Challenge of pipeline pact fails

Bill Gang

Monday, Dec. 7, 1998 | 11:12 a.m.

A legal challenge to a $100 million contract to build a second pipeline to carry water from Lake Mead to thirsty Southern Nevadans has been denied.

District Judge Mark Gibbons ruled Friday that the Southern Nevada Water Authority and a state hearing officer did not act arbitrarily or abuse their discretion when they approved the contract awarded to Lake Mead Constructors -- a joint venture between Gilbert Western Corp. and Kiewit Western Company.

Sletten Construction argued that Lake Mead Constructors was improperly given a 5 percent local business preference allowed under Nevada law to encourage the awarding of public works contracts to Nevada firms.

Sletten's attorney, Steve Parsons, contended the company was formed to circumvent the law, and as a result, should be declared ineligible to win any state contracts.

The partners in Lake Mead Constructors are both Delaware companies.

Parsons maintained that had the water authority not given the preferential treatment, Sletten would have been the low bidder on the project.

Their winning bid for the project was $109 million while Sletten's was $113 million.

State Hearing Officer Brian Nix, the court ruled, had considered the legality of the joint venture and decided it was formed to comply with Nevada law, not circumvent it.

The joint venture was formed in 1992 and the pipeline contract wasn't put out for bid until 1995, although that was the year the company changed its name to Lake Mead Constructors.

The company's attorney, George Ovilvie III said the intent was never to violate the law but to bring Lake Mead Constructors into strict compliance with the statutes.

However, he sympathized with Sletten's burden in the case, that he sees as a result of narrow language in the law.

He said that if a company was formed improperly and did win a state contract, it would be a difficult thing to overturn under the current law.

That law, Ogilvie noted, states that contracts can be set aside only if a company is formed for no other purpose than to circumvent the law, while it would be a simple matter for a company to articulate other reasons for forming.

"It would take a smoking gun -- a Bill Gates e-mail" to win, he said.

With Gibbons' ruling, the pipeline project is expected to get back on schedule.