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The demise of a local engineering firm has stalled work on a major road project, and Pima County doesn't know whether shifting the contract to a new firm will end up costing taxpayers more money.

Castro Engineering, run by former county Transportation Director Frank Castro, stopped operations in July, an apparent victim of the general decline in construction work.

At that time, Castro had six outstanding contracts with four county departments worth more than $3 million. Some of those projects were near completion, but one of the largest — the design work for widening a five-mile stretch of West Valencia Road — was not. The work on Valencia would run from Ajo Highway east to Mark Road.

Castro was awarded a five-year, $2.5 million contract for the Valencia Road project in March 2007. The project is funded through the Regional Transportation Authority's half-cent-per-dollar sales tax.

Castro offered to transfer the contract to the Psomas engineering firm, but the issue is not so simple. In a letter to Castro, procurement officials laid out the problems:

"The proposed assignment is unacceptable to the County, however, because of significant claims from unpaid subconsultants and a request by the proposed assignee for substantial additional funding beyond that provided for in the contract," said the letter, sent last month.

Deputy County Administrator John Bernal said the county doesn't know how much extra money Psomas may want to complete the work, and the county may end up choosing a different contractor.

"The contract terms allow for assignments, but the county has complete control, and if we determine that is not in our best interests, we will not go forward," Bernal said. "We are very concerned about any approach that would increase costs for us."

No one answers the phone at Castro Engineering's office. A principal from Psomas could not be reached Friday for comment.

County Transportation Director Priscilla Cornelio said engineers from Psomas are sitting side by side with county engineers as they go through the work Castro turned over.

That way, they will be in agreement about what work can be used, what will need to be redone and what hasn't been done at all, she said. Psomas will be able to make an educated offer, and the county will be in a good position to know if it's acceptable, given the scope of the work.

Cornelio said the county hopes to finish that process by the end of the month and get back to work on the project.

Jim DeGrood, director of transportation services for the Pima Association of Governments, said problems like this probably will come up again during the 20-year implementation schedule of the Regional Transportation Authority plan, but it won't prevent all the RTA projects from being completed.

"We've entered into a contract with the local agencies to do the work for a fixed dollar amount, and we expect them to work it out," DeGrood said. "It's up to the jurisdiction to resolve it."

Castro's decision to close up shop also left the city with an unfinished contract for design work on South Houghton Road from Valencia to Interstate 10.

The city is using an on-call consultant to finish design work on one intersection, and then it will look for another firm to finish the work, said city Transportation Department spokesman Michael Graham.

Bernal said county officials had no idea Castro was having financial problems, and he believes Castro was trying to be helpful by bringing forward another firm.

He said Castro has been very good about turning over all documents and work related to the contracts, and the county has not paid Castro for work that wasn't finished.

He said it's actually the opposite — that the county is withholding payment on several invoices until officials are sure what work has been completed.

Castro Engineering, which has been a top recipient of county contracts, was not chosen through a low-bid process. Instead, the county divvied up the design work on its large roadway projects among firms that met certain qualifications, then negotiated a price.

The county has paid Castro a little over $1 million on the $2.5 million contract, and $1.4 million remains.

Castro also was working on the permitting and construction administration for the Pantano Linear Park; a parking lot and a staging area for Sweetwater Trailhead; improvements to the Southeast Park Shooting Range; and revisions to flood control models along the Camino Real Wash.

Several Castro engineers who worked on these projects have said they are willing to complete them at their new firms or on their own, easing the transition.

Castro completed engineering work on an underground conduit for the Joint Courts Complex, a project that has been put on hold due to cost overruns, before the firm closed.