Wine Country Boondoggle- Contractor For Napa Valley Railroad Stimulus Project Pockets $20 Million For Doing Nothing

(Amy Miller)

According to California Watch and the San Francisco Chronicle, a project involving a new bridge and track realignment for Northern California's Napa Valley Wine Train as part of the larger Napa River flood-control project was awarded $54 Million in stimulus funds. The Napa Valley Railroad is a privately-run tourist railroad that takes tourists and sightseers between Napa and St. Helena, CA and serves meals and wine in restored coaches. The Wine Train began operations when the Southern Pacific announced it was abandoning it's Vallejo to Calistoga, CA branch in 1985. Former Rice-A-Roni and Ghiradelli Chocolate President Vincent De Dominico and local entrepreneurs would purchase the right-of-way from Southern Pacific, four 1950s vintage former VIA Rail Canada/Canadian National Montreal Locomotive Works FPA4 diesels and some former Rio Grande passenger cars. The wine train began operations in 1987, and aside from ballast for the railroad's maintenance-of-way, very little freight is hauled over the line.

The current project and the contractor that was awarded the funding in a no-bid contract have come under scrutiny. Anchorage, AK-based Suulutaaq Incorporated was founded by Alaska tribes and enjoys special access to Federal Contracts including the Napa River Flood Control project.

However, Suulutaaq turned around and subcontracted the project to Peter Kiewit Sons, Inc.

Federal records show that Suulutaaq is paying Kiewit $28.1 million - 53 percent of the total stimulus contract. Suulutaaq is keeping about $20.4 million, or 38 percent of the total. The rest, about $4.7 million, goes to other subcontractors, all from the lower 48 states.

So that means Suulutaaq basically pockets $20 million of taxpayer funds by subcontracting a public works project that was closed to bidding. In other words, the company made $20 million without even lifting a finger.

Walnut Creek, CA contractor Robert G. Brosamer had planned to put in a bid on the proposed project as early as 2008, but was told that no bids were being sought at the time as it was looking like the project was a "done deal with an ANC [Alaska Native Corporation]".

Brosamer, the Walnut Creek contractor, said the public was paying a premium for the Wine Train project, saying, "It would have been a hell of a lot cheaper if they had put it out to bid."
"The reality is, Suulutaaq isn't doing much," Brosamer said.

However, as the article points out, very few of the jobs awarded to ANCs actually go to Alaska Natives:

Critics have complained that the no-bid contracts provide relatively few jobs and little investment income to the tribes while costing taxpayers a fortune.

Alaska Native corporations don't have to prove that they're socially or economically disadvantaged," Sen. Claire McCaskill, D-Mo., said at a 2009 hearing. "They don't have to be small businesses. And they can receive no-bid contracts worth billions of dollars."The companies employ few Alaska Natives and "rely heavily on non-native managers," she said.

The current CEO of Suulutaaq is Samuel Boyle, who burned through an estimated $14 million worth of venture capital as CEO of sailnet- an online retailer of sailing and boating equipment that went bankrupt in 2005.

"My comment to anybody connected to this thing - if Sam Boyle is involved, watch out," said Arizona venture capitalist Kent Mueller, who said he lost more than $1 million in Sailnet.

[Hat tip: Zombie]