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IMPLEMENTATION of the CITY of TAUNTON’sDESIGN / BUILD / OPERATE
WASTEWATER PROJECT
A Case History of Massachusetts’ First D/B/O Wastewater Project
NEWEA Annual ConferenceSession 15 - January 30, 2001
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Need Gives Way to Innovation
Federal and state funds no longer readily available
WWTP’s requiring significant capital repairs
Correction of permit violations - band aid approach
Competing demands for municipal funds
Additional capacity required for growth
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New Partnerships
Needs defined new approaches for partnerships with private firms to provide:• Wastewater plant operation & maintenance services• Design engineering services• Construction of capital improvements
Risks of liability and performance transferred• Private sector guarantee
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Old Private Arrangement
Publicly operated only for a few months
Short-term operations contract executed in 1980
Services for: • Plant and pump stations• Residuals disposal• Industrial pretreatment
Capital items limited to items not exceeding $3,0000
Employees represented by Local 1144
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Permit Compliance
Worn out equipment, Capital improvements required
Violations for BOD5 and TSS to Taunton River
Series of EPA Administrative Orders issued
City commenced traditional facilities planning
Started preparation of Plan of Study, I&I reduction plan and CSO abatement plan
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Project Delivery in Massachusetts
Design/Bid/Construction ContractsMassachusetts General Law establishes and Inspector
General’s office enforcesChapter 7 (designer selection law)
Chapter 149 (construction bidding law)
Operation ContractsChapter 30B (supply and service)
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Project Delivery in Massachusetts
Chapter 30BSupply and service contractsRequest for Proposals procurement documentEvaluate the relative merits of proposalsAward to most advantageous firm (merit & price) No restrictions requiring award to lowest price firm
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Taunton Considers Alternative Project Delivery
May 1995 Paul B. Doran, P.E of ARI retained to conduct initial feasibility study
Study recommended 4 options:Design/build services for capital improvements with
separate short-term (5yr) operations contractDesign/build services for capital improvements with
long-term (20yr) operations contractFacility saleFacility lease
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Special Legislation
Massachusetts Legislature required to approve a “home rule” petition and enact special legislation to give the City of Taunton the legal basis to conduct a design/build/operate procurementSupport required from:
City Council, Raynham, DightonState Representatives and SenatorsLocal labor unions
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Elements of Special Legislation
Key elements of Taunton Special Legislation:20 Year Term of AgreementOne 5 year renewalEligible for State Revolving Fund LoansDevelop RFP to evaluate a contract award based on technical,
qualitative and quantitative meritsAward contract to most advantageous proposerAward not restrictive to lowest cost proposerRequire a Project Labor AgreementNegotiation with selected vendor allowed
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City Procurement Objectives
Key City procurement objectives:Upgrade WWTP and pump stations with improved performanceMinimize operation and maintenance costsAdhere to NPDES complianceAdhere to all EPA, MADEP regulationsComply with Administrative order requirementsReduce the cost of improvements on the City ratepayersMinimize negative impacts to customersProvide employment opportunities and development of staffComply with EPA CSO policy - City preferred elimination of all
CSO discharges
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Design/Bid/Build/Operate [D/B/B/O]• Selection of engineer to permit, plan & design project• 100% contract documents issued for bid• Selection of general contractor to construct project• Selection of Engineer to provide construction
management services• Finance project through SRF / GO / Revenue bonds if
Municipality
Operation of Facilities by Municipality / Industry
Traditional D/B/B/O Approach
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Design/Build [D/B]• Entity issues RFEI / RFP for design/build services• Entity evaluates proposals & selects vendor• Entity negotiates contract with vendor• Vendor designs & constructs project• Entity provides construction management services• Entity finances project through SRF/GO/Revenue
bonds
Operation of Facilities by Municipality / Industry / Vendor
Design/Build Approach
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Design/Build/Operate [D/B/O]• Entity issues RFEI / RFP for design/build/operate services• Entity evaluates proposals & selects vendor• Entity negotiates service contract with vendor• Vendor designs, constructs & operates project• Entity provides construction management services• Entity provides contract monitoring• Entity finances project through SRF/GO/Revenue bonds
Design / Build / Operate Approach
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Proposers were invited to respond to 4 options:1. Continue current, short-term contract operations
services with no capital improvements;2. Provide long-term (20 year) O&M services with DB of
capital improvements;3. Purchase the wastewater treatment plant and make
capital improvements; or4. Lease the wastewater treatment plant and make capital
improvements.
Request for Proposal Options
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Special Legislation
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Short Term Perspective / Long Term PerspectiveQuality vs Quantity of FinancialsStrength of FirmStrong Firm Made Weak -- Special Purpose CompanyWeak Firm Made Strong -- Solid Parent Guarantee
Talk with Credit Analyst / Talk with a Rating AgencyWork with Source Materials
Evaluation of Proposers’ Financials
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Public Entity Financing
Sources of Public Sector CapitalGeneral Obligation DebtRevenue DebtConcession Payments
Revenue Procedure 97 - 13Maximum 20 Year Term, Renewals AllowedMinimum 80% Fixed Fee
Credit Strength of Proposers/Vendors
Project Financial Analysis
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D/B/O Contracts
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Elements of Solid Contracts
Well-defined Scope of Service
Highly Specific Performance Standards and Attainable Performance Guarantees
Necessary Sureties -- Construction and OperationLabor and Material Payment BondsPerformance BondsBid BondLetter of CreditVendor Parent Guarantee
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Elements of Solid Contracts - II
Review / Oversight of Design and Construction
Well-Defined Acceptance Testing Requirements
Information and Reporting Requirements
Periodic Testing Provision
Annual Operations Review by Independent Engineer
Well-Defined Arbitration / Dispute Resolution Provisions
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Elements of Solid Contracts - III
Protection For Existing EmployeesAll Employees Offered jobsEqual or Better Pay / BenefitsNo Lay-offs for Life of Contract -- Except for CauseRecognition of Existing UnionsNo Loss of SeniorityNo Involuntary Transfer to Off-site PositionAbility to Stay in the Public Pension SystemAbility to Remain Public Employees
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Elements of Solid Contracts - IV
“Make Whole” Provision
Termination ProvisionsCauseConvenience After the Fifth AnniversaryExcessive Increase in the Service FeeExcessive Future Capital Modification CostsInability for Entity to PayNon-appropriation