Water Materials Open Procurement

-----------------------------U.S. Conference of Mayors

Mayors Water Council Beacon Hotel, Washington, DC

May 1, 2015

Presented byBruce Hollands

Executive DirectorPVC Pipe Association

UNI-BELL PVC PIPE ASSOCIATIONFounded in 1971 as a non-profit organization, the PVC Pipe Association (PVCPA) is the authoritative source of information on PVC pipe and serves the engineering, regulatory, public health and standardization communities. The PVC pipe industry contributes in excess of $14 billion annually to the US economy and supports more than 25,000 jobs.

Our mission is to support the use of longer-life, lower-maintenance, cost-effective and corrosion-proof PVC piping in water and wastewater systems – for sustainability and long-term asset management.

WATER MATERIALS OPEN PROCUREMENT

• USCM 2007 National City Water Survey• Procurement Reform• Case Studies• Local Lawmakers Can Make a

Difference

USCM 2007 MAYORS WATER COUNCIL NATIONAL CITY WATER SURVEY

• Water and sewer rates are increasing in America’s major cities

• Must close gap between system revenues and expenditures

• Historical trend of increased spending will continue

• Water main breaks a major concern/continue to plague cities

• Asset management provides information to determine user rates and help achieve system sustainability

• Inclusion of life-cycle planning to asset management allows cost-efficiencies and savings to be achieved, which can help win public’s support for reinvestment in water and sewer infrastructure

USCM: CORROSION MAJOR COST

Larry, Jim “Corrosion, Not Age, is to Blame for Most Water Main Breaks,” WaterWorld, 2009.

USCM: CORROSION MAJOR COST

U.S. CORROSION MAP

“A 2011 study by the American Water Works Association Research Foundation reported that ductile iron pipes with the thinnest walls (representing the majority of metallic pipes sold) in

moderately corrosive soils have a life expectancy of only 11-14 years,” says Dr. Rich Anderson of the Mayors Water Council.

PVC’s resistance to corrosion is the key reason for its superior performance over other pipe materials - removes corrosion as a failure mechanism.

According to a Utah State University study, corrosive soils affect 75% of all US Water utilities.

REPORT: 2012 UTAH STATE UNIVERSITY• Study on water main breaks in the US

and Canada showed PVC pipe to have the lowest rate of main breaks of all pipe materials examined, which included ductile iron, cast iron, steel, concrete, and asbestos cement.

• Corrosion of iron piping is a major problem for water systems and newer metallic pipes are experiencing failures more rapidly than older types because of their thinner walls.

Water Main Break Rates in USA and Canada: A Comprehensive Study

USU WATER MAIN BREAK GRAPH

WATER MATERIALS OPEN PROCUREMENT

• USCM 2007 National City Water Survey• Procurement Reform• Case Studies• Local Lawmakers Can Make a

Difference

LACK OF OPEN BIDDING: MAJOR PROBLEMNumerous organizations support open procurement measures for local water and wastewater projects.

• U.S. Conference of Mayors Water Council

• U.S. Water Alliance

• National Taxpayers Union

• Competitive Enterprise Institute

• Water Finance Research Foundation

• American Legislative Exchange Council

• Water and Wastewater Equipment Manufactures Association, Inc.

• National Association of Home Builders

• The Franklin Center

• American City County Exchange

PROCUREMENT REFORM: USCM REPORTAccording to the US Conference of Mayors a total of $2.28 trillion is needed in water and wastewater piping over the next 20 years.“Closed procurement processes lead to unnecessary costs, and may diminish public confidence in a local government’s ability to provide cost-effective services.”

“The common practice of choosing metallic pipes without a full financial evaluation continues to dominate procurement decision-making…Only by modernizing procurement practices and the assumptions upon which pipes are selected can municipalities achieve much needed cost-savings and performance improvements in their underground infrastructure at a time of dwindling financial resources.”

“The use of non-corrosive materials can help reduce the overall costs of maintenance, operations and expensive capital replacement plans.”

- Richard F. Anderson, Ph.D., Senior Advisor, U.S. Conference of Mayors Water Council

Municipal Procurement: Procurement Process Improvements

Yield Cost-Effective Public Benefits

WHY PROCUREMENT REFORM?

• Restrictive procurement policies for underground infrastructure may cause developers to bypass your community and build new housing projects in other jurisdictions where access to all piping materials is allowed. Drives up costs for new subdivisions and makes homeownership less affordable.

• Technical considerations: There are no valid technical reasons for not including PVC pipe in municipal bids except when operating pressures are above 305 psi or when water temperature is above 140°F. These design conditions are extremely rare for a utility to encounter.

• The average operating pressure for water systems in North America is only 77 psi (with pressure fluctuations less than 20 psi). As a result, almost every water or sewer infrastructure project should include PVC pipe in the bidding process.

• Impediments to change are more fiscal and political in nature than technical.

PVC PIPE LONGEVITY REPORT

• “A combination of pipe examination and testing data in conjunction with previous pipe break studies support PVC as a sustainable pipe material and confirm its longevity in excess of 100 years.”

• “Understanding the longevity of pipes improves the ability of a water utility to make better infrastructure investment decisions with improved affordability results for customers,” says report author Dr. Steven Folkman.

• “A major finding of the study is that US water utilities can reduce water main breaks and operations and maintenance costs by including corrosion-proof PVC piping in their replacement programs.”

A Comprehensive Study on PVC Pipe Excavations, Testing and Life Cycle Analysis

Utah State University, Buried Structures Laboratory

AFFORDABILITY AND THE 100+ YEAR BENCHMARK STANDARD

LONGEVITY OF PVC PIPE

• “AWWA Water Research Foundation study confirms life expectancy of PVC water pipe in excess of 110 years.”

• “European tests on PVC water pipe excavated in Germany in 2004 determined PVC pipe’s longevity at 170 years.”

PIPE MATERIALS AND CORROSION COST COMPARISON WORKSHEET

A cost comparison methodology for water pipes developed during the USCM study is a useful tool that can be used by finance managers and utility

engineers.

CRITICS OF OPEN PIPE SELECTION• Suggest procurement reform would unduly complicate the task of design engineers

overseeing pipe-replacement projects

• Decisions on pipe material selection would be removed from the engineer

• Local government will incur increased costs, project delays, bidding confusion, and loss of decision-making ability

• Diminish the recommendations of a registered professional engineer that may specify a particular type of pipe based on factors not limited to soil conditions, strength of materials, stress or strain calculations, corrosiveness, etc.

Fair and open competition requires the bidding and selection of technically qualified pipes that is fair, open, and responsible. There are two key components:

Engineering Autonomy is Preserved - all pipe materials should be qualified and selected based on sound engineering principals and the decisions governed by established technical standards.

Design engineers should always have the autonomy to set technical material performance criteria based on specific project conditions.

Procurement Process is More Accountable - once pipes are technically qualified, all qualified pipes must be competitively bid. Competition benefits everyone, including the municipality and

taxpayers. By allowing contractors to bid on alternate pipe materials that meet technical performance criteria, the municipality will instill accountability in the procurement process

which will reduce costs, improve quality, and foster innovation. Costs are higher when only one material is specified versus bidding two or more materials.

WHY FAIR AND OPEN COMPETITION IS IMPORTANT?

• Excluded materials have not been objectively assessed by the utility engineers who instead rely on competitive “claims.”

• Example: PVC Pipe Leaches Toxins

• Since 1955 PVC pipe has been certified to NSF/ANSI Standard 14 covering physical performance, health effects and quality requirements for pipe products and NSF/ANSI Standard 61 (for potable water contact products) that establishes strict criteria for products to be considered safe for use.

• NSF International certifies that PVC pipe and fittings are resistant to chemicals generally found in water and sewer systems, preventing any leaching or releases to ground and surface water during the use of the piping system.

• NSF also confirms no known chemicals are released internally into the water system from PVC piping and no known toxicity effects occur in the use of PVC pipe.

• Some 10 million quality control tests have been conducted on water carried through PVC pipe since it was introduced in North America and around the world.

USDA OPEN PROCUREMENT POLICY

“All procurement transactions…shall be conducted in a manner that provides maximum open and free competition. RUS expects the owner

and the design engineer to be open to reasonable alternatives... Contractors, manufacturers, and suppliers with acceptable equipment and materials should have a chance to participate in the project. Once

the facility requirements have been established that assures good quality, the goal is to construct the project at the best price for the

system and the taxpayer.”

WATER MATERIALS OPEN PROCUREMENT

• USCM 2007 National City Water Survey• Procurement Reform• Case Studies• Local Lawmakers Can Make a

Difference

CASE STUDY: SCHENECTADY, NYU.S. MAYOR, MAY 3, 2010

“The traditional habit of using one or two pipe materials exclusively is no longer satisfactory. Local officials need to compare all proven pipe

materials on a life cycle basis before choosing the best pipe for the city.”

- Schenectady (NY) Mayor Brian Stratton, Co-Chair of the U.S. Conference of Mayors Water Council

CASE STUDY: PLEASANTON, CAU.S. MAYOR, MARCH 28, 2011

“As a solution to corrosion and to better control costs, Pleasanton began using

corrosion-proof PVC pipe in the mid-1980s because it doesn't need coatings, liners, or other materials to ensure strength or sustainability.”

“PVC pipe is about 70% cheaper than ductile iron pipe.”

“Pleasanton's demonstrated progress and outside recognition have come from being adaptive, flexible and open to better technologies such as PVC pipe...”

- Pleasanton (CA) Mayor Jennifer Hosterman, Co-Chair of U.S. Conference of Mayors Water Council

Pleasanton's Underground Infrastructure: Sustainability, Cost-Efficiency Through Better Materials Procurement Practices

CASE STUDY: INDIANAPOLIS, IN

Underground Water Infrastructure: Getting Results in Indianapolis through

Continuing Improvement and Modern Materials Procurement Practices

“We found that alternative pipe materials like PVC pipes have demonstrated far superior performance…and also learned through life cycle analysis that PVC pipe has both a longer useful life than traditional pipe materials, and has a lower cost

to both install and maintain.”

“PVC pipes in our system have a failure rate 2.5 times less than traditional pipe materials, helping our city realize significant cost savings for ratepayers.”

- Indianapolis (IN) Mayor Gregory Ballard, Co-Chair of the U.S. Conference of Mayors Water Council

CASE STUDY: CULPEPER, VA

Councilman Jon Russell, Culpeper, VA:

• Russell disputes claims that fair and open bidding leads to higher costs: “Culpeper’s taxpayers could have saved $10,000-$20,000 if we had adopted competitive bidding a few years earlier.”

• Your municipality can only benefit by reviewing its procurement policies.

• The price of all pipe goes down when all products that meet recognized standards are included in the bidding process.

CASE STUDY: PRINCETON, IL

CASE STUDY: CALGARY, AB• In 1976, Calgary drilled into its asset

management practices and risk identification and moved to PVC from metallic pipes to bring down the break rate.

• The move to PVC from a largely metallic network has helped drive down the break rate. The network is currently about 50 percent plastic pipe.

• Prior to 1910, the city used wooden pipes, which are no longer in service. In 1910, the city moved to cast iron until 1968. The AC pipe was introduced in 1955 until 1978. Ductile iron was used from 1963 to 2010. And the PVC came in 1976 and remains in use today.

• “Like cars…you have pipe technology that moves on,” says Andy Hughes, leader of asset planning, City of Calgary’s water resources.

ACCESS TO NEWER TECHNOLOGIES

WATER MATERIALS OPEN PROCUREMENT

• USCM 2007 National City Water Survey• Procurement Reform• Case Studies• Local Lawmakers Can Make a

Difference

AFFORDABILITY MATTERS • Open procurement:

• Supports life-cycle planning and asset management• Allows cost efficiencies and savings to be achieved• Improves affordability results for customers• Provides access to newer technologies• Helps reduce water main breaks• Increases public confidence• Leads to better water conservation and supports sustainability goals• Results in lower replacement, maintenance and repair costs

Ductile Iron $1.5mPVC $400k

Per Mile

YOU CAN MAKE A DIFFERENCE

Update Old Design Specs Corrosion vs. Sustainability

PVCPA is a proud Associate Member of the Mayors Water Council Water Development Advisory Board

of the U.S. Conference of Mayors

THANK YOU