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Water project RFP adjustments will yield millions in savings, agency says

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From page A1 | April 21, 2013 |

The Woodland-Davis Clean Water Agency board took action last week to trim the overall price tag of the two cities’ surface water project by another $10 million.

The board amended the request for proposals documents last week, asking the two remaining design-build-operate teams competing for the contract to submit bids that are 10 percent cheaper than the $245 million price tag agency officials have estimated the project will cost to build.

Effectively, agency officials say, the cost of the project to Davis and Woodland has been reduced to about $235 million, potentially saving residents on their water bills as the two cities ramp up water rates to pay off the project.

Rates in Davis are set to go up on May 1, with subsequent increases set for each Jan. 1 for the next five years, to begin paying off the project.

Approved by Davis voters on March 5, the project will pump water from the Sacramento River, treat it and pipe it to Davis and Woodland. The new water supply largely will replace each city’s dependence on ground water.

“With this amendment, we’ve set a very aggressive maximum price by driving down the cost of these project elements to $151.5 million,” Bill Marble, chairman of the water agency board and a member of the Woodland City Council, said in a statement. “That’s a 20 percent decrease from original engineering estimates. This will directly translate into cost savings and lessen pressure on rates over the long run.”

The board also adopted amendments that require the winning contractor to utilize competitive bidding processes — which must include local companies and resources — when selecting the subcontractors and construction materials they’ll amass to build the project.

This is especially important, said Dennis Diemer, general manager of the water agency, because 70 percent of the work on the project will be performed by subcontractors selected by the design-build-operate team.

Further, the board will have the ability to monitor the books of the DBO contractor in order to ensure the quality and efficiency of their work for the remaining 30 percent of the project.

“(Last week’s) actions continued the agency’s work to fiercely protect ratepayers’ financial interests by lowering project costs,” Mayor Joe Krovoza said in a statement. “In addition, we’ll satisfy our requirements for absolute transparency and better ensure the contractor’s pricing is competitive and comparable to industry norms.”

The aggressive actions come only months after the CDM/United Water team removed itself from the bidding process and had to be talked back in after raising concerns over the risks it was being asked to take on to put together a bid for the project.

Veolia Water North America also left the bidding process late last year, leaving just two teams to compete for the project.

However, while the agency tightened the strings on the RFP process in some places, Diemer said it also sweetened the deal for the two remaining bidders by allocating $250,000 to be given to the losing contractor. Diemer said the process of putting together a bid can cost up to $1 million or more.

The agency also has taken other measures to ease the burden on the bidding contractors, such as streamlining the bid submittal review process and making adjustments to the indemnity and default provisions of the contract.

“Through our conversations with the DBO teams I think we’ve made some adjustments, a number of changes, to address their concerns,” Diemer said Friday. “(We also made) changes that address risk transfer concerns that they had.”

The agency board will pick one of the two contracts after the proposals have been submitted in September and will consider awarding the contract in October.

Meanwhile, the agency and the two cities it represents are still hoping to receive state revolving funds, which are lower-interest loans that they can use to reduce the overall cost of the project. Agency officials also are still waiting for state funds worth $16.7 million that would match a federal monetary commitment for the water intake facility, which they have assumed into the overall cost of the project.

Construction on the project is estimated to begin later this year.

— Reach Tom Sakash at tsakash@davisenterprise.net or 530-747-8057. Follow him on Twitter at @TomSakash

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Tom Sakash

Tom Sakash covers the city beat for The Davis Enterprise. Reach him at tsakash@davisenterprise.net, (530) 747-8057 or @TomSakash.
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