Augie Paone, who used to co-own a contracting firm called Christensen Builders, said he would have pushed to collect the nearly $20,000 directly from the senator, but he worried about retaliation from Bill Allen, the senator’s former close friend and owner of the influential Veco oil-services firm.

“I knew I was in between a rock and a hard place — rather than to supersede his authority, I thought it was better business sense on my side to just leave it alone,” Paone said.

The testimony is meant to shore up Stevens’s legal defense that the senator would have paid all bills from the project — which doubled the size of his once-modest A-frame home — but Allen refused to disclose the costs. Paone testified that he gave Allen all the bills for his review before they were given to the senator’s wife, Catherine.

It is also meant to cast doubt over the testimony of Allen, the government’s star witness, who said this month that he did not tell Paone to “eat that bill,” leaving the impression with jurors that Stevens willfully did not pay for the costs.

The testimony comes on one of the most critical days of the trial. Several key witnesses are prepared to testify as soon as Wednesday, including the senator’s wife. Stevens also might take the stand, but defense lawyers did not indicate Wednesday when they would call him.

Stevens, 84, is facing federal charges that he failed to report more than $250,000 in gifts, including $188,000 in home renovations from Allen. He denies all charges and says that he paid $160,000 for the renovations, including some $130,000 to Paone, who was called on to help finish the elaborate project in the fall of 2000. Paone said Wednesday that Veco employees were doing a shoddy job on the house when he was called in to help.

Catherine Stevens paid Paone for five bills in 2000 and 2001, but a sixth bill for nearly $20,000 was unpaid by the couple.

Paone said Wednesday that Allen told him to look at the unpaid bill “as a political contribution” to Stevens. He said Allen wanted him to produce invoices to “cover all of our bases so that if any of his enemies could see the invoices that there would be no problem.”

Paone added that Allen later paid him for the balance after he carried out some improvements at Allen’s Alaska home.

Paone’s testimony conflicted with his statements to a secret grand jury in November 2006 during which he didn’t say that Allen told him to “eat that bill,” according to government prosecutors.

In an aggressive cross-examination, Joseph Bottini of the Justice Department sought to sow doubts on Paone’s testimony by pointing to several statements he made that seemed to conflict with his grand jury testimony. Paone said his recollection might be foggy since the renovations happened years ago.

Bottini also sought to downplay Paone's work by showing Veco taking the lead role in the project and arranging for a slew of renovations in which the man had no involvement.

"These guys were basically running the show down there, weren’t they?” Bottini asked.

"They were running the show," Paone said of Veco employees.

Paone also testified Wednesday that he told an FBI agent in 2006 that he “was concerned that the senator wasn’t getting billed for some of that stuff, and I was concerned that something like this would happen.”