ALBUQUERQUE, N.M. — Two out-of-state construction companies will pay a total of $150,000 to settle allegations of unlicensed contracting on the Union Pacific railroad hub project in southern New Mexico.
The violations could have resulted in fines ranging in the millions of dollars under state law that calls for a penalty of 10 percent of the value of the contract – which was in excess of $178 million.
The state Construction Industries Commission on Wednesday agreed to accept the settlement that resulted from a closed-door mediation earlier this month involving four commissioners and representatives of the companies.
Commission chair Randy Baker said after the meeting that the $150,000 was more of an “administrative assessment than a penalty.”
He added that the amount to be paid by Sundt Construction, based in Tempe, Ariz., and Ames Construction, of Burnside, Minn., was “fair and equitable.”
Randy Nye, general counsel for Sundt in Arizona said, “We’re gratified to have it behind us.”
He said there was no deliberate intent to avoid obtaining the proper licenses in New Mexico.
The companies previously denied any wrongdoing.
The case, which was prosecuted by the state Attorney General’s Office representing the commission, focused on pre-construction bidding and contracting that occurred in 2011 and early 2012 on the $400 million project.
The two companies, and a joint venture they formed to act as general contractor on the project, were accused of various licensing violations that focused chiefly on the failure to obtain the proper New Mexico construction license before bidding on the project.
Emails obtained by the Journal show the investigation was spurred in April 2012 by a complaint to the governor’s office and the state Regulation and Licensing superintendent from Albuquerque businessman Kevin Yearout of Yearout Mechanical.
Yearout’s firm lost out on a contract for mechanical work on the rail hub to a subsidiary of Sundt, which Yearout contended hadn’t obtained the proper mechanical license.
“I have total confidence in the commissioners who sat in on the mediation,” said Yearout, who himself is a commissioner but recused himself from voting on the matter Wednesday. He said he was “comfortable” with the amount the two companies will pay.
During the investigation in April and May of 2012, Gov. Susana Martinez and her senior staff were briefed weekly about its progress, records show.
Lawyers for the companies asked for a meeting with the governor with an “unrestrained agenda.” It’s unclear whether that happened, but a May 10, 2012, email shows that Jessica Hernandez, general counsel to the governor, planned to have a “call with Ames/Sundt’s attorneys” later that day.
A Martinez spokesman on Wednesday didn’t immediately respond to questions about the governor’s office involvement.
State documents show Union Pacific offered its cooperation and hoped to avoid a rebid “or other action” so the project could “move forward, ” according to a letter Clifford K. Atkinson, lawyer for the company, wrote to Sundt and Ames’ lawyers in April 2012 letter.
The letter said Union Pacific hoped to “expedite construction” and complete the project economically.
The joint venture of the two companies broke up, and Sundt became the general contractor. Ames Construction also worked on the project.
Nye said on Wednesday the investigation and prosecution by the AG’s office didn’t hold up the project. The rail hub in Santa Teresa, N.M., which opened in April, a year ahead of schedule.