August 12, 2024
Contractor Pays Fresno $332K for Using Chinese-Made Light Poles
A contractor’s decision to substitute 62 poles on a 'Buy American' project proves expensive
A Fresno, California contractor has been ordered to pay the City of Fresno $322,000 for failing to use American-made steel in a federally funded streetlight project, violating "Buy American" requirements. The court ruling, handed down on July 31, marks the culmination of a legal battle that began in October 2023 when the city sued Kertel Communications Inc., also known as Sebastian, over a 2018 streetlight contract.
The project, valued at $1.1 million, involved improvements to 62 light poles along Blackstone Avenue and Abby Street. Because the project utilized federal funds, Sebastian was required to comply with "Buy American" rules, which mandate the use of American-made steel in such projects. However, the company installed poles manufactured with Chinese steel, a direct violation of the contract terms.
A press release issued by the city highlighted Attorney Andrew Janz praising the outcome, stating, "The City Attorney's Office will continue to enforce 'Buy American' provisions in our city contracts." The city went on to state that this case highlights the city's commitment to ensuring that contractors adhere strictly to the terms of their agreements, especially when federal funding is involved.
Legal Dispute and Judgment
The legal dispute took a turn when Sebastian initially agreed to repay $142,000 to the city. However, disagreements arose over whether the contractor was still owed the remaining $180,000 from the original contract. The court's decision sided with the city on both issues, resulting in the total $322,000 judgment against Sebastian.
In addition to using non-compliant materials, the city stated that Sebastian completed the work behind schedule, further violating the contract terms. This delay, coupled with the use of Chinese-made steel, put the city at risk of losing $1.75 million in federal grants, according to court documents. Furthermore, the city estimated that replacing the non-compliant poles with American-made versions would cost more than $274,000, as reported by GV Wire.
Implications and Future Enforcement
City officials emphasized that the "Buy American" provisions are not merely bureaucratic red tape but are designed to support domestic manufacturing and ensure the quality of materials used in public infrastructure projects. The successful enforcement of these provisions in this case may lead to increased scrutiny of similar contracts in the future.
The case has important implications for contractors working on publicly funded projects in Fresno and potentially beyond. It serves as a reminder of the importance of adhering to all contract requirements, particularly those involving the sourcing of materials for federally funded projects.
The substantial financial penalty imposed on Sebastian, who might have saved only several thousand dollars by sourcing Chinese poles, is a sign that certain local governments are going to enforce and make contractors pay for out-of-spec substitutions.
