Agua SUD terminates contractor for sewer project

After months of disputes, the Agua Special Utility District on Wednesday terminated OG Construction, one of its contractors for the Palmview sewer project, in a move that could lead to litigation.

Agua SUD issued a statement Wednesday afternoon stating that OG Construction’s “unwillingness to honor its obligations to the District and the citizens of Palmview” caused their section of the sewer project to come to a standstill.

“OG Construction has failed to perform its work per contract. OG Construction is months behind schedule and its work contains uncorrected deficiencies,” Agua SUD stated. “Despite ample notice and months of time to address its default, and after every opportunity has been provided by the District to OG Construction to prevent termination, the District has been left with no choice other than to terminate the contract with OG Construction.”

However, Edinburg-based OG Construction alleged the decision by Agua was a tactic used to avoid paying the company.

“Our Office is both shocked and disappointed in the Agua SUD Board’s decision today, which can only be explained as personal vendetta against O.G. Construction,” stated a response issued through the Law Office of Jonathan Lee Almanza, a firm representing the company. “The Project is over 99% complete, and instead of working amicably with O.G. Construction to see that the little left of project is completed, the Board chose this time to terminate to avoid ever paying O.G. Construction for its services.”

The relationship between Agua SUD and OG Construction was turbulent from the very beginning as the Agua board of directors begrudgingly hired the company in May 2017 after their first choice was rejected by the Texas Water Development Board.

However, tensions between the two entities only escalated in recent months.

On Sept. 6, Agua SUD issued OG Construction a “notice to cure,” which notifies contractors of deficiencies that must be “cured” lest they be terminated after a video inspection of parts of OG’s work in August allegedly revealed damaged and defective work.

By mid-September, though, the parties appeared to have reached an understanding.

In a letter dated Sept. 16, OG made note of an agreement on payment and stated it would work with Agua SUD’s engineer — S&B Infrastructure — on repairs to existing deficiencies.

Agua SUD then wrote on Sept. 17 that its board had agreed to hold off on terminating the company for the time being.

In early October, the utility district reaffirmed in a news release it had not terminated OG Construction but “may exercise all contractual and legal rights it possess(es) to ensure the Palmview Sewer Project is completed as designed.”

Around the same time, OG issued their own statement claiming the company had worked without pay for months without a clear explanation but said they were committed to completing the project.

But according to Agua SUD, OG refused to comply with the terms of their contract to complete its work according to the plans and the schedule.

“The video inspection covered approximately 10% of the ‘completed’ work and revealed failures along the installed sanitary sewer line, including obstacles in pipes, deposits of extraneous materials in the pipe, lining failures at pipe joints, broken pipes, pipe sags, misaligned grades and service connection blockages, among other defects,” the utility district alleged in their statement Wednesday.

“District officials were alarmed to discover these deficiencies. If not discovered by the camera inspection of pipes buried deep underground, the District would have remained unaware of the failures and inherited a faulty system from the onset,” they further stated. “While completing the work on this long-delayed project remains a high priority, the District refuses to accept substandard work for the sake of completion.”

But those allegations are “simply untrue,” according to OG’s response Thursday.

“Confirmed deficiencies were remedied and, until today, O.G. was promised a sealed engineering report to confirm other deficiencies before mobilizing (to) correct them,” they stated. “The report never came, because the engineer for Agua SUD refused to adopt Agua SUD’s alleged deficiencies with its professional seal.”

OG reiterated the lack of pay in Thursday’s news release, stating that they were owed over $1 million for services rendered since July 15.

“O.G., per its contract, had the right to terminate and abandon the job months ago, the moment payments had become due for over 60 days,” their statement read. “Instead, it self-funded and took out loans to make sure the project was complete, that roads were paved and that its reputation stayed intact.”

“O.G. encourages the community to make an effort to understand the full details of this project before concluding that any one party is responsible,” the company stated. “O.G. Construction will be vindicated in a court of law, should that become necessary, and will show that the project was delayed through no fault of the Contractor.”

“That said,” they added, “O.G. sincerely hopes that litigation is not necessary to move forward in negotiating an expeditious resolution of this project for the community of Palmview.”

Agua SUD, for its part, stated they were committed to remedying the situation as expeditiously as possible to ensure the completion of the project.

“Upon termination of the contractor, the District will find alternative means to remedy the situation as efficiently and expeditiously as possible, with the support of the funding agency, state officials, and the City of Palmview,” the utility district stated. “District officials ensure Agua SUD customers and the community-at-large that they will remain transparent and keep the community abreast of all updates during this process.”