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Travis County Commissioners Court

September 21, 2004
Item 11

View captioned video.

We have some people who have come from out of town to discuss number 11 which is approval termination of contract number 03 t 00118 ld with gulf states asphalt for emulsified asphalt.
>> good morning, judge, Commissioners. County purchasing agent. To my right I have mr. Lewis pena with gulf states asphalt and his attorney kevin george. To my left, for those of you who don't recognize mr. Wheeler in a suit, this is don wheeler and mr. Ward. We entered into a contract in February 11th of 2003 with gulf states asphalt for emulsified asphalt used by t.n.r. On their chip seal operations on county roads. Last year we experienced some performance issues and we worked with the contractor and decided in March of this year to renew their contract with amendment regarding the county's rights to reject loads that came in. We have had similar problems this season and we are formally requesting that the court terminate the contract with gulf states asphalt.
>> what's the problem?
>> bleeding of the roads.
>> and what does that mean?
>> we're the -- the Commissioners that probably had calls on it we've had so far this year, I know in several of our precincts where that the oil comes up through the rock and gets picked up by the vehicles and gets thrown on the vehicles. When I first came to the county back years ago, we used to have -- we had a different type of material. We went over to the polymer material, which is a little more expensive. The court gave me the authority to buy that oil. We haven't had that bleeding issue or problem since. Although I know the state is tightening up their specifications on this type of material. We should still be able to have a material that will not bleed on us if we -- when we put it on our roads. We started having a little issue with our equipment first part of this year. I instructed mr. Ward and his crews to start testing the material. We tested a load -- I can't remember the date off the top of my head.
>> June 17th.
>> June 17th. Did not meet specifications. We informed the contractor and then again on 8-5 we ran -- we had stopped -- we suspended operations, and again well, started back up after notifying the contractor of the problems. And then the first load that we received on 8-5 failed the test again. To meet specks. And we returned -- specks. And we returned the load and we haven't been seal coating since.
>> bleeding asphalt, yes or no, mr. Pena?
>> I haven't seen it, but I have no reason to doubt it.
>> I can respond to your question. My name is kevin george. The bleeding that they refer to is, I think, relates to an incident that occurred in April of 2004. It was a one-time incident and it was not tied back to gulf states' asphalt. The product -- and this is important for you all to consider -- initially is tested by gulf states at their plant. And then it is again tested to meet specification requirements of the state by the Texas department of transportation. Once that test is accomplished and passed, then delivery is made to Austin. Their reference to this bleeding is how the asphalt is applied. It may not tie back to the product itself meeting specifications. It has a lot more to do with how that product, how that asphalt is applied on the road. And what mr. Pena tried to do is tried to find out the source of the problem. And he wrote them a letter saying this is my thought on it. This is how you can find a solution. They never responded to that letter at all. There was never another incident that was identified on bleeding whatsoever. Now, moving forward a little bit, the product was again tested, as you suggests, sometime in June, June 17th of this year. The product was tested at delivery in Austin. Now mind you, and this is important again, the product is tested at the plant, again tested by the Texas department of transportation. It what passed. It had met the specification requirements. What the Texas department of transportation requires is if you are going to take a sample test, you have to take it in an appropriate manner otherwise the test results are going to be skewed. The way that they recommend that the test ought to be taken is you get on top of a taerpbg, but this -- tanker, put this spoon that is about three feet long and you take a sample in the middle of the truck. They didn't do that test that way. Instead they took it from the spigot and typically what you are going to have is because you have residue from other asphalt that's been brought there you are going to have some residue that is going to skwaou the test results. So what we found out that their test results at delivery were inconsistent with two tests done by -- internally by us as well as the Texas department of transportation, we suggested, listen, what you ought to do is do the test in compliance with Texas department of transportation standards. They refused to do that. They say we will do it the way we want to do it. We suggested as an alternative that we go out there and test it ourselves in the appropriate manner so that we would have consistent results. The problem we're faced with today is they are trying to compel to us prove a negative. We believe that the product meets specifications in every way. And we also believe that the only reason that they have the test results i've also taken the liberty to bring with me and provide to you the correct technique that txdot recommends so that a representative sample is taken of what the contained in the trucks. And as well --
>> so now, what sampling technique did we use?
>> let me tell the judge what the -- the contract says we are not required to take a sample, first of all.
>> we're not required what?
>> to take a sample. That's left to the county engineer's discretion.
>> but we did take two.
>> yes.
>> and we relied on the results.
>> yes.
>> so what tech knee --
>> what of my [indiscernible] this was not a single incident. Then i'll go tour sampling procedures and testing procedures. I have a list, ann showers road, 1600 feet, jacob son road, circle drive, 660 feet, edgebrook drive, 588 feet, [inaudible] lane 13,600 feet, split rock road, 2980 feet. Old san antonio road, 500 feet. Duvall creek, 10,085 feet. Pierce road, 8,335 feet.
>> that's 10 or 11 roads.
>> yes, sir.
>> during what time period?
>> from April to this -- to June. And we had consistent problems throughout the summer, throughout the heat. Basically all summer long.
>> okay. So April through June of '04.
>> I would say through August. We're continuing having these problems.
>> through August of '04.
>> yes, sir. As ms. Grimes pointed out, we do not specify in our contract that we follow txdot sampling procedures. We specify that we want this material to meet txdot specifications. And that's required on each transport when it arrives on the job site. We actually follow the american society for testing materials specifications which are probably a more global specification. We have this material tested at a certified astm lab and bringing this material to this laboratory and the lab has tested it for txdot specifications as prescribed in the contract. The material has failed not only in specifications but also in the afpl answer issues on all of those read ways and we feel it will continue to do that during hot weather when this material has some performance issues.
>> and there's a cost to us for that.
>> hold on. Hold on. So how many contracts did we have for this same asphalt?
>> we have one contract for all the asphalt that we purchased. And because we have one contract and one vendor, our contract prohibits us from going out when we have a failure to buy asphalt from any other vendor.
>> okay. So if staff is right and we've got 10 or 11 roads that -- where the asphalt is bleeding --
>> judge, if I can respond to that.
>> let me just -- and the picture they are saying is you are the county's exclusive provider of asphalt, then we do have a problem.
>> you have a problem.
>> what's the solution?
>> i'll tell you one thing. In these 10 or 11 incidents they've addressed with you today, they've never addressed with us. We've never heard of any of these other instances he's talking about. We don't know where the location is, the people that address this problem. It never has been brought up to an issue to us and none of the correspondence you have before you today addresses any of these points he's addressed. We have asked for that information, they have failed to provide us that information. The only thing that you have -- the only thing we have is these two incidences. Those are the only two incidences. Now, to address the second part of your question what's the solution, the solution doesn't -- the problem doesn't necessarily tie back to a failure of the product. It can be the application. How the product is being applied to the roads. We don't know what the solution is until we see the product and identify what the problem is. We haven't been able to do that. The only time we addressed this issue is in correspondence in April and unfortunately do you not have a copy of that document.
>> is in this section.
>> what did you all recommend in April? Or did you?
>> we said possible reasons for the problem. This is in the letter dated June 14, 2004. The second course is being applied, meaning the second layer of asphalt is being applied before the emulsion has cured. Some water is still trapped in the force course. Days with high humidity retard the breaking of the water from the asphalt causing slower curing. Traffic on the second course causes the -- forces the water out. That's causing the bleeding. It has nothing to do with our product failing to meet specifications. It has everything to do with how the product is being applied by tend user. Recommendations, allow more time between the first and second layer. Tree three to five days. Second recommendation, reduce slightly the rate of emulsion on the second course from -- to point 25. Third recommendation, for the [inaudible] near Lake Travis, we recommend full road closure for the workday. Roll well with pneumatic rollers. Because they were rolling with steel rollers and that crushes the rock and that destroys, makes it impossible for gravity to hold on. And then allow three to five days between the coats. Sweep well before the second course. Allow second coat to cure well before allowing traffic back. This letter was never responded to. No one addressed any issue about this letter whatsoever. This is the only evidence that we ever heard of any bleeding out there other than these two separate alleged failures to meet specifications when they tested the product, as I said contrary to what decks dot txdot requirements. These other complaints, first time i've heard about.
>> sir, if I may, really, what we know how to do is make the material according to specifications. We sell [indiscernible] at the same time it is being sold to -- delivered to Travis County to several other customers.
>> what other counties in Texas?
>> specifically there's several. Lockhart, which is --
>> the city of lockhart.
>> well, it's the txdot --
>> project?
>> right. So you are selling it to txdot, they use it on central Texas projects.
>> right. And they said they had no problems. As a matter of fact, on one instance, and I believe first thing -- first time that we heard about the problems was just a little before this June 14th letter. And one of the recommendations that our people made to Travis County was to call lockhart and find out what they are doing. Because they are using the same product out of the same tank practically delivered on the same day and you are having problems and they are not. City of college station is one of the customers that uses this product exclusively, as far as I know. So and in all the correspondence that has transpired between [inaudible] and myself, all these other issues were news to me. I heard some of them on the letter that she sent me on September the 16th. But.
>> this year.
>> of this year. But in response to my letter of September the 8th. But we don't pretend to be knowledgeable in application. The -- whoever does the application, that's their job. Our job is to make the material that meets txdot specifications. And in order for someone to really know and prove everything that whether the product made to speaks -- met the specifications or not, a good sample has to be taken. A sample that is bad, that is off the discharge pipe that contains whatever the trucks [indiscernible], it's a fairly small amount. Those pipes [indiscernible] on the truck go between maybe [inaudible] eight feet at the longest, they will hold at the most approximately a gallon and a half, two gallons. But what is in that pipe is not representative of what's on the truck. And they are [indiscernible] that small section of the pipe that has no impact, has no effect on the load because the load is approximately 5,000, $6,000. And this is a couple of gallons. It will not do any damage to the load, but it will certainly yield a test result that is wrong. Now, on the first failure, on the one that happened in June, [indiscernible] in one of the correspondence, in one of the letters that you have, it stated -- well, in several that you have, that gulf states was [indiscernible] -- present and assisted with the taking of the sample. Which is not true. We were called or we were told that a sample was going to be taken on that load so christina pena, which is one of the sales persons, informed -- and I don't recall exactly who she was talking to, but I think it was [indiscernible] how a sample should be taken according to txdot procedures. And we requested that we be there when the sample was to be taken. We were given a location, we showed up there and there was nobody there. Final there any distributor arrived at the location and [indiscernible] a first course. The material was working fine, as far as I can tell, there was no complaints whatsoever from the -- from the representatives. [indiscernible] back the sample and he says, well, mr. Davis -- our salespeople -- gave our salespeople a location of the road where the sample was to be taken. So they -- and he proceeded ahead of them. They got there and the distributor-operator said [indiscernible] sample. They did not observe it. They were not present when the sample was taken. [indiscernible] which is another one of our salespeople, asked the operator how do you take the sample. What the operator said is that he had pumped about a thousand gallons out of the truck into the distributor, then he had unhooked the hose intake and taken a sample. And mr. Hernandez's comment was, well, that's really not the best way to take it, but it will do. However, and I believe that the sample is taken that way would have passed. Now, ms. Grimes wrote me a letter saying you failed, we're not going to pay for this. I wrote her a letter and it's -- I don't know whether you have a copy of that, but there's a copy of it here in this package that I brought. Change her mind and agreed to pay for the thing. To me that's telling that she didn't believe her sample, so the material [indiscernible] is going to be paid. On the second sample, the one that took place in August, the -- and you do have that. There's a statement from the driver of the truck that states exactly how the sample was taken. When the truck showed up, they -- the valve is closed. They open up the cap on the -- on the unloading pipe, and the first thing that was -- [indiscernible] that was seen there was [indiscernible]. When the truck got back to our [indiscernible], we went ahead -- I asked the driver what had happened. We took a sample exactly the same way from the residue from the bottom of the pipe, and sure enough we tested it and the sample failed. We also took two samples from the top of the truck [indiscernible] and both samples pass. On Thursday, the same tank that was filled with, the state picked up a sample also and it was taken to -- it was taken to here, to Austin. And consequently we found out that the [indiscernible] they used [indiscernible]. The samples that we sent when we first made the material and the weekly samples are not being tested by txdot. They've contracted for [indiscernible] and I believe that's wrong, may through December, of the emulsion samples from whatever the sort [indiscernible]. On that same day there was a sample from the tank that we had shipped earlier that went to the state, and in this case of the weekly samples no news is good news. If the weekly sample for some reason fails, then the state immediately notifies us and pulls the numbers, the numbers that we have that say this is -- this is a certification that the state has sampled this material and that it meets specifications. So however-whether the contract states it or not, that the material whether it meets specifications or not, no proper sample has been taken. If you take a sample that is not proper, then it's failure [indiscernible]. And that's really when we ship something, if it bleeds, there's -- i've got something in here that the state also publishes as to what are the -- what is the leading cause for bleeding. Really the contract calls for and all that you can do is change something that meets state specs. So if they blame us for the bleeding, it's unfair. It's really not anything that we do that will cause that bleeding. There's nothing that we can change in the making of the -- of that emulsion that can change it whether it's going to bleed more or bleed less or not bleed. We can only make the product in a way that it meets state specs. There's very few customers that we have and right off the top of my head I can't recall any that don't speaks tpaoeu for whatever we sell that state specs, txdot specs have to be met.
>> what specifications did we require in our contract?
>> txdot specs.
>> well, I mean it's obvious that depending on where you take the sample determines whether or not you get something that passes inspection. I mean you all wouldn't argue that, would you?
>> one thing I might point out on the second sample that we took, when the material arrived, we asked the driver who owned the truck -- the truck was owned by gulf states tanker, and we inquired of the driver what material he had hauled previously in this tanker. And he replied to us that it was s.s. 1, which would have not provided any sort of failed sample according to these specifications that happened in the laboratory. We did run a gallon or so out of the spigot to remove any residue when we took the sample, and then we took the sample, sealed the can, labeled it and took it to the laboratory. That's the requirement that you run a gallon on the ground.
>> it's their position the sample [indiscernible] samples passed state inspection.
>> they have a reservoir that they take a sample out on random basis that was with a third-party contractor. That tank has anywhere from 40,000 gallons to probably 42,000, 43,000 gallons. The loads we get on the field, which in our contract requires that that load at the time of transport meet specifications. In the contract it says we can request that material, each transport be tested and pass specifications. The load arrived on site. We followed the astm sampling procedures that is correct sample fails, we've got bad material.
>> you are saying the state specs requirement is you pull the sample off the top, not off the bottom.
>> right. And in the contract it doesn't address how -- because typically we wouldn't do this unless we had a problem. It says we will test the material, test, which is different than sampling. If you want to look at it --
>> if we say we want to you meet state specs, that means we would imply that we would test in the same manner that the state does?
>> not necessarily. Astm is a testing entity that governs probably nationwide. A lot of states adopt astm specifications and call them their own specifications. Typically that's pretty much how each state does it. They base them on astm guidelines. And then they -- a lot of state regulations are based on that way. It's the e.p.a. Guidelines and they call them the tceq guidelines.
>> what's our response to mr. Pena's position that apparently our application procedure or process --
>> I can let mr. Ruler address that. My understanding is we've been using this product 10 to 15 years and for numerous years [indiscernible] had no issue. And only in the last two years by using the same type of polymer have we had problems. I guess I would point out to you that it may be similar to -- and this is fairly simple, buying a gallon of milk. You don't expect the first drop to be bad and then you drink the rest of it. We're paying for a material out the back end of a transport and we expect the material that the county taxpayers pay for be good throughout that use. And what we're finding out --
>> you are saying -- [indiscernible].
>> the first tests we took was from the middle of this transport. It wasn't as to his sampling techniques. Their representatives were there on site and had no issue with the sample.
>> and that sample passed? Aopb that sample failed. We took a second sample, they failed. We got bad material. I don't believe the history of the road crews that we've got over 10, 12 years using this material is improper technique. We've got roads hundreds of miles of the county roads have been used this material in the last 10 or 12 years, not a problem. Now we've got a problem the last two years.
>> don, you just reeled off about 10 sections of about maybe eight or 10 miles, I mean the linear feet. How many miles total have we done, I mean are there places where we have used this and we haven't had the problem?
>> Commissioner, I would anticipate that it's an unknown right now. Our typical work program per year, we do approximately 80 miles of seal coat. Some of those roads were done from last year. So we're having problems with roads that were applied with this material last year. We could go now because of cool weather, these conditions, we might not have a problem until next year. It's very unusual, but it's not right after it's applied. The road -- seal coat and then it could be a week of 100-degree weather with 98% humidity and all of a sudden we have this problem. It's a weather condition that kind of initiates this action in the material. They could sit there for six months, a year, which is what we have seen, and then all of a sudden this happens and we have to immediately address the situation.
>> one point is just income the middle of this discussion is that the contamination possibly happened from the time they put it out of their tank that was tested by txdot into the transport tanker because they've used a different material prior to putting our asphalt in that tanker. So [indiscernible] has pictures of what they are calling rubber particles in it, so we think possibly contamination took place when they took it out of a tank that met specs and put tonight a truck and brought it to us.
>> and I might address --.
>> of the application of -- throughout the county with the roads that you've mentioned, that where are these roads? Basically throughout Travis County?
>> throughout the county.
>> that's what I wanted to isolate on.
>> specific roads -- it's basically throughout the work program where we have applied a chip seal within the last two [indiscernible].
>> can you tell me what would -- if the roads start bleeding, what are the associated costs we'r having to go back and do that --
>> yes, sir. The cost of the amount of money that had to be expended for a retrofit of bleeding of those roads.
>> yes, sir, what we've planned, and this is -- this is work that is inclusive of what we've done already this year and what we'll have to do whenever they are able to purchase asphalt again. Duvall creek road. Hot mix overlay at the cost of $95,000. Pierce road, we corrected with a single course of additional [inaudible], a cost of $21,991. We also anticipate a cost with the other roads that something will be done corrective action at a cost of 89,497. And this doesn't include we had numerous [indiscernible] responses after [inaudible] to go out on roads and apply a sand course on these roads after hours. That's an additional cost and I believe we had at least three and possibly as many as five to six of those where we've sent employees out basically after our work hours and with material and equipment to apply sand course to these roads to prevent possible claims against the county for possible damage to vehicles.
>> all right. Now, the folks from gulf states mentioned earlier that -- I think the judge brought this question up a little bit ago and I really didn't get a full answer. I mean I didn't hear a full answer, and that was basically what they are alleging is that the application process, they mentioned the humidity and the one time you do it and then the next time you put another layer on it, kind of the procedure things and they said the procedure of application with these roads is not followed properly, in the words of -- that's the alleged comment, but I?m want to go hear basically what you said. Have there been any deviation in the way, in the procedure of doing these roads?
>> [indiscernible] we've been doing this many years. And like I said, we've used this material for a long period of time prior to this, same application, same equipment, same aggregate. Supposedly the same sort of material that we speck and up until the last two work times we have not had these issues.
>> yes, sir. And so from the last 12 to 15 years, we've applied seal coat process basically the same. The process is the same. The amounts may vary even on the oil. In mr. Pena's, the letter -- his letter was talking about, they wrote the letter did go to larry and larry is not here today and I didn't see this until this issue came up. It was brought to my attention. And talking with larry, I believe he was in contact with gulf states, ms. Pena, I believe, and [inaudible], and although did he not respond in writing, he did respond verbally to this and informed them our process is we don't -- we have always seal coated our road one course right after the other. We don't have the luxury of being able to close a road for an entire day. Especially in precinct 23 or other areas. So we could not change our process. It was part of the -- the issue was part of the material. I understand mr. Pena feels his material is very good, but all I can say is for the last two years i've had equipment failure due to trash of which I thank his company for fixing. His company has fixed the equipment. We've had it last year and we had it again this year. We sent it down, they fixed it at no charge. Paid for my fuel down and back. But I?m continue to go have problems with my constituents calling me. That is why we started testing this material and it does not test meeting specifications, clear and simple. I buy the material out of the back of the truck, not the middle of the truck. I don't buy the material out of his tank. I buy it out of the end of the truck. And that is where it did not pass.
>> what's the term of this contract?
>> we made tonight March so it goes through March of '05. If we don't terminate today.
>> judge, if I can say a couple things. One, i-gulf states has been in existence for 50 years and as I understand they have followed policies and procedures on application 10, 12 years, but likewise we have followed policies and procedures for making asphalt for over 50 years. They know what they are doing. Second, if you mention that gulf states were there when they took a representative sample, no, what mr. Pena told everyone here today is that they were invited to be there, they were there, no one was there and these folks took the sample without our viewing it. And that sample failed. I do find it very interesting that if they are having all these problems out there in the field with bleeding, that something was not done and brought to the attention of mr. Pena immediately. That just doesn't follow common sense. If anyone is having a problem with the constituency or anything else because the asphalt is bleeding would have identified where it is, tried to find an immediate solution. There is no correspondence, no communication except that one letter I read earlier in June of -- in April of 2004. That is the only letter that addresses this particular bleeding issue. And we outlined a solution and we never got a response. What we have before tkau is a quick rush to judgment on the basis of how two samples were taken. The did sample failed according to them, but they used that application, they used the product out in the field and we never heard a peep about any problems with that product. The second sample was taken in August of this year. Now, that particular truck came back to gulf states and then we then again took two samples. One txdot did, we took the sample and did it in conformity with txdot raoeurpltsd. They are saying listen, we want you to meet txdot requirements, but we're not going to observe txdot procedures as far as taking samples. Txdot identifies the proper procedure. They did not follow it. We followed it, it passes. They are asking you to make an exception here. Let's follow txdot procedures all the way to making the product, but once we decide to take a particular sample to verify whether it meets those standard, we're going to observe astm procedures which is not something followed by txdot. So you ought to be consistent. And [indiscernible] it had been identified in the contract saying, listen, I understand we want you to follow txdot procedures, but we will take a sample by astm standards. That I think will be a better full disclosure and would disclose to mr. Pena in following that mechanism. That's all I want to say.
>> realty county's position [indiscernible]. What's your recommendation about where we ought to go from here?
>> well, I would say that if it were my call, I would say that mutually the parties ought to terminate their arrangement and just walk away. It appears to me they are not going to be happy and they are going to continue taking these samples and as far as we're concerned, we want to sell, we do, and we believe our product works. We believe the sample tests we take in conformity can everything shows the product works. But they don't have that level of comfort with us and when you don't have a level of comfort, you ought to just separate and I think you would have that arrangement in the contract that both parties can mutually agree to separate. That would be my recommendation.
>> do we -- if we accept that recommendation, do we need to chat with [inaudible]?
>> you are talking about mutual termination, we basically pay for what we've used and that's it?
>> correct.
>> and we terminate and we're free to go buy from another vendor?
>> absolutely.
>> and we can't again claim failure where we're going to have to pay that $250,000, we waive our claim against them if we do it for convenience? The court might want to discuss that in executive session.
>> is that the figure?
>> it's an estimate.
>> what's the teug?
>> about 200, 250,000. -- figure.
>> well, obviously we have a problem. It's not like we've done business with you and hadn't wanted to do business with you. Our guys are just doing roads, they are going to do roads because that's their job. So we really -- whoever is at fault here, I mean you all want to sell your product, we want to build roads. But you are right, I mean I think that once you lose the confidence of the product, it makes, you know, dealing with each other very difficult. You know, it really probably boils down to and if there were $250,000 on the table, probably be a real [inaudible] decision. You go about your business, we'll go about ours.
>> the overlay you made reference to, who pays for that?
>> the county did.
>> the county.
>> well, let's chat with counsel in executive session. We're looking at this this afternoon, I would guess. I mean if -- I don't see us doing it between now and lunch. Do you want to come back after lunch?
>> might as well.
>> we'll come back, we're in executive session there, try to deal with some of these issues. My estimate would be 1:30 we'll know. We'll chat with counsel in executive session. Thank you very much.
>> judge, before we leave, on that item, I mentioned the cost of having to retrofit to go back and fix those roads that were bleeding. I would really like to have that number because that's another added cost to the taxpayers should Travis County have to bear that expense.
>> Commissioner, that's the $250,000 we're estimating.
>> I didn't sum it up.
>> Commissioner, also, what I would like to point out to you there are a lot of roads in the work plan that were done last year that could come up and have these problems so that $250,000 number could be higher.
>> okay. All right.

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Last Modified: Thursday, October 27, 2005 10:24 AM