Asbestos 101

In which the professor and his wife share the secrets of low bids, high profits, and your money

Once hailed as the "magic mineral," asbestos was widely used in the United States throughout much of the Twentieth Century. It was placed in ceiling tiles because of its superior acoustical qualities; it was sprayed onto beams and girders to provide greater strength and support; and it was piled into tiny gaps behind walls as a fire-proofing agent. But by the late Seventies its use was banned, after tests showed it caused lung cancer and other diseases.

What had once been a thriving industry was replaced by another: asbestos removal. Today it continues to prosper. According to figures recently cited in the Asbestos and Lead Abatement Report, the industry's newsletter, asbestos-removal companies across the United States are expected to do more than $20 billion in business during the next two decades.

In Dade County, one firm stands uniquely poised to capitalize on this burgeoning market: MCO Environmental, Inc. Owned and operated by Cruz and Julio Otazo, MCO has been engaged in asbestos removal in South Florida only since 1988. But the Otazos have been aggressive in pursuing new business, and their company has grown rapidly.

In addition, "Cuqui" Otazo, as she is widely known, has in recent years become one of Dade County's most visible and politically well-connected Hispanic businesswomen. She was the first woman elected to the board of directors of the Hispanic American Builders Association; she served on the board of directors of We Will Rebuild; and she was a founding member of the Coalition of Hispanic-American Women. Last year, when the newly expanded county commission was elected, she contributed to the campaigns of several commission hopefuls. Since then she has emerged as a key player in the efforts of minority- and female-owned Dade companies to guarantee themselves a greater share of county business.

While Cruz Otazo A a former day-care operator with a master's degree in Spanish language and literature A is listed as the president and owner of MCO Environmental, it is her husband, Julio, who provides the actual expertise in asbestos removal. A tenured professor in the construction management department at Florida International University, he has been teaching full-time at the school for twenty years. During that time, he has also owned several construction-related companies of his own, but perhaps none as potentially lucrative as MCO.

After just five years in the asbestos business, MCO counts among its major clients the Dade County Public Schools, the City of Miami, and the Dade County Aviation Department. The company's work for the aviation department, in particular at Miami International Airport, has brought it both a substantial amount of money and an increasing amount of attention.

In 1992 MCO won bids for a series of asbestos-removal projects involving hangars formerly occupied by Eastern Airlines. The combined value of the bids MCO won amounted to slightly less than two million dollars. But now, more than a year after completion of its work, the firm is demanding that the county aviation department pay it an additional $13 million above its original bids. MCO claims the additional payments are justified because of delays and other difficulties it encountered. Julio and Cruz Otazo have submitted nearly a thousand pages in supporting documents, hired an attorney to press for a speedy resolution, and have threatened legal action against a competitor who has raised questions about their claims.

The county bureaucrat charged with responding to the Otazos' demands is Narinder Jolly, acting assistant director for facilities at the aviation department. Jolly appears eager to reach some sort of negotiated settlement with the Otazos, even though he admits he has not carefully examined the voluminous material they have delivered. But in forming his judgments about the amount of taxpayer money to which the Otazos might be entitled, Jolly explains that he will rely on a report being prepared by one of the aviation department's consultants, as well as the advice of the county attorney. A decision likely will be made within the next couple of months and ultimately it will have to be approved by the county commission.

Based on its past practices, the aviation department's analysis of MCO's multimillion-dollar payment demand will not necessarily include line-by-line scrutiny of the claims. Nor will it automatically involve a review of the the company's history of business at Miami International Airport. But a detailed analysis, while time-consuming, would disclose numerous discrepancies and highly questionable assertions. A review of MCO's business history would also show that, far more frequently than do other asbestos contractors operating at the airport, it demands additional money after completing its work.

The Dade County Aviation Department currently restricts to three the number of companies allowed to bid on asbestos-removal contracts. Those companies are MCO Environmental, DPC General Contractors, and Wayne Blackwell, Inc. When any of them wins a contract, they are expected to complete their work in exchange for the amount of money they bid. Occasionally, though, unanticipated delays or additional work can complicate this straightforward proposition. In those cases, the contractor submits what is commonly referred to as a "change order," which describes the nature of the problems and the added costs resulting from them.

Such change orders were the subject of a recent aviation department survey, and the results were revealing. Of 42 asbestos-removal projects competitively bid between 1990 and January 31, 1994, the survey showed:

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