Granite Falls supplier falsified steel grade

Published 10:49 pm Thursday, March 19, 2009

SEATTLE — A subcontractor who worked on Sound Transit’s light-rail line from Seattle to ­Seattle-Tacoma International Airport lied about the strength of steel casings he provided, but engineers say the weaker material poses no hazard.

David Appleby, president of Appleby NW Inc. of Granite Falls, pleaded guilty Thursday in U.S. District Court to making and using false documents, admitting he falsified test results concerning the strength of the steel. He faces up to five years in prison and a $250,000 fine.

The 150-plus casings he built served as forms for reinforced concrete columns supporting 4 miles of elevated track from the Rainier Valley to Tukwila. Sound Transit’s contract specifications called for grade 50 steel, which yields at 50,000 pounds of pressure per square inch, but in most cases Appleby used grade 36, which yields at 36,000 psi.

Sound Transit spokesman Bruce Gray said Thursday the agency did not need to replace the casings because the contract specifications were written in an abundance of caution. Studies commissioned by Sound Transit, the Federal Transit Administration and Appleby’s lawyers all found that the lower-grade steel is still plenty safe.

“Good design on a project like this will always err conservatively on the side of safety and caution,” Gray said. “The structural stability and seismic stability and long-term operational stability meet our requirements.”

Charging papers say Appleby altered test results to conceal that the steel he purchased in 2005 and 2006 from Oregon Steel Mills in Portland, Ore., did not meet contract specifications.

The investigation began when a competitor, noticing that Appleby was providing vast amounts of 50-grade steel at a time when the product was in short supply, reported that observation to the U.S. Department of Transportation. The department’s inspector general and the FBI conducted the investigation.

Sound Transit hired PCL Construction as general contractor for the Tukwila-Rainier Valley segment of the line. PCL in turn hired Malcolm Drilling to dig holes for the support columns, and Malcom Drilling hired Appleby to make the casings.

Appleby’s contract with Malcolm was oral, and his lawyer, Irwin Schwartz, said Thursday that Appleby was never told what grade steel to use. Therefore, when he first began ordering the steel, he used grade 36, which he considered standard for those types of projects.

Appleby eventually learned that Sound Transit’s specifications called for stronger steel, and instead of calling attention to the fact that he was using grade 36, he panicked, covered it up and kept ordering the same material, Schwartz said.

“A little problem is covered up, and all too often it becomes a big problem,” Schwartz said.

The lawyer insisted that Appleby did not profit from using the cheaper steal and, in fact, passed on the savings.

Grade 36 at the time was about 2.5 cents per pound cheaper than grade 50, which would have saved Sound Transit $37,500 on the 1.5 million pounds of steel that Appleby provided.

Sound Transit maintains that it was billed for the higher grade and has reached an agreement with the general contractor to reduce the final payment on its $240 million contract by $48,000 — the difference in steel cost plus the expense of commissioning a safety study, Gray said.

Asked whether confusion stemming from the oral nature of Appleby’s hiring might have contributed to the problem and whether Sound Transit should require written contracts among all subcontractors, Gray said Sound Transit relies on its general contractor to enforce contract specifications. Appleby’s contract should have been handled more formally than Schwartz claimed it was, he added.

Appleby is scheduled to be sentenced July 10 by U.S. District Judge John C. Coughenour. Assistant U.S. Attorney Carl Blackstone said he had not decided whether to request prison time.

Appleby sold his firm last year.