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Land acquisition delays have paralyzed high-speed rail contractor, lawsuit alleges

Land acquisition delays have paralyzed high-speed rail contractor, lawsuit alleges
The 3,700-foot Cedar Viaduct will carry high-speed trains over California 99, North Avenue, Cedar Avenue and Golden State Boulevard in Fresno. (www.hsr.ca.gov)

The California bullet train project is supposed to be an economic engine for small business in the Central Valley, but one woman-owned construction firm is alleging in a suit that the project has paralyzed her company.

Virginia Villa made it a goal to win a small contract for high-speed rail construction for her firm, West Pacific Electric Co. in Lemoore. Villa spent about a year going to the rail authority's outreach meetings, which it held to help meet a goal of issuing 30% of its work to small businesses.

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In October 2016, Villa won a $685,000 subcontract from the Spanish construction giant Dragados USA to move telecommunications cables in five locations along the rail route. She purchased new equipment, hired more workers and put up more than $1 million in performance and bid bonds under the subcontract — limiting the firm's ability to bid on other projects.

Villa's suit, filed this week in Sacramento County Superior Court, alleges that Dragados issued the subcontract knowing that it did not have access to land at two of the work locations. After completing three of the locations, Villa's company had to suspend its work. It asked Dragados to release it from the contract and return its bond.

Dragados has refused, said Lisa Nicolls, the Sacramento attorney representing Villa. Without a return of the bond, Villa had limited capacity to bid on other contracts, she said.

"Virginia would have never taken the risk and the bonding companies would never have agreed to issue the bonds if they knew Dragados did not have access to the land," Nicolls said. "Not being able to use that bonding capacity has had a devastating effect."

Dragados officials did not immediately return calls seeking comment. A spokeswoman for the state rail authority said it can't intercede in the dispute, but is attempting to bring the parties to the negotiating table.

Nicolls said that the demand for qualified small disadvantaged contractors is so strong that West Pacific could easily have obtained other work. Nicolls said it could be another 18 months before the rail authority acquires the land and turns it over to Dragados, which could leave West Pacific stuck until the middle of next year.

The problem originated with the state rail authority, which is years behind schedule in acquiring land. It has paid tens of millions of dollars to rail contractors Dragados and Tutor Perini to compensate them for the delays.

The suit, which also names as defendants 10 bonding companies, is seeking $2 million, along with punitive damages.

Twitter: @rvartabedian

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