Asbestos 101

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

Wayne Blackwell, Inc. was awarded $630,319 worth of work. After having begun the projects, the company received less than $21,000 in change orders, an increase of three percent over its original bids.

DPC General Contractors won nearly two million dollars' worth of work and received only $12,000 through change orders, an increase of six-tenths of one percent over its original bids.

MCO Environmental, during the same period, successfully bid on contracts worth more than five million dollars. But change orders ended up adding another $512,000 to the final price tag. That represents an increase of ten percent over the company's original bids.

The survey also showed that while MCO garnered 66 percent of the airport's asbestos-removal business by undercutting competitors' prices, it took home 94 percent of the money paid by the aviation department as a result of change orders.

MCO's competitors express concern with those figures. Asbestos work at the airport has become extremely competitive; it's not unusual for a mere two- or three-percent difference in bids to separate winners from losers. If one firm consistently bids low in anticipation of making more money through subsequent change orders, then that firm would have an unfair advantage. Says DPC General Contractors founder Buddy Klein: "Then the process is no longer competitive, and that's our concern." It is also one of the reasons DPC is moving away from taxpayer-funded contracts. "The style to do government work is you've got to bid it very cheap to get it, then you've got to work your change orders. And I don't mean necessarily illegally, but you work your change orders," Klein says. "You just don't let [the government agency] get by with anything. You've got to hammer them with change orders to make up for that little [profit] margin. And that's not our style. We prefer to give somebody a price and then go in and get the job done without any change orders."

New Times spent a month examining some of the projects for which MCO has already received more than $500,000 in change orders. In addition, the newspaper undertook an analysis of the company's pending demands for another $13 million. Nearly 2000 pages of documents were scrutinized, and more than two dozen people were interviewed, including former MCO employees. Some of those people harbor no antipathy toward Julio and Cruz Otazo or MCO, but others admit to animosity. Most did not want their names used in this article for fear of possible repercussions, though some say they would be willing to cooperate with investigators should the need arise.

Requests to interview Julio and Cruz Otazo were denied by the couple's Miami attorney, who said he did not believe it was in his clients' "best interest" to speak to the press. The attorney, David Swimmer, instead asked that New Times submit written questions. Six pages of detailed questions were presented on March 4, and several days later the attorney responded in writing: The Otazos would not cooperate or answer any questions. "Quite frankly," Swimmer wrote, "when we first spoke, I had hoped that you were seeking the truth and that your story would not be slanted or biased. I no longer hold that hope."

One of the most recent projects for which MCO received additional money was also supposed to be among the company's most modest. Yet it ended up being one of its most profitable.

In 1992 the airport's Burger King outlet, located in Concourse E, needed work done to its ceiling. The state and federal regulations regarding asbestos are simple: If asbestos-laden material is discovered in an area about to undergo renovation or demolition, a licensed asbestos abatement firm must be summoned before construction work begins. In the case of Burger King, the amount of asbestos fireproofing material to be removed was small A about 216 square feet.

On August 7, 1992, bids for the project were opened. Wayne Blackwell, Inc. bid $52,000, DPC General Contractors bid $37,000, and MCO Environmental won the project for $28,360.

MCO began work on October 31 and finished in three days A a good bid for a legitimate project that was efficiently accomplished. Several months later, however, Burger King's renovation plans changed slightly, and a small amount of additional asbestos would have to be removed. The aviation department had two choices: It could either ask for new bids from the three contractors or it could consider the new work an extension of the original contract and issue a change order (also known as a "project order modification"), thereby allowing MCO to finish quickly. It opted for the latter. Airport officials contacted the firm, explained that there was some additional asbestos (approximately half as much as in the original project), and asked MCO to submit a cost estimate. MCO was happy to oblige.

In a letter dated March 29, 1993, Julio Otazo provided his assessment of cost and time requirements. "We will need three to four mobilizations and work Friday afternoon to Monday morning on each mobilization to complete the new job," Otazo wrote. The cost for the twelve-day project, Otazo added, would be $71,400.

Airport officials were taken aback by the price and asked Otazo to itemize his estimate. "You see, first we gave them a price without knowing that they wanted a breakdown," explains Tom Sellers, a former project manager with MCO who helped prepare the Burger King estimate. "And then they said, 'Geez, this is outrageous. Show us what this $71,000 entails.' So we sat down and came up with $71,000 in charges."

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