County offers cash to attract bidders

State auditors believe Spokane County may have made an illegal promise to the losing bidder of a proposed sewage treatment plant.

In 2006, the county agreed to pay up to $200,000 to companies that bid on but lose a county contract for building and operating the plant, which would serve Spokane Valley and surrounding areas.

The money was intended to increase competition for the contract by persuading more companies to submit bids for what is expected to be one of the costliest public works projects in Spokane County history.

County officials say the concept is common for expensive projects that require intensely detailed proposals because there’s a strong public interest in gathering multiple bids.

But after hearing about Spokane County’s plans to offer the payment, the state auditor’s office e-mailed county officials to warn them against the idea.

“Our assistant attorney general does not believe that they have the authority to do this,” Mindy Chambers, a spokeswoman for the state auditor’s office, said this week. “Essentially, they can’t give away public money if they’re not getting something in return.”

When the honorarium was crafted in 2006, county officials argued that they would get something in return because a losing firm that accepted an honorarium would have to let its ideas be used by the winning company.

“I want the ability to do that without the threat of a litigation that would tie us up for months or longer,” county Commissioner Todd Mielke said in 2006.

Even with the cash inducement, just two proposals were submitted to the county. Next week, county commissioners are scheduled to consider awarding a multimillion-dollar contract to Colorado-based CH2M Hill. If that happens, the expected losing bidder, France-based Veolia, will get an honorarium payment.

“To me, it made philosophical sense,” said Commissioner Mark Richard. “If you don’t provide the honorarium, you may lose bidders who might not have otherwise bid.”

Officials from the two companies said it’s hard to say they’d have bid had the payment not been offered.

“It’s certainly influenced our decision to invest in the project,” said Sean Haghighi, vice president of business development for Veolia Water North America.

The firms point to other governments that also have allowed losing bidders to walk away with a consolation prize.

“Particularly in projects of this magnitude, I’d say it’s more common than not,” said Joe Glicker, a CH2M Hill vice president based in Portland.

The city of Tacoma paid $100,000 to two companies that lost a recent contract to expand the city’s sewage plant, said Craig Francis, assistant division manager of Tacoma’s science and engineering division.

Glicker and Haghighi estimated that each of their companies spent between $1 million and $2 million creating concepts for the county.

Rachael Paschal Osborn, director of the Center for Environmental Law and Policy, questions the need for an honorarium, especially considering the international scope of the companies that bid on the project.

“It is kind of an insult to the taxpayer,” Osborn said. “Do we have that much money to throw it around like that?”

Although the state has questioned the county’s offer, Chambers said the auditor’s office has no authority to penalize the county except by pointing out the problem in a state audit.

“All we can do is tell them we don’t think you have the authority to do this,” Chambers said. “You can’t audit something before it happens.”

Osborn, meanwhile, also has questioned the ties between the companies and county leaders.

Before being elected to the Spokane County Commission, Mielke did lobbying work for US Filter, which has since been purchased by Veolia. The county’s utility director, Bruce Rawls, is a former employee of CH2M Hill. And both CH2M Hill and Veolia have made campaign contributions to commissioners.

Haghighi donated $1,000 to Mielke’s 2004 campaign. Veolia donated $500 to the campaign of former Commissioner Phil Harris in 2006. CH2M Hill donated to Mielke’s and Richard’s campaigns in 2004 and 2008 and Harris’ in 2006. Roger Flint, who leads CH2M Hill’s Spokane office and is the city of Spokane’s former public works director, gave $100 to Mielke’s campaign this year.

Both companies said they backed candidates for office who held similar views and weren’t trying to influence them. They noted that other groups with interests in the plant, including from the environmental community, have contributed to commissioner candidates. Osborn, of the Center for Environmental Law and Policy, contributed $500 to Mielke’s opponent this year.

Glicker said CH2M Hill has business and community interests as a company with large Spokane operations.

“The issue of cleaning up the Spokane River is important to CH2M Hill,” Glicker said.

Mielke pointed to the selection process and noted that the final recommendation was made by a committee of wastewater experts. Richard and Mielke said contributions don’t influence their votes.

“Two hundred and fifty dollars is not going to sway my opinion,” Richard said.