, the Senior Engineer on the project (who
supervised the RE), respondent was exceedingly difficult to work with. She stated that he
was hostile during meetings and would raise his voice and use profanities. He complained
about Department delays costing him money and, at times, would demand to be paid for
additional work before working on another part of the contract. He wrote letters calling
Department employees "incompetent." She also noted that respondent would call employees
at the field office yelling and screaming at them until they hung up on him.
In the Spring 2002, a few months after project completion, Baghbanian went
to a local restaurant for lunch. Respondent and his brother were there as well. After the
arrival of friends, Baghbanian became aware that respondent was shouting and using
profanity. She and her fhends quickly discerned that respondent's verbal assault was
directed at her and was in Tarsi. She became frightened and she and her friends left the
restaurant.
Respondent's written response to the Department does not address the above
behavior, but at hearing respondent admitted telling Baghbanian; you "think you are tough
shit." This admission tends to corroborate rather than rebut Baghbanian's version of the
incident.
16. Although respondent admitted during hearing that he uses profanity and
insults, lie asserts it is simply a manifestation of the construction business. In respondent's
view, the use of profanity is conmmonplace and includes state employees as well. Loud and
AUG -03 -2005 WED 09:34 AN OAH bA0 FAX NO. 19163cs6439 P. 12
profane arguments are the norm, if he is to be believed. However, even if the use of
profanity and vulgar talk is a hallmark of the trade, respondent's use of it is different. The
difference is in the degree of hostility present, the nature of the language used and the fact
that respondent personalizes it. He is not just profane; he is intimidating and verbally
threatening, especially towards those he considers inferior to himself. In short, he is a bully
who uses his anger to get what he wants. Respondent is unabashedly unapologetic for his
behavior, much of which is recent, and there is little reason to believe he will change his
demeanor in the near future.
17. The state has a zero tolerance policy when it comes to violence in the
workplace. Violence, of course, includes verbal abuse as well as physical assault. While
respondent may not be subject to its terms, his conduct directly affects the states
responsibility to maintain a violence free work environment for its employees. 'Thus, where
respondent's actions create a hostile work environment, the state has the authority and
responsibility to prevent his interaction with its employees.
18. Respondent's general disregard for the rules and protocols governing state
construction contracts is equally significant. As demonstrated by the evidence, respondent
pays lip service to the chain of command when he determines he cannot work with the R8, in
order to "elevate" the matter up the supervisory ladder. He also fails to follow the'process
for resolving claims and disagreements, It is also evident that respondent's conduct creates
unreasonable administrative burdens disproportionate to the complexity of any given project.
19. Respondent offered several character reference letters and evidence that it has
performed in a satisfactory manner on numerous other occasions. Such evidence may be
considered in mitigation, but it does not rebut the rather strong evidence of unacceptable and
improper conduct by respondent and the concomitant preliminary determination of non-
responsibility.
LI✓GAL CONCLUSIONS
1. Public Contract Code section 1103 provides that the Department is required by
law to award public works contracts to the lowest responsible bidder. A responsible bidder is
one who "has demonstrated the attribute of trustworthiness, as well as quality, fitness,
capacity, and experience to satisfactorily perform the public works contract."
In determining what constitutes a responsible bidder, it is clear that the term
encompasses far more than technical skill or proficiency. Trustworthiness, likewise, is a
term with broad implications including the expectation that the contractor will comply with
rules and procedures and will not unnecessarily or unreasonably increase the burden to the
state in performing the contract. Fitness is another term that necessarily involves the obvious
and need for and responsibility to maintain good and effective working relationships with
project personnel.
Ii
AUG -03 -2005 WLD 09:34 AM OAH SAC FAX NO. 19163r36439 P. 13
2 Chapter 5, section 3 -502A, of the "Standard Specifications, applicable to all
contracts states that "The Resident Engineer (Subject to delegation of authority within the
district) is the authorized representative of the chief engineer on the project; therefore,
contacts and correspondence should be between the contractor and the resident engineer."
The section also states that "Good working relationships between the resident
engineer and the contractor do much to encourage an effective, efficient project and can
minimize misunderstandings and disputes."
3. The relevant statutes and regulations are silent as to the standard of review to
be utilized by the Administrative Law Judge (ALJ) when the matter is referred to the Office
of Administrative Bearings for a Proposed Decision. The Administrative .Procedure Act
does not provide the answer. Common sense, however, compels the assumption that the
ALJ's role is akin to a Superior Court judge reviewing the exercise of administrative
discretion by the Department and its staff in rendering a determination of non - responsibility.
It would make no sense to require that the ALJ conduct a de nova hearing, including the
presentation of evidence, or even a quasi -de nova hearing based on the materials previously
reviewed by the Department's designee. First, that decision has been delegated exclusively
to the Department. Second, such delegation necessarily involves the exercise of discretion
and application of policy considerations, purely legislative functions. Thus, while the ALJ is
also a member of the executive branch of government, he or she performs a judicial (or
"quasi-judicial") function when reviewing the Department's Preliminary Determination of
Non - Responsibility.
4. Typically, a Superior Court reviews a governmental entity's award of a public
contract pursuant to Code of Civil Procedure section 1085, the "traditional" writ of
mandamus provision used to review an agency's exercise of discretion. (Ghilotti
Construction Co. v. City of Richmond (1996) 45 Cal.App.4'h 897.) The Ghilotti court stated
on pages 903 and 904:
Our review is limited to an examination of the proceedings to determine
whether the City's actions were arbitrary, capricious, entirely lacking in
evidentiary support, or inconsistent with proper procedure. There is a
presumption that the City's actions were supported by substantial evidence,
and GCC has the burden of proving otherwise. We may not reweigh the
evidence and must view it in the light most favorable to the City's actions,
indulging all reasonable inferences in support of those actions.
5. Respondent argues that the instant proceeding necessitates a full evidentiary
hearing with the right to call, examine and cross - examine witnesses.' In certain
circumstances, court's have required that some form of an evidentiary hearing is required.
Where the solicitation requires that the contract be awarded to the lowest (or highest)
responsible bidder, prior to awarding a public works contract to other than the lowest bidder,
' AS this proceeding was limited to the sole issue of whether respondent was a responsible bidder on this particular
contract, there is no fundamental interest at stake and the argument is withour merit.
AUG -03 -2005 WED 09:34 AM OAH SAC FAX NO. 19163[36439 P. 14
a public body must notify the low bidder of any evidence reflecting upon his responsibility,
afford him an opportunity to rebut such adverse evidence, and permit him to present
evidence that he is qualified to perform the contract. However, due process does not require a
quasi- judicial proceeding prior to rejection of the low monetary bidder as a nonresponsible
bidder (City of Inglewood -L.A. County Civic Center Auth. v. Superior Court (1972) 7 Cal.3d
861, 866 -867 Boydston v. Napa Sanitation Dist. (1990) 222 Cal, App. 3d 1362, 1368-
1369.). The judicial review standard remains the same.
6. It was established by a preponderance of the evidence that respondent is not a
responsible bidder in that:
A. Respondent refuses to acknowledge the authority of the Resident Engineer.
B. Respondent does not comply with established procedures for resolving
claims and disagreements.
C. Respondent and its employees have repeatedly threatened Department
employees.
D. Respondent has demonstrated a lack of trustworthiness essential to the
good faith and fair dealings implied in every contract.
E. Respondent's conduct has resulted in increased administrative burdens in
excess of experiences on similar contracts.
ORDER
I . The Department's Determination that respondent is a non - responsible bidder,
is sustained as to Contract No. 07-166 1A4.
Dated: 2 O
�a� �,O. A
WILL.lAM O. HOOVER
Administrative Law Judge
Office of Administrative Hearings
12
EXHIBIT D
Determination of Bidder's Responsibility and Findings
for Award of Contracts No. 07- 1661A4, 07 -4 ,12704 and 11- 266404
Contract No. 07- 1661A4
The Department of Transportation has now completed its contractor responsibility
assessment following receipt of the Highland Construction, Inc. apparent low bid for
contract 07 -1661 A4. The Department issued a preliminary determination on March 21,
2005 that Highland Construction was not a responsible bidder, as defined by Public
Contract Code section 1103.
Public Contract Code section 1 103 defines a responsible bidder as "a bidder who has
demonstrated the attribute of trustworthiness, as well as quality, fitness, capacity, and
experience to satisfactorily perform the public works contract."
The Department's preliminary determination outlined a broad array of serious issues that
ranged from Highland's failure to follow contract claim procedures to the creation of a
hostile work environment for Department employees.
Commencing June 6, 2005, Highland had an opportunity to hear the Department's
position and rebut any facts in a proceeding conducted before an Administrative Law
Judge. The objective was to allow an independent party to take a fresh look at the facts
and make a recommendation to me as designee of the Chief Engineer.
On July 29, 2005, Administrative Law Judge, William 0. Hoover issued his written
findings. A copy of those findings and conclusions is attached to this Determination.
After careful review of the evidence presented by both parties, I concur with each of the
findings of Administrative Law Judge William 0. Hoover.
Findings
A. 1 concur and adopt the findings that Highland Construction, Inc. has repeatedly
refused to acknowledge the delegated authority of the Resident Engineer.
B. I concur and adopt the findings that Highland Construction, Inc. has repeatedly
failed to comply with or follow established procedures for resolving contract
disputes, as well as personnel conflict and disagreements.
C. I concur and adopt the findings that Highland Construction, Inc. has repeatedly
threatened and verbally abused Department employees and created a hostile
working environment. The hostile work environment fostered by Highland
compromises the Department's ability to retain quality staff and has a negative
effect on the health and productivity of Department employees.
D. I concur and adopt the findings that Highland Construction, Inc. has
demonstrated a lack of trustworthiness essential to the good faith and fair
dealings implied in every contract.
E. I concur and adopt the findings that Highland Construction, Inc. conduct has
resulted in increased administrative burdens in excess of the Department's
experiences on other similar contracts.
Determination - Contract No. 07- 1661A4
Therefore, as defined by Public Contract Code section 1103, the Department of
Transportation concludes that Highland Construction Inc. is not a responsible
bidder, and is ineligible for award of contract No. 07 -1661 A4.
Contracts No. 07- 4J2704 and 11- 266404
Since the time of the preliminary decision, Highland has been the apparent low
bidder on two other proposals, contracts 07- 4J2704 and 1 1- 266404. Highland was
put on notice that the record upon which the Department relied to reach a final
responsibility determination for contract 07 -1661 A4 would also be used to
determine Highland's responsibility on these other contracts.
By agreement, the parties extended the contract award period on these two
projects until resolution of the responsibility hearing. These agreements are the
subject of letters from the Department for each of these contracts. The first
requests, dated June 24, 2005, were to extend the bid award periods until July 31,
2005. Highland approved these requests in letters faxed on June 24, 2005. The
second set of letters, dated July 26, 2005, requested extensions until August 31,
2005. The July requests were approved by Highland in letters faxed to the
Department on July 26, 2005.
The Department's June 6, 2005 Pre - meeting Brief and the Department's opening remarks
before ALJ Hoover put Highland on notice that the final responsibility determination for
contract No. 07-1661 A4 would also be used for these additional contracts.
Findings
Given the fact that Highland had a full opportunity to address each of the identical
responsibility issues the Department would raise as to its responsibility in
contracts 074J2704 and 11- 266404, there is no reason why the presentation of
evidence or any rebuttal could be different in a later proceeding. Therefore, I make
the same findings with respect to Highland's responsibility as the apparent low
bidder for contracts 074J2704 and 11- 266404 based on the record established by
2.
the parties in the responsibility proceeding for contract 07- 1661A4.
Determination - Contracts No. 074J2704 and 11- 266404
Therefore, as defined by Public Contract Code section 1103, the Department of
Transportation concludes that Highland Construction Inc. is not a responsible
bidder, and is ineligible for award of contracts 074J2704 and 11- 266404.
August 19, 2005
MARK LEJA U
California Dept. of Transportation
Chief
Division of Design
3.
EXHIBIT E
ACIHighLand
Construction, Inc.
December 13, 2005
Aaron Harp, City Attorney
City of Newport Beach
3300 Newport Blvd.
Newport Beach, CA 92658 -8915
Re: Preliminary Determination of Non - Responsibility
2005 -06 Balboa Island Bayfront Sidewalk & Drainage Improvements Project
Contract No. 3796
Dear Mr. Harp:
Lic. #743775
The following is in response to your letter dated December 5, 2005, "Preliminary Determination
of Non - Responsibility."
This is to inform you that Highland Construction, Inc. has completed approximately forty
projects with the Department of Transportation (please see attached project list) since 1998.
Within the last year there were four projects that had design errors and contract management
problems that were difficult to resolve at the field level, so it was necessary to elevate certain
issues to persons who had more experience in field construction and construction management.
These same projects are the subjects of Caltrans "witch- hunt" to determinate HighLand
Construction, Inc. as a "non- responsible bidder." The contracts are:
Contract # Contractor Job #
12- OC2404
132
08- 438114
135
12- OH0024
137
07- 41-11104
131
On December 15, 2004 HighLand Construction, Inc. was the lowest bidder on contract #07-
1661A4 for approximately 3.5 million. Subsequently in February 2005 HighLand Construction,
Inc. was low bidder on contracts 07- 4J2704 and 11- 266404. Early in January 2005 Caltrans
contacted HighLand in reference to contract 07 -1661 A4. Caltrans told us that they were seeking
additional funding for contract 07 -1661 A4 as this project was a joint venture between Caltrans
and the MTA. Caltrans asked that we sign a contract extension in order to obtain the required
funds. We agreed to extend the award process at Caltrans' request. On February 15, 2005 we
received a letter from Caltrans alleging that they had some concerns on the above - mentioned
projects and asked HighLand to address these concerns. HighLand responded to the various
concerns and forwarded to Caltrans additional information in order for them to have the correct
facts. Subsequently, on March 21, 2005 Caltrans sent us a letter stating that they found us to be a
"non- responsible bidder" on Contract 07- 1661A4, in which we vehemently deny and are
currently pursuing all legal remedies in order to invalidate all allegations. Subsequently,
Caltrans notified HighLand at an AU hearing for Contact 07 -1661 A4 that this determination
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would also apply to the subsequent projects (Contracts 07- 4J2704 & 11- 266404), without
allowing HighLand to formally rebut the charges. Caltrans based their allegations on distorted
facts on five out of the forty projects that we have completed for them, along with the coerced
hearsay declarations from various Resident Engineers. The following are the facts of these
allegations:
In order to follow the disputed allegations, we will take Caltrans March 21, 2005 letter, along
with its attachment `:A" and address each allegation that is being made (we have attached a copy
for your convenience, CT HC 00001 - 00025, along with HighLand's response with attachments
#1 - 66).
For the record, HighLand Construction, Inc. does not accept the determination of non -
responsibility, denies its allegations and is seeking all legal remedy to reverse the determination.
BASIS FOR DETERMINATION
1. Standard
Although the Standard of the Public Contract Code § 1103 is vague on it face we do not have any
disagreement with its contents.
2. Prior communication regarding HighLand's responsibility
Caltrans alleges that our key representative Mike Ahmadi " ...behaved in a disorderly and
improper manner which recently resulted in his removal on Contract 07- 4H1104 and Contract
12- OC2404. " It further alleges that " ... HighLand did not respond to requests to designate a
superintendent on these projects" and "on Contract 12- OC2404 failed to prosecute the work and
. . . secure the project as required by the contract. " Additionally, Caltrans alleges that
HighLand " ... failed to follow dispute resolution procedures established in the contract. "
In order to give an accurate accounting of the facts, a brief history of the specific issues are
necessary:
Contract 07- 4H1104, our job #131 and Caltrans attachment "A" Ref #: 21, 23, 24, 25, 26
This was a small project to construct a block wall around Caltrans maintenance station in
Bellflower. The allotted time for the contract was sixty working days. However it was our
schedule to perform the work and complete the contract within fifteen working days, not
including plant establishment. Our schedule was approved at the preconstruction meeting. It
was evident at the onset that there were many minor design errors on this project. In order to
keep the progress moving, HighLand performed numerous extra works, per the verbal request of
the Resident Engineer and his Senior Supervisor, this work totaled in the amount of ±
$40,000.00. We performed this work in order to keep the project moving and with the promise
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that Contract Change Orders (CCOs) were forthcoming. As the project neared completion we
had a meeting with various representatives from Caltrans with regards to the still unseen CCOs.
In this particular meeting the Senior Resident Engineer reneged on his promise to pay for the
extra works that had now already been completed. Because of the design errors, the project that
was to be completed in fifteen working days has now gone on for four months and has put
HighLand's other projects behind schedule. Not only did the delay cause other projects to go
behind schedule, but also we had also not even been paid for work that we had already
performed months previously. When Mr. Ahmadi contacted Caltrans' District Field Manger,
Scott McKenzie, he told us to file for arbitration and threatened that "... Caltrans has over 100
attorneys and that a small company like you cannot win against us. . . " Caltrans requested us to
perform extra work without giving us anything in writing and circumvented their own contract
procedures as specified in the Standard Specifications Section 4- 1.03D, which states in part that,
... the contractor shall do the extra work ... upon receipt of an approved CCO or other written
order of the Engineer. We later found out that Caltrans did not even have the money in the
project account to pay for the extra work and therefore did not even have the authority to request
such work to be performed (please see the attached Caltrans internal email from P. Chan [Chief
of Construction] to Scott McKenzie, attachments #67 & 68). During the said meeting it is
alleged that Mike Ahmadi raised his voice and left abruptly in a threatening manner (who
wouldn't after being told that, "there is nothing I can do, I cannot pay you, I cannot make any
promises, I cannot make any decisions, I cannot write a CCO, etc. " this came from the Senior
Supervisor that requested the + $40,000.00 of work to be performed to begin with). Caltrans
later this same day sent a letter that `removed" Mr. Ahmadi from the project. There was not an
inquiry or investigation to determine what the facts were or to hear our side of the story, just a
directive removing him from the project. Caltrans alleges in their March 21, 2005 that we failed
to designate a superintendent on this project. However, the facts are that Mr. Ralph Nevarez was
designated as our field superintendent, at the preconstruction meeting, and was onsite during the
entire construction of this project. We even provided certified payrolls to Caltrans to prove this
point repeatedly, yet they failed to recognize this particular fact. Finally, some three to four
months after completion of the project, Caltrans obtained the funds, wrote the CCOs and paid for
the work that we performed. In addition, Caltrans had to pay the delays they caused to our
operations (please see attachments #26 - 33).
As you will later see, all of the allegations against HighLand Construction, Inc. follow a similar
pattern of problems on the project and Caltrans blames the contractor for pursuing the money
that is owed to him. Caltrans repeatedly brings up the same claim over and over in their
"determination" of "non - responsibility."
Contract 12- OC2404, our job #132 and Caltrans attachment "A" Ref #1, 12, 13, 14, 15, 16,
17,18,19 &20.
This also was a small project where we were to remove various approach/departure slabs on
Route 91/5. The contract time was forty -five working days and it was our schedule to complete
it within three weekend shifts. Again, as evident from the attached correspondences (please see
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attachments 434 — 44) the project had design errors, mainly the specs called out for a six -hour
cure on the concrete and only a seven hour work window to sawcut, remove concrete, steel rebar,
and place concrete, (virtually impossible for any contractor). The engineers were aware at bid
time of the design error and contractors were told to bid the project "as seen." Prior to the
preconstruction meeting, we advised Caltrans of the design concerns and made suggestion as to
the remedy of the issues. During a subsequent meeting with Caltrans, the Structures
Representative, the Resident Engineer, the District's Field Construction Chief, along with
ourselves, all agreed to change the concrete mix design to a rapid set concrete and increase the
work window in order to complete the contract. Chris Mockus (District Construction Chief)
promised that CCOs would be written in five days from the date of this meeting (06- 21 -04,
attachment #39 & CT HC 01061) in order to get the project moving. The Resident Engineer
authorized us to mobilize forces and requested us to perform the installation of the construction
signs and other remedial work while CCOs were being processed (please see Caltrans internal
email by C. Mockus, attachment # CT HC 1241/1242 and attachments #34 - 44). After one week
passed and we could not perform anymore work until CCOs were received, we were kept in
limbo for sometime on the word that, " ... we would be going back to work any day now."
Months had passed and after numerous phone calls and letters, C. Mockus informed Mr. Ahmadi
on the phone that "... he would not be writing the CCOs the conversation was somewhat heated
by both parties and C. Mockus said, "... I will not write the CCOs and I will bankrupt you ... "
The statement was made because HighLand had written a letter to C. Mockus' supervisor and
this infuriated him. Later, in September 2003, Caltrans terminated the contract for its own
convenience. It was our schedule to have this project completed by July 2004. Caltrans alleges
that, "we failed to prosecute work failed to secure the project and failed to follow the established
contract procedures". We removed all construction signs, demobilized and removed all forces
from the jobsite along with removing all equipment from the temporary yard that was set up for
this project. We filed Notice of Potential Claims for all costs including delays and had an
independent CPA audit as required by the Contract (please see attachment #36). Now Caltrans is
denying the payment for the three- months delay that our personnel and equipment were tied up
while waiting for Caltrans to decide on whether or not we are going back to work on this project
(In August 2005 we had to file for arbitration to force payment for the delays). Caltrans wanted
HighLand to perform additional work that was not even in the original contract upon the
termination. When HighLand requested a CCO for the compensation of the "extra work,"
Caltrans refused and now claims that that "we failed to secure the project." The facts are that our
project file is replete with documentation that proves Caltrans allegations is not supported by
even their own evidence submitted to the ALJ.
3. Investigations and Record
Caltrans collected various letters from each project and made them a part of the "record." They
allegedly show some of the "egregious" examples of HighLand's conduct. The March 21, 2005
letter and "the record" make a series of unfounded allegations over and over. It also refers to
attachment, "A" which has taken excerpts of the said letters out of context to try and show that
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HighLand had no basis for writing such letters. In addition, much of the said "record" are
frequently duplicated in order confuse the reader and to add volume to Caltrans "investigation."
We will use Caltrans' own evidence along with our project records to refute all allegations
against HighLand Construction, Inc.
4. Companies owned by Mike Ahmadi
Caltrans states that HighLand Construction, Inc. and M. Ahmadi Construction & Engineering,
Inc. are both owned by Mike Ahmadi (who worked for Caltrans fourteen years prior to the
establishment of his own company and for which Caltrans maintains a personal grudge against).
It is misleading to those not familiar with the company. M. Ahmadi Construction &
Engineering, Inc. was established in 1988, incorporated in 1997 and in 2002 the corporation
underwent a name change to HighLand Construction, Inc. The officers and the employees have
all remained the same, they are not two different corporations they are one.
5. Contracts awarded to companies owned by Mike Ahmadi
As you can see Caltrans' main focus is on Mike Ahmadi and not that of the corporation for
which he is an officer. Caltrans lists what purports to be the projects completed by HighLand,
but the list is not complete. It lists eleven projects out of forty that have been completed by
HighLand for Caltrans. All have been completed satisfactorily, without defects and any
workmanship issues. Not one project has had a lawsuit been brought against it by Caltrans or
others. Three of the forty projects were subject to claims in arbitration brought by HighLand for
nonpayment by Caltrans. One has been settled (Contract 07- 458904) and two (which Caltrans
has based their allegations, Contract 12- OC2404 & 08- 438114) are still waiting to be heard in
arbitration.
FINDINGS
A. HighLand does not prosecute the work in accord with the provisions of the contract and
was untruthful in its letter of February 15, 2005 when it claimed otherwise.
Here Caltrans makes unfounded statements that HighLand does not believe that the Special
Provisions and Standard Specifications are not a part of the contract. Caltrans further alleges that
HighLand advised Caltrans' staff that the Standard Specifications are " ... merely guidelines"
and refers to the Declaration of John Hancock.
Nothing is further from the truth! HighLand has repeatedly acknowledged the Special
Provisions and Standard Specification as part of the contract agreement. Infact the disputes arise
with Caltrans' own personnel have difficulty determining what is a part of the contract and what
is not. Each and every time that HighLand has brought an issue up that we felt is not a part of
the original contract agreement and a CCO would have to be prosecuted, Caltrans' engineers
emphatically deny that the work is extra It would take us months to resolve even the simplest
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issues when it comes to the extra work. However, as the record shows each and every time
HighLand's assessment has been correct and eventually a CCO is written. Getting a CCO
processed is one thing, actually getting paid for the work is altogether a different story. Caltrans'
staffs that are supposedly "in charge" of the project do not have the capacity to interpret the
Contract's Special Provisions nor the Standard Specification. Kristi Stelle in her Declaration
(see attachments #69 - 71) denies that any such statement was made to Mr. Hancock. Caltrans is
guilty of ignoring its own procedures when it comes to extra work, design errors and delays, yet
has the audacity of accusing HighLand of ignoring the contract requirements. A contract is just
that, a written agreement between two parties that specify the exact work to be performed, for the
exact dollar amount and in the exact amount of time to be completed. Any deviation from such
specifics is a departure from the original contract agreement and Change Orders have to be
written. When HighLand brings valid construction issues to the attention of Caltrans, which are
not a part of the original contract agreement, Caltrans routinely ignores and/or denies the issue
exists. If they acknowledge the issue exists then they deny that the work is not extra. If they
happen to acknowledge that the issue exists and that it is extra work, then they drag their feet in
writing a CCO and therefore delays payment to the contractor. HighLand is only accountable for
diligently pursuing the matters. Caltrans does not like this. They would rather the issues go
away rather than to yield to the contractor.
Each and every project that is at issue in Caltrans' "determination" of "non- responsibility"
HighLand had brought the issues up to the attention of the Resident Engineer and when
necessary elevated the issues to someone that has more experience until the matter would be
resolved. In each and every instance HighLand has been proven correct in the assessment of the
contract requirements and eventually the CCO would be processed and HighLand would get paid
what is due. However, Caltrans' routinely stonewalls a contractor in the hopes that they will just
give up and eventually end up out of business as many of our competitors will attest to. We do
not give in and Caltrans does not like it or Mr. Ahmadi. (please see attachments # 5 —7 and 8 —
13) Please note the dates that the original issue is brought up and the time that had elapsed until
the CCO was actually written.
1. Refusing to acknowledge the authority of the Resident Engineer.
Again, Caltrans' makes a half -witted attempt to show that HighLand does not acknowledge the
Resident Engineer and " . . . seeks to discuss issues, problems, and claims with the REs
management without first discussing them with the RE." Caltrans then refers you to the
Declarations of Nahid Baghbanian, Ken Bocchicchio, Scott McKenzie and Kausi Amuth. We'll
examine each one individually to give you a clear picture of Caltrans' distortion of the facts.
N. Baghbanian, para 7 -9.
Ms. Baghbanian stated in her declaration that Mike Ahmadi ignored the Resident Engineer prior
to starting work on the project and he contacted her. What Ms. Baghbanian failed to mention in
her Declaration is that at the time Mr. Ahmadi contacted her, the RE had not yet been assigned to
the project and we had some minor concerns that needed to be addressed prior to construction.
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She also failed to mention that their own office was having some staffing problems and early in
the project HighLand was instructed by the current RE to address all further issues to Ms.
Baghbanian. This part was never brought up because Caltrans wants to give you a false
impression that they did not create any of the problems on the construction project and its all
Mike Ahmadi's fault. Ms. Baghbanian further alleges that Mr. Ahmadi raised his voice and
became insulting at every single meeting they had. Mr. Ahmadi denies this allegation and did so
under oath at the ALJ hearing. Mr. Ahmadi acknowledges writing letters to the chief of
construction, as is our right to do if the issues are not being resolved at the field level. Mr.
Ahmadi also requested meetings with the District to resolve the pending issues at the time. Any
contractor who had been delayed by five months on a contract would do the very same thing.
Caltrans' very own policy tells the contractor to elevate issues to the next level to find resolution.
In the end, the very same issues that we brought up at the very start of the project and were
denied repeatedly by Baghbanian and her staff, it was found that HighLand was accurate in our
assessment and eventually after months of delays Baghbanian had to write the appropriate CCOs
to resolve the matters (please see attachments #5 - 7). It should be noted that Ms. Baghbanian
did not appear at the ALJ hearing in order to clarify any of her statements; therefore HighLand
had no means to cross - examine.
Ken Bocchicchio, para 7.
Mr. Bocchicchio's Declaration is a fine example of Caltrans' manipulating and distorting the
facts. Mr. Bocchicchio was the Acting Construction Chief during the construction of Contract
12- OH0024 and he mentions in his declaration that "his staff' also handled another contract 12-
OC2404, however he was not in that position at the construction of the latter contract. In para 7,
Mr. Bocchicchio states, "... the contractor's staff often contacted me be ore providing the
Resident Engineer or construction engineer the opportunity to address the question or concern
raised " This is an outright lie (please see attachments #53, CT HC 00925 & 00963), these are
addressed to K. Amuth regarding the same issue that was later brought up to K Bocchicchio).
When the Resident Engineer took a $30,000.00 illegal deduction (please see attachment #CT HC
00936) from our monthly payment and would not return it, we called his immediate supervisor
(D. Hartman) first to try and resolve the issue to no avail (see attachment #53A, phone diary
authored by K. Stelle). We then contacted Mr. Bocchicchio (as directed) and he ordered the RE
to release the illegal deduction immediately. In addition, at the completion of the project the RE
was trying to demand us to perform ± $200,000.00 of extra work (not in the contract or the
Special Provisions), we informed Amuth that the work was not included in the contract (see
attachment #53) and we tried to resolve the issues with Amuth to no avail and with his
supervisor, Darrell Hartman to no avail. It was only then that we contacted Mr. Bocchicchio.
Mr. Bocchicchio failed to acknowledge in his declaration that he agreed with HighLand's
assessment and he failed to mention that, "he can't understand why the RE is giving HighLand
such a hard time" and it is obvious that the work could not be performed unless there were
additional design details and specs forwarded to the contractor. Again, he ordered Amuth to
process the CCO for the work that Amuth originally denied was extra and the same work that he
"ordered" HighLand perform. Mr. Bocchicchio also failed to mention that it was, he, himself
who designed the additional work that the RE wanted us to perform and that it took three months
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to get the design to Highland. It took Amuth another month after that to process the CCO
necessary to perform the extra work (please see attachments #CT HC 00908 — 00911 and CT HC
01045, please note the dates). We will get into more detail on this subject when we address
Kausi Amuth's declaration. Mr. Bocchicchio states in para 8 that, "... it is proper for contract
administration issues or disputes to be elevated to my level. . . ", but then he goes on to say that,
elevating issues to the Governor's office is unwarranted. First of all, it is not in his capacity to
decide whether or not it is warranted. We are taxpayers and we have a constitutional right to
address our Governor for any grievances, especially those that are being imposed on us by a
governmental agency funded by taxpayers, such as ourselves. What Caltrans does not want you
to know, is that the fact that we contacted the Governor's office is the real thorn in their side.
The Governor's office took action against Caltrans on our behalf and it has made them very
angry at HighLand and at Mike Ahmadi.
Scott McKenzie, para 7.
Ironically Ken Bocchicchio's declaration, para 7 and Scott McKenzie's declaration, para 7 are
verbatim identical. We imagine that Caltrans was able to entice these individuals into signing
the inaccurate declarations knowing that these individuals would never be brought into the
hearing to clarify their statements under oath. Scott McKenzie's declaration mentions three
contracts. Attached you will find letters that were authored by HighLand to show that each and
every one of them are addressed to the RE "in charge" of the project (please see attachments # 18
- 27). These alone prove that the statements made by Mr. McKenzie are false and were written
by Caltrans' legal department to give a false impression of HighLand Construction, Inc. and to
distort more of the facts concerning the projects.
2. Refusing to comply with contract requirements for resolving claims and disagreements.
This would be in reference to Standard Specification 4 -1.03, "Extra Work ":
Caltrans alleges that HighLand "shows disregard for these requirements. " Caltrans further
allege that HighLand "... regularly demands payment for specific work it considers extra and
threatens to halt work, refuses to perform specific work it considers extra and often insists on
payment for all outstanding claims before it will agree to continue .... " This is another ironic
twist to Caltrans' allegations. HighLand does demand payment for work it considers extra.
Caltrans' own specs require the RE to write a CCO before "any" extra work is performed.
Absent a CCO a contractor is entitled to nothing. As a contractor for the State you must get a
CCO or written agreement that the work will be paid as extra. HighLand has by no means
delayed a project and insisted on payment of outstanding claims before continued performance
on a contract. Our job is to get the contract done and get out in the least amount of time. That is
how a contractor profits on a project from the State. Caltrans also alleges that HighLand ".. .
even demobilized and left a project before acceptance ... " and claimed that this is "...the most
serious offense . ." Caltrans lists several specific projects that, again, we will address
individually:
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Contract 12- OC2404
This is the same project mentioned earlier. It consisted of removing and replacing several
approach slabs on the Route 91/5 freeways. As stated before, there were design errors that were
evident at bid time. Caltrans and HighLand were working on resolutions to the design errors and
were in agreement about the resolutions required to get the project completed. In a meeting C.
Mockus assured HighLand that CCOs were forthcoming and would be processed within five
days from the date of the meeting (please see attachment #CT HC 01061 and CT HC
01241/1242). However, this promise never came through, in the mean time we had our
equipment and personnel tied up on this project. Caltrans insisted each week for months that we
would be going back to work any day. Therefore, we were kept in limbo unable to start work on
other projects or go to work on this project until resolution of the design errors.
During the months of waiting to receive the promised CCOs, HighLand was receiving numerous
of claims from motorists for damages to their vehicles and some even were involved in auto
accidents (please see attachments #72 - 74). Because we are the prime contractor we could be
potentially held liable for these motorists claims that are within the contract's work limits. We
voiced our concern for the safety of the + 300,000 daily commuters traveling this stretch of
highway and encouraged Caltrans to expedite the process of the CCOs. We even took the matter
further up the chain of command because of the safety issues involved. Caltrans misconstrues
this as abusive /slanderous /insulting, etc. We had the preconstruction meeting on June 2, 2004
(please see attachment #34). Caltrans after all of its broken promises and foot - dragging
terminated the contract on September 8, 2004 (please see attachment 944). For three months we
were at a stand still, waiting for Caltrans to make a decision. Highl-and's first concern was for
the safety of the motorists and secondly to keep our projects moving forward. Caltrans does not
consider these things as they keep a contractor in limbo. A contractor cannot survive if he is not
working, period. Did we send letter to headquarters addressing these concerns? Absolutely and
we had every right to do so. Even a big agency like Caltrans has no right to disregard safety and
to keep a contractor at a virtual stand still until it decides what it wants to do. To prevent delays,
Caltrans is required by their own Standard Specifications to either write the appropriate CCOs,
temporary suspend the project or as a last resort terminate the project. All of which, must be
done within a reasonable amount of time. But Caltrans, again, ignored this and they instead they
kept us in limbo and not working for three entire months. Which of course put HighLand's other
three projects behind schedule and could be subjected liquidated damages. Caltrans, after three
months of limbo, terminated the contract for their own convenience. As for not securing the
project, HighLand did exactly what is required to secure the project and exactly what is required
as per the contract's specifications. Caltrans, again, ignoring their own Standard Specifications,
wanted HighLand to perform work that was not included in the contract requirements. Caltrans
is well aware of this fact but fails to mention the actual facts that occurred on this project.
Ironically, HighLand still has not received payment in full on this project that was terminated
over one year ago (please attachments #34 - 44).
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Contract 08- 438114
For this contract Caltrans alleges that a SWPPP was required for this contract and called out for
in the Special Provisions. However, the facts are that there was an error in the contract (as
usual). The designer called out for the water control plan (WPCP) to be installed, which is
indicated on the contract's items sheet (please see attachment #50, Engineer's Estimate Item
List, Item #2). In the Special Provisions it directs the contractor to follow the standards set forth
in the Caltrans BMP Construction Manual. In the manual, the first page of the first paragraph
tells the contractor that if the area to be disturbed is less than one acre the water pollution control
plan shall be WPCP (please attachment #51). This was the issue; it was a minor conflict between
the contract items and the Special Provisions. It is by no means out of the ordinary on any one of
Caltrans' projects. The Caltrans Construction Manual clearly defined which water control plan
shall be required (WPCP). There were no bodies of water, lakes, streams, etc. and the area to be
disturbed was less than one acre. However, the RE insisted on for us to provide a SWPPP even
though it was not required and it was not a part of the contract. None of the elements in the
SWPPP applied so it was difficult to have a satisfactory water pollution control plan using the
SWPPP. Even though it was not required, in order to keep the peace, we complied with he RE's
request to submit the SWPPP (please see additional attachments #45 — 52).
Caltrans in its March 21, 2005 letter wants the reader to believe that this took weeks and there
was an ongoing battle. Again, distortion of the facts, the truth is that the requested SWPPP was
submitted the very same day the RE requested it. Caltrans also alleges that HighLand "cancelled
all work" for the said project. Again, another distortion of facts that even the biased ALJ could
not buy into and he agreed with our assessment. The allegations on this project were rebutted
and unproven by Caltrans.
Contract 12- OH0024
Caltrans states that on this contract HighLand ignored the RE's directions, refused to comply
with the Department's requests to clarify submittals and "even demobilized before contract
acceptance ". Caltrans further alleges that HighLand did not follow the order of the Engineer to
complete the work it felt was extra and file a claim later. Caltrans fails to mention, as stated
previously in the rebuttal of Ken Bocchicchio's declaration, that HighLand could not complete
the ordered work until the design was provided. Kausi Amuth failed to recognize this fact and
insisted that we perform the work. The work involved securing the krail (approximately 1 100 of
them) to the newly paved highway. Caltrans did not provide in the original contract that this
work was to be included, nor did it tell the contractor what type of steel the dowels should be
made of, how long the dowels should be, how thick in diameter they should be, nor whether they
were to be threaded or unthreaded, etc. They did not tell the contractor whether they were to be
driven in or pre- drilled. Infact, this work was so special that it is not even included in Caltrans'
own Standard Plans. Mr. Bocchicchio and the structures team came up with the design and the
specifications for the work. All of the contract work had been completed prior to this issue
arising. Amuth purposed that all of our forces should have stayed on the project for four months
while Caltrans decided what to they wanted us to do (we did that already on Contract 12- OC2404
and still have not been paid for it over one year later). Amuth in every instance that HighLand
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informed him that the work we are doing is extra denied the fact that it was extra. What Caltrans
also fails to mention is that, again, each and every instant we were correct and eventually got
paid for the work that the RE originally denied us payment. Caltrans alleges that one of the
reasons HighLand fails to comply with the contract procedure is by not performing work it
considers extra. Again, Caltrans Standard Specification requires a contractor to get something in
writing before the extra work is performed. Caltrans also wants you to believe that HighLand
routinely ignores the claims procedure. As you can, (please see attachments #53 - 54) and there
corresponding CCOs this simply is not factual. Caltrans also relies on a paragraph in one of
HighLand's letters that is taken out of context, which reads, "Upon our insistence to be paid for
the work performed and/or the appropriate Change Orders be processed before we start work on
additional work that was not part of the original contract, ... " [emphasis added]. Caltrans
would want you to believe that this statement means that, HighLand will not do any work unless
we get paid first; it's absurd and a distortion of the facts. We will break it down for you:
Upon our insistence of being paid for the work being performed:
Meaning that frequently HighLand has performed the original contract item work and Caltrans
routinely does not pay the contractor accordingly. Even though Standard Specification Section
9 -1.06 dictates exactly how a contractor must be paid. Caltrans routinely ignores this
Specification and this point is proven when K. Amuth took the $30,000.00 deduction for work
that had already been completed by HighLand. Only when HighLand elevated the issue to his
supervisor, the RE was directed to release the money immediately.
And/or the appropriate Change Orders be process before we start work on additional work
that was not part of the original contract:
Again, Caltrans would want you to believe that we insist on being paid before the extra work is
completed. However, the truth is that we only request that the appropriate Change Orders be
processed i.e., written or something in writing indicating that we will be paid for the extra work.
Caltrans Standard Specification 4- 1.03D, which state in part, "The contractor shall do the extra
work and furnish labor, ..., upon receipt of an approved contract change order" requires this. It
further reads, "... in the absence of an approved change order or other written order of the
Engineer the contractor shall not be entitled to payment for the extra work. [emphasis added].
Caltrans has determined us as a "non- responsible bidder" not for ignoring contract procedures,
but for bringing the mismanagement of their construction projects to the attention of several key
State representatives and because HighLand has shone a spotlight on the discriminatory
treatment of contractors, such as ourselves.
Caltrans also mentions the declaration of one Peter Chan as additional proof that HighLand
routinely breaches contract procedures. The internal email from Mr. P. Chan to S. McKenzie,
contradicts this statement and proves HighLand's contention that all we want is something in
writing indicating that we will be paid for the extra work that Caltrans routinely directs us to
perform.
133 North Pixley Street o Orange, California 92868 o Phone (714) 538 -5156 - Fax (714) 538 -5157
December 13, 2005
Aaron Harp
Page 12 of 15
B. HighLand and its employees have repeatedly threatened Department employees and
HighLand misrepresented that fact in its letter of February 15, 2005.
Caltrans refers to their internal policy for "workplace violence" and zero tolerance for threats,
violence, harassment, and intimidation. They further define intimidating behaviors to include
shouting, slamming doors and throwing objects. Caltrans then goes on to say that Mike Ahmadi
has been "physically threatening" in several instances. We address each instance separately:
Contract 412 -AO695 (our iob #125) Caltrans References #44, 45, 46 & 47 "A ":
This contract was small and it was our schedule to finish all work in 7 — 8 working days. It had
design errors, the most important one was the rebars that were left out of the contract. This issue
was brought up to the attention of Caltrans from very early on and prior to the preconstruction
meeting (please see attachment 45, please note the date). Caltrans at first denied the fact, them
refused to accept they had to write a C.C.O. It took Caltrans three months to understand the
contract and finally we received the C.C.O. on October 29, 2001 (please see attachment #7).
After receiving the C.C.O. for the rebars, the inspector refused to pay us for the total quantity of
the concrete we had poured. It took another 3— 4 months before Caltrans finally made full
payment for the concrete. We never got paid for the additional costs of delays that Caltrans
caused. Mr. Ahmadi did admit in oral testimony that he made an unpleasant comment to
Baghbanian after she ignored his attempts to say hello to her. However, Ahmadi denies all
allegations that he behaved in a threatening manner.
Contract #07- 4H1104 (our iob #131) Caltrans References #21, 23, 24, 25 & 26 "A ":
This project was to be completed in 15 — working days, not including plant establishment. It was
our schedule to start on June 1, 2004, but due to Caltrans' surveying, who delayed the project at
the onset, we ending up starting on July 12, 2004. During construction the inspectors had asked
us to perform additional works and promised to pay us accordingly for the extra works. After the
contract work was nearly completed, the inspector, in a meeting, reneged on his promises to pay
us and stated, "...I cannot pay you, I cannot write a C.C.O., I cannot make any promises, I
cannot make any decisions, ...." This after he had started the meeting with "Alahakbar" (God is
great in Arabic). Later, Scott McKenzie threatened us with ... Caltrans has over 100
attorneys and that a small company like you cannot win .... " Caltrans has stated that Mike
Ahmadi raised his voice and shouted; however, these allegation have yet to be proven.
Accordingly how would any average person behave if they had to wait months and years before
they got paid for the work they have performed, while being forced into bankruptcy (please see
attachments 426 - 33 and internal email from chief of construction P. Chan attachments #67 &
68). The design errors and extra work caused delays, which caused us to incur additional costs.
Yet, it took Caltrans until July 6, 2005 to fully pay for the work that we completed on this
contract the year previously.
C. HighLand habitually displays a lack of trustworthiness essential to good faith and fair
dealing implied in every contract.
133 North Pixley Street e Orange, California 92868 ^ Phone (714) 538 -5156 • Fax (714) 538 -5157
December 13, 2005
Aaron Harp
Page 13 of 15
Contract 407- 020474 (our mob 4129) Reference 428,29 30, 31, 32,33, 34, 35, 36, 37, 38,
39, 40, 41 & 42 "A"
Again, this project had many design errors and other problems. The inspectors would refuse to
write the appropriate CCOs and delayed the operations by weeks. For example, we encountered
water in the piles (which was not in the contract and required a C.C.O., as is the norm!) The
inspector L. Okoye for the first three weeks insisted that is was part of the contract. We had to
contact his supervisor, Mr. Roy Fisher, who agreed with us and directed Okoye to write the
CCO. We performed the work on December 03, 2002 and submitted the billing on December 9,
2002. However, the inspector did not process the billing for payment until October 29, 2003
(please see attachments 48 — 13, with corresponding CCOs, please note dates). Also, on another
issue, we were to remove part of an existing retaining wall which was shown in the contract plan
to be + 12" wide. It turned out to be + 36" wide. We requested a CCO to be processed for the
additional costs, as is the norm. The inspector, again, refused to accept that he had to write the
appropriate CCO. After 3 — 4 weeks, we contacted Mr. Roy Fisher, who agreed with HighLand
and directed the inspector to write the CCO (please see attachments 914 - 17). Every single issue
that came up (± 15 -20 of them) the inspector would refuse to write the CCO and then after we
contacted his supervisor, he was told to write the CCO and to get "even" he would drag his feet
to delay our payments.
D. Contracting with HighLand has resulting in an administrative burden and cost far
excess of that encountered on projects of similar size, scope, value, and complexity.
HighLand does contend that many of Caltrans' engineers are inexperienced and routinely place a
substantial financial burden on HighLand while administering their contracts. if HighLand did
not elevate the previously described issues, it would have not been paid appropriately and in a
somewhat timely manner, meaning before two to three years are up. Caltrans would also like
you to believe that HighLand bullies Caltrans into complying with our demands as if that were
even possible. We have called Caltrans on every single issue where their engineers believed that
the work they asked us to do was not extra. We called them on it, we were right and Caltrans
does not want to do business with us anymore because of it. The administrative burden is
actually caused by Caltrans' own incompetent personnel who consistently fail to recognize what
is a part of the contract's specifications and what is not. HighLand is required to respond, in
writing, to these denials in order to make a complete record of what has transpired on a project.
HighLand feels that many of the engineers that Caltrans employs are incompetent. Caltrans does
not refute this allegation. It was uncontested by Caltrans.
CONCLUSION
Caltrans does not argue that HighLand Construction, Inc. does not have the capacity to
satisfactory perform the work on a public works contract as specified in the Public Contract
Code Section 1103. Nor does Caltrans dispute that HighLand Construction, Inc. has
demonstrated the quality, fitness and experience to perform the public works contract as
specified in the code. Caltrans' only argument is that because HighLand has diligently pursued
133 North Pixley Street v Orange, California 92868 • Phone (714) 538 -5156 • Fax (714) 538 -5157
December 13, 2005
Aaron Harp
Page 14 of 15
their requests for proper compensation for the extra works that it regularly performs and/or for
the Caltrans related delays, HighLand is deemed by Caltrans as not "trustworthy ". HighLand
can be trusted that it will perform the work required in the public works contract. HighLand can
be trusted to employ experience personnel to perform the work required in the public works
contract. HighLand can be trusted to have over 100 years combined experience in the highways,
bridge and road construction for public works contracts. HighLand is trusted to have the
capacity to perform the work on public works contracts (please see attachments #56 — 66).
The issue is this, HighLand has proven on each and every contract that the initial decisions made
by the various Resident Engineers had been incorrect and because of these erroneous decisions it
had caused HighLand to incur numerous delays, extra works, and additional expenses that
virtually impacted all of the projects that HighLand has. Within the last couple of years
HighLand has brought these particular mismanagements up to the attention of the Governor and
to the attention of several State's Representatives. This has incensed Caltrans and now Caltrans
( "with their 100s of attorneys ") are retaliating against HighLand Construction, Inc. and
maliciously trying to force HighLand out of business.
HighLand Construction, Inc. denies all of the allegations made by Caltrans and is in the process
of bringing a legal suit against Caltrans for its decision of "non- responsibility." In addition, we
are not only in the process to invalidate the determination of "non - responsibility" we are also
disputing the procedures that was afforded to HighLand to make this determination.
For additional reference please see the following:
• Closing Brief Submitted to ALJ (separate cover)
• Filed Writ of Mandate (separate cover)
• Letters of Reference by Various Subcontractors & Suppliers (attachments 975 — 82).
HighLand will make available, at your request, the entire project file for each contract that is at
issue. The information was submitted to the ALJ, who did not consider it in his opinion. Due to
the substantial volume, we choose to make it available to you should you need additional
information. The evidence in the project files will substantiate all facts that support HighLand's
position.
We ask that you award the contract to HighLand Construction, Inc. who is the lowest responsible
bidder and has demonstrated, as per Public Contract Code Section 1103, the trustworthiness, as
well as quality, fitness, capacity and experience to satisfactorily perform the public works
contract.
If you have any questions, please do not hesitate to contact us.
133 North PLrley Street v Orange, California 92868 + Phone (714) 538 -5156 ^ Fax (714) 538 -5157
December 13, 2005
Aaron Harp
Page 15 of 15
Sincerely,
Kristi Stelle
Office Manager
KS:
c: Brad Raisin, Attorney
Paul Mahoney, Attorney
Attachments
VIA DHL OVERNIGHT
133 North Pixley Street • Orange, California 92868 a Phone (714) 538 -5156 • Fax (714) 538 -5157
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HighLand
Construction, Inc.
January 17, 2006
'06 Atil2G 't9:16
City of Newport Beach
3300 Newport Blvd.
Newport Beach, CA 92658 -8915
"RECElUfD AFTER AGENDA
PRATED."
Lic. #743775
Re: 2005 -06 Balboa Island Bayfront Repairs Award of Contract No. 3796
Dear Council Members:
Reference is made to Aaron Harp's letter dated January 17, 2005, received by our office via fax
on this same date, which recommends rejection of HighLand Construction, Inc.'s bid for the
above- mentioned contract.
Before the Council adopts a resolution, we would appreciate the opportunity to be heard on this
matter. According to Mr. Harp, the City of Newport Beach has agreed with a determination of
"non- responsibility" that was made against our company by Caltrans in late 2005. The
determination, by Caltrans, is biased, discriminatory and very much illegal, all of which is still
being litigated. In the meantime, HighLand Construction, Inc. has the right to perform the work
for which it is qualified and for which we have submitted an eligible bid.
By rejecting HighLand Construction, Inc.'s bid based solely on the discriminatory
recommendation of Caltrans, your City may only perpetuate the adverse treatment that we are
receiving by those individuals within Caltrans who have been incensed by our persistence in
being paid what is due to us and by exercising our right to contact our State's government
representatives for grievances.
We are sure that officials, such as yourselves, of a public agency that will deal with this specific
issue, instead of following the footsteps of a few reckless people, who have been proven to be
erroneous decision makers, would certainly apply the principle code of moral values and
integrity necessary for making a management decision like this on behalf of the residents of
Newport Beach.
We urge you to award the above - mentioned project to HighLand Construction, Inc. which is the
lowest responsible bidder.
We appreciate your help in this matter.
Sincerely,
Kristi Stelle
Office Manager
VIA FAX & USPS
133 North Pixley Street • Orange, California 92868 • Phone (714) 538 -5156 • Fax (714) 538 -5157