Veolia, one of the three main bidders for the DBO in the surface water project, has been the subject of scrutiny, because one of its subsidiaries operates a bus line through the occupied territory in Palestine, opening the agency up to concerns by Palestinian rights groups about the propriety of doing business with a company that is operating in an area where possible racism and discrimination is occurring.In addition, a review of the company by the Vanguard last fall showed a number of problems with the operations of some of its North American water plants.
These concerns have now subsided with the announcement at the December 20, 2012 Woodland-Davis Clean Water Agency meeting that the Veolia Water team had withdrawn from participation in design-build-operate (DBO) procurement.
In a letter dated December 12, 2012, Sean Haghighi, Vice President of Veolia Water North America wrote to Jim Yost, “As a follow up to our earlier discussions, this letter is to confirm the Veolia Water Team’s (Veolia Water West Operating Services, Inc., Kiewit Infrastructure West Co. and MWH Americas, Inc.) withdrawal from the Woodland-Davis Clean Water Agency design/build/operate (DBO) procurement.
Mr. Haghighi continues, “Our team sincerely appreciates the opportunity to participate in this procurement over the course of the past two years and we wish the communities of Woodland and Davis complete success with this important project.”
Currently, that leaves two bidders for the project, CDM/United Water and CH2M Hill. A fourth team had previously been determined to be qualified – Balfour Beatty – but they did not make it on the list of the three shortlisted teams.
The question now is whether Balfour Beatty is interested in joining the shortlist of companies that would be invited to bid on the project.
The decision was made in June 2011 to create the shortlist. Following that decision, Balfour Beatty requested that WDCWA reconsider whether to include them on the shortlist.
On October 10, 2011, the board made the decision to reject their request and continue with the plan to limit bidding to the previously shortlisted three DBO teams. However, the board noted that Balfour Beatty could be reconsidered should one of the three selected teams drop out.
Staff had argued strongly against the inclusion of a fourth at first, arguing that the additional firm would increase the uncertainty and discourage the top three firms from fully engaging in the RFP process.
The belief is that somehow three is the magical number, with four firms making the odds of success too low for them to invest more than $1 million into the project, and two being too few firms to have real competition in which to keep down prices.
The staff report from the December 20 meeting indicates that discussions are currently underway with the Balfour Beatty team to see if they are interested in being added to the shortlist of teams and responding to the RFP.
Staff writes, “In the event that the Balfour Beatty team does indicate interest in being included on the shortlist of teams, the Agency Board will need to determine whether to add Balfour Beatty to the short list of teams. Alternatively, if Balfour Beatty responds that they are not interested, the Agency will need to decide whether to proceed with issuing the RFP to only the two presently short-listed DBO teams, or to change the current procurement plan.”
Sources have told the Vanguard that the reason for the withdrawal was the delay in the project, which required the bidder to submit two proposals – one for a Woodland-only project and one for the Woodland-Davis joint project.
None of the bidders, according to General Manager Dennis Diemer, will submit their bids until after Davis votes.
When Davis moved its vote to March 2013 from November 2012, the Woodland-Davis Clean Water Agency was able to adjust its schedule by requiring the DBO teams to carry two alternatives – a 30 mgd joint project and an 18 mgd Woodland-only project.
Creating two alternatives, however, obviously increases the price and apparently that was a price that Veolia was not willing to pay.
But this might ultimately be good news for the project if Balfour Beatty joins the fight. At one point, two of the other firms had serious ethical considerations.
United Water faced, at one point, serious legal issues and an indictment, which claimed two of its managers at a Gary, Indiana, plant “intentionally manipulated water quality monitoring results at the facility over a five-year period between 2003 and 2008.”
As we reported previously, “The indictment charges the company with 25 counts of Clean Water Act violations and one count of conspiracy to defraud the U.S. Government by tampering with E. coli bacteria monitoring results.”
However, while the ethical concerns remain, the company officials were acquitted last fall, in a federal trial, of criminal charges.
Veolia was a much more difficult problem. United Water faced a concrete allegation and, while they were at least partially exonerated, Veolia presented a political problem more than a legal one. We believed that, given the fact that the bid would be awarded following the election, Palestinian rights groups might become involved in a political campaign.
With Veolia withdrawing and United Water acquitted, the proponents of the project have much less of a headache in terms of the companies involved in the DBO process.
—David M. Greenwald reporting
Veolia made the smart business decision. And good riddance.
As someone who works for peace in the Middle East and Palestinian rights, I want to make a correction. The local group that you refer to are a hate group, antisemitic and anti-Israel neo-Nazis who have no real concern for the future of the Palestinian people. Please don’t legitimatize them by buying their pretense of caring about the people of this region.
JR: I dont know anything about the Veolia/Middle East issue, really. Glad you posted a clarification, which I think you intended for the DV editor.
Veolia is a large, multi-national company that stays alive and makes tons of corporate profits by making fiscally and strategically smart business decisions. Who knows what the communications were between Veolia and West Yost and the JPA on this project? It’s all a black hole of drama and self-enrichment by numerous parties involved; I seriously doubt our CC or staff really have a clue what is going on behind the scenes.
I suspect that Veolia’s internal analysis of the JPA situation is that Woodland is fiscally shaky, and Davis is stewing with political and environmental and legal turmoil, and is likely to be for several years.
THis project is a mess, and I seriously doubt a bonding company would or could responsibility issue bonds. Without the subsidies by Davis of Woodland that our CC just foolishly blessed, would anyone issue bonds to Woodland, with its huge increase in utility service shutoffs that spiked after the last rate hike? There are additional rate hikes to go, too. The answer is no.
Veolia’s managers have to analyze all of the above, and the smart money is that they should invest elsewhere. They made the smart choice.
I think United Water is going to reach the same conclusions; they also have professional staff that conduct similar research to what Veolia just did. Stay tuned for more defections from the JPA DBO bidding process.
I never have liked the idea of a private operator of something as important to our health as our water system. Seems to me that there would inherently be less direct accountability.
BK: exactly corrent. Making things worse, the JPA is an extra layer of unnecessary bureaucracy between the Davis CC and the control of the water project. The JPA Board is only 4 (2 each from Davis and Woodland CC’s), so we would have to get a Woodland CC to split off from their side to vote with us to make any kind of substantive change to the project, etc.
To recap, Davis voters install the CC; The CC hires the CM; the CM hires the Utilities Manager; the CC members and the UM work with the JPA; the JPA has a General Manager; that GM talks to and instructs the private contractors. How many layers between the Davis voter and their water system?
Oh, and the private contractors, by law, are obligated by corporate governance law to absolutely try to soak the customer (us) for all we are worth, to increase profits payable to the shareholders of that water company. So you have that drama, too.
We can do a lot better. We can do this the Davis Way.
We have a standard in our collective jurisprudence colloquially known as ‘innocent until proven guilty,’ yet in this piece David is arguing the antithesis with his regurgitation of allegations that were determined to be false by the court.
“company officials were acquitted…in a federal trial, of criminal charges.”
So why repeat the false allegations unless your goal is to scuttle the project?
There are no false allegations here Mark, the jury ruled that what happened did not rise to the level of criminal negligence.
Mark, the allegations were not determined to be false. United Water was not found factually innocent, a different process.
[quote]We can do a lot better. We can do this the Davis Way.[/quote]
Michael,
I found this statement very interesting given that at various times you have characterized the CC and staff as
“incompetent”, purveyors of “fraudulent” rates, kowtowing to Woodland and developers, to name a few disparaging comments. Since these are the people that we have elected and who have been appointed to serve the citizens of Davis, I am quite curious about what you mean by “the Davis Way”. From my perspective, it would appear that for you it would be synonymous with “the Harrington way”. If I am wrong, could you provide a clarification about the meaning of “the Davis Way” ?