An Oak Harbor woman-owned small business has lost a key contract with the Navy, and the owner said the loss may put her out of business.

Kathy Lester, owner of Earthworks Environmental, has been a subcontractor working under several succeeding prime contractors on the Super Fund environmental clean-up at Whidbey Island Naval Air Station for the past seven years. Her business has been in charge of extracting, cleaning and monitoring of contaminated groundwater at a number of areas on the base.

A contract for the project had been in place between the Navy and Foster-Wheeler Environmental. Lester’s company was a subcontractor for Foster-Wheeler. A recent changeover in the prime contractor has pushed Lester off the project entirely.

Effective Oct. 17, an environmental clean-up company called Shannon & Wilson, Inc. is now the prime contractor. Usually, when a prime contractor is replaced, the new contractor picks up Lester’s company, Lester said.

“I have extensive knowledge of the site,” she said.

But Shannon & Wilson, Lester said, chose to hire a very large subcontractor instead.

“This is probably going to wipe my business out,” Lester told the Restoration Advisory Board at its semi-annual meeting Oct. 24. The RAB is made up of Navy personnel, the Environmental Protection Agency, a community member and representatives of environmental watchdog groups. Its purpose is to keep the public informed of the progress of the environmental clean-up efforts taking place at Whidbey Island Naval Air Station as mandated by federal Super Fund regulations.

Problems began for Lester’s company when the prime contract came open for bids. One of the reasons Shannon & Wilson, Inc. was selected is because it is categorized as a small business, while Foster-Wheeler was a large company.

“The U.S. government, and the Navy in particular, (are) under intense pressure to contract with small businesses,” said John Gordon, of Engineering Field Activities Northwest, a department within the Navy structure that oversees such contracts.

However, Lester said, her small business was cut out and replaced by what she says is a large subcontractor, Shaw Environmental.

“All contractors, regardless of size, are permitted to employ subcontractors, and this is a common practice,” Pat Callendar, public affairs officer for EFA NW, said this week. “It is true that Shannon & Wilson is utilizing Shaw Environmental as a subcontractor on this project and that they are classified as a large business.”

A large business, as viewed by the U.S government, is one that employs more than 500 people.

Lester further alleges that Shannon & Wilson gathered information and project data from her, under the guise that the contractor would award the subcontract to her. Instead, Lester alleges that Shannon & Wilson used her information to obtain the Navy contract and then chose Shaw, saying that they never had the verbal agreement with Lester to hire her firm.

“Shaw Environmental actually had my information, and now they have my job,” Lester told the board.

Nancy Harney, the EPA representative on the board, told the rest of the board members that she has concerns with the quality of work and the credibility of the new contractor and subcontractor.

“I’m concerned about who’s going to be out there doing the work…how really qualified are they,” Harney said.

With Foster-Wheeler and Earthworks Environmental, Harney said the job was being done right.

Lester said she brought the matter to the board’s attention in the hope it might communicate her concerns to EFA Northwest.

RAB community co-chair Ed Oetken, a retired environmental engineer, said she could count on it.

“The information will be provided to all who might be interested,” Oetken said. “We are a conduit for public information.”

Oetken then confirmed with co-chair Kathy Souters, of the Whidbey Island NAS environmental affairs office, that she will “make sure that this record is taken to the proper chain” of command.

However, unless Shannon & Wilson violated any laws, there is probably little that EFA NW can do about the contract or subcontract award.

“EFA NW does not routinely investigate business disputes between a prime contractor and a disappointed subcontractor,” Callendar said. “If evidence were provided that a prime contractor had violated public law in the performance of its contract, the matter would be referred to the appropriate federal investigatory agency.”

Souters said that Whidbey Island Naval Air Station has no decision-making responsibilities when it comes to contractors for the Super Fund clean-up work.

“It’s not our say, not only not our fault,” Souters said of the contract award.

Meanwhile, Lester has secured an attorney and said she may sue Shannon & Wilson for breach of a verbal contract that Lester alleges was agreed upon prior to her releasing project details to the contractor.

Representatives of Shannon & Wilson, Inc. did not return messages offering them the opportunity to make a statement.

You can reach News-Times reporter Christine Smith at csmith@whidbeynewstimes.com or call 675-6611