$18-Million Challenge : Indiana Engineers Face Biggest Test in McColl Cleanup

Hidden in a modest woods on the edge of Lake Michigan, the single-story brick offices of Canonie Engineers are quiet and unpretentious, which is just the way Tony C. Canonie Jr. likes to do business.

Methodically and with little fanfare, the company in the past six years has drained toxic pools, dismantled contaminated pesticide plants, neutralized chemical-soaked soil, designed treatment systems to purge polluted ground water and dug up assorted forms of hazardous waste. Yet all the while, the firm’s public profile rarely rose above the excavations it undertook.

Those quiet days are over, for its next job will shine the limelight on Canonie Engineers.

The environmental engineering company--a subsidiary of a once-struggling road-paving firm--will dig up the McColl dump in Fullerton in one of the largest excavations ever conducted under the “Superfund” hazardous waste cleanup program.

Whereas the company had once focused on capturing privately financed, less publicly known work, Canonie Engineers now is about to begin one of the most expensive and heavily scrutinized hazardous waste cleanups ever paid for by the federal Environmental Protection Agency.

Canonie’s $18-million challenge will be to unearth 200,000 tons of sickeningly odorous World War II refinery acid waste and contaminated dirt from a vacant lot and a chunk of a golf course without disturbing the health of hundreds of people who live in upper-middle-class homes next to the dump site.

Answering a nationwide call for bids, Canonie Engineers won the technically complicated and politically sensitive contract, defeating a giant in the industry, Chemical Waste Management, a subsidiary of the nation’s largest hazardous waste handler.

Yet it was the challenge of the job--not the attention it would bring them--that attracted Canonie Engineers to McColl, company officials insist.

“It was just our cup of tea,” Canonie, president and chairman of the board of Canonie Engineers’ parent company, Canonie Inc. of Muskegon, Mich., said of the firm’s decision to bid on the McColl job.

But winning the contract was not easy.

A study of state Department of Health Services documents shows that the panel of state, federal and consulting representatives reviewing the bids last year had serious concerns about Canonie Engineers’ ability to perform the job well. Of particular concern was the company’s proposed health and safety plan, a crucial issue because workers would be handling potentially health-endangering chemicals in a densely populated area.

Some evaluators believed Canonie’s health and safety plan--which is supposed to explain the precautions that will be taken to protect workers and nearby residents during the cleanup--lacked sufficient information about such matters as training, protective equipment and emergency decontamination, according to a memo.

The panel gave Canonie’s technical plan for cleaning up the dump a barely passing grade--70.32. A bidder needed a score of 70 to be considered qualified, and half of the eight panel members rated Canonie below 70.

Under the state procedures, bidders were first screened to eliminate unqualified firms. Then the contract was to be awarded to the qualified firm that submitted the lowest bid. In the McColl case, that was Canonie Engineers.

But so unsettled were the panelists with Canonie’s barely passing score that authorities called the three finalist bidders in for unexpected interviews at the state Department of Health Services’ Sacramento offices so that they could clarify their written bids.

Yet the Canonie team did not perform well in their interview and “did not resolve concerns and questions . . .” according to a memo by Radian Corp. of Austin, Tex., the consultant to the state.

The bid evaluators later were polled over the telephone, and a majority gave the firm a somewhat hesitant thumbs up, memos show. Their recommendation was given to the health department director, who decided to award the contract to Canonie.

Tom Bailey, program management chief for the Health Department toxic substances control division, acknowledged that the evaluators originally had “a great deal of concern” about Canonie.

But, Bailey said, the evaluators’ scoring system was designed to eliminate all but the above-average bidders to assure that a good company was chosen. The fact that Canonie barely passed the cutoff score does not mean it was barely qualified, he said.

Further, since the company began work on the McColl dump, “they’ve demonstrated a high level of professionalism and capability,” Bailey said. “They’re a well-qualified firm.”

Despite the concerns about Canonie Engineers, several evaluation team members said they made no comprehensive background check on the firm and restricted their analyses to the written bids.

Mike Golden, McColl project manager for the Health Department, said he was familiar with Canonie’s work on one California project--the excavation of contaminated topsoil at an illegal chemical storage yard in Santa Fe Springs--because he was assigned to that cleanup. Golden also checked with a former colleague who had overseen Canonie’s work at the cleanup of soil at a chemical plant in Lathrop, Calif. Golden said he was satisfied with Canonie’s reputation.

But no one contacted the references on Canonie’s bid, he said. There were no checks made with health authorities in Michigan, where the company performed two noteworthy cleanups, including a $15-million hazardous waste cleanup five years ago. Golden said the contract-award procedures limited the evaluators to judging only the written documents.

Actually, had the evaluation team checked, they probably would have heard mostly good reviews of Canonie’s work. When contacted by The Times, many private and public officials familiar with Canonie’s work praised the company.

“They were very thorough,” said De Montgomery, a senior geologist with the Michigan Department of Natural Resources hazardous waste division. Montgomery supervised the cleanup of the Hooker Chemical Co. site in Montague, Mich., where Canonie constructed a 15-acre vault and filled it with chemical waste, contaminated soil and pieces of the dismantled production plant. Canonie Inc. enjoys a good reputation in the state, she said.

Golden said part of the reason Canonie received the marginal score during the McColl contract competition was that the scoring system evaluators used had a “built-in bias” against high points. Of the four finalists for the contract, the highest score was 75.81, only a few points higher than Canonie’s score, he said.

And there have been no qualms about Canonie’s abilities since the firm won the contract and began preparations for the excavation, Golden said.

“As it turns out, they have been a very pleasant surprise,” he said.

Confident of their safety plan, Canonie officials appear nonplussed about the earlier concerns, attributing much of the controversy to the state scoring system, which they contend was inconsistently applied, to determine whether bidders were qualified.

“I frankly don’t know what was going on,” Phillip E. Antommaria, executive vice president of Canonie Engineers, said of the contract concerns. The company had submitted similar health and safety plans for the hazardous waste cleanups in Lathrop and Santa Fe Springs, and both had been approved by California agencies, he said.

“We’ve done a lot of hazardous waste projects,” Canonie said. “For me the proof is in the work, and I don’t know of a single lost-time injury we’ve had in our hazardous waste operations that relates to a safety problem . . . . Talk is cheap. It’s easy to write safety programs, but it’s hard to maintain them. You’ve got to support them from the top, and I do that.”

Tony Canonie is no expert in hazardous waste. But his company engaged the necessary geotechnical specialists when a Canonie Inc. subsidiary bid for--and won--its first hazardous waste job--to clean up a chemical plant--in 1980.

It was a natural progression for Canonie Inc. The company had been diversifying into several related kinds of contracting work after surviving some lean years and learning that the firm should not “live or die with any particular specialty,” Canonie said.

“This was the beginning of the hazardous waste upheaval, and we just felt this was a tremendous market for us. Most of the hazardous waste removal projects would need some of the disciplines (earth moving, construction, hydraulic dredging) we offer,” Canonie said.

“It looked like an ideal situation. It was going to be a market that somebody” was going to profit from, and the leaders of Canonie Inc. figured it might as well be their company, he said.

After a rocky period in the 1960s, Canonie Construction has grown into Canonie Inc., which has diversified and prospered by focusing on privately funded projects . Through the years, Canonie Inc. produced five subsidiaries, which have performed hydraulic dredging, heavy construction, marine transportation, environmental engineering and earthmoving for clients such as power and steel companies.

For the past six years, Canonie Inc. has been named by Engineering News-Record, a construction industry weekly, as the top excavation and foundation specialty contracting firm in the nation for sales volume. Last year, the company had sales of at least $50 million, according to a company officer.

Canonie Jr., 38, who became president of Canonie Construction in 1977, was named president and chief executive officer of the parent company when his father retired in 1980.

Canonie Inc. diversified into the hazardous cleanup industry in 1979 when the construction subsidiary formed a partnership with the geotechnical contracting firm of D’Appolonia, then located in the Chesterton, Ind., offices that Canonie Engineers now occupy. The Canonie-D’Appolonia team was immediately successful, winning a $15-million contract to design and construct a 90-foot-tall vault for the cleanup of the Hooker Chemical Co. site in the township of Montague, Mich.

Since the Hooker cleanup, there has been a steady stream of hazardous waste cleanups for Canonie Engineers. (Several years ago Canonie Inc. bought out D’Appolonia’s share of the partnership, and the hazardous waste group became a separate subsidiary, Canonie Environmental, later renamed Canonie Engineers.)

Last year, according to Canonie Inc. treasurer Leo MacKeller, the environmental engineering subsidiary had sales of $14 million for the financial year ending Feb. 29, 1984. The firm’s assets were $1.5 million, its liabilities $986,884, and it retained earnings of $965,640, MacKeller said.

Canonie’s bigger private projects include:

- Excavating topsoil that was contaminated when barrels of waste stored on a vacant lot in Santa Fe Springs burned and leaked in 1981.

- Constructing the final burial ground for the dismantled contaminated Velsicol Chemical Corp. plant a few years ago in St. Louis, Mich.

- Devising a ground water treatment system for an Occidental Chemical Co. plant in Lathrop, Calif., in 1981. Canonie also excavated about 4,000 cubic yards of pesticide waste that had contaminated soil, state health officials said.

- Digging up contaminated soil beneath an electronics firm in San Jose, using an excavation procedure that allowed vibration-sensitive manufacturing to continue.

- Draining pools of chemicals and digging up hazardous sludge at a 100-year-old railroad tie treatment plant last year in Laramie, Wyo., which had contaminated ground water and threatened the purity of the nearby Laramie River.

Spokesmen for Canonie’s clients, as well as for the government agencies that oversaw the projects, gave the firm solid marks. But Tony Canonie acknowledges the added pressures on his firm in the McColl cleanup because of the job’s size and the national attention it has attracted.

“It’s a challenge, no doubt,” said Canonie. “Obviously we are going to be in the limelight for a while, and we don’t want to fail.”