As reported on Tuesday, the city is moving forward with an RFQ that may end up restricting options that could save the city twenty million dollars, if not more, on the design of its wastewater treatment plant. The justification that arose from both staff and councilmembers like Mayor Joe Krovoza is that council made the decision to choose the local Charrette Design Option.
Mayor Joe Krovoza stated at the May 21 meeting, “It is my position… that the Charrette process is one that this community came up with, this community likes, that fits our site and there’s been some opportunities where I’ve suggested doing something a little different than the Charrette process, this council has come back and said we’re going to keep it a local project. If it’s a local project the Charrette design is what we came up with.”
“If this council is not interested in doing the Charrette Design Plan, then this is not the RFQ for us to move forward with, period,” he said. “This is not a performance-based approach, this is an approach to implement the Charrette plan.”
But PERC Water, in a letter to the city dated June 13, 2013, wrote, “We respect the Council’s vote to rely solely on the Charrette Design Plan as the basis of design for the Project, however we remain puzzled why the Council would not entertain designs in a parallel path that could result in such meaningful savings to the ratepayers of Davis.”
If that seems like an odd position, observe that the Charrette conducted its view on October 22 and 23, 2009. The report would not be published until January 29, 2010. But, as Matt Williams noted in a comment yesterday, “We are talking about 3 and 1/2 years of wastewater industry innovation.”
When the report came out, its stated purpose was: “A wastewater planning Charrette be conducted to examine all treatment alternatives, in an effort to minimize ratepayer impacts (emphasis added).”
“The charrette team developed a conceptual plan for the most appropriate project of upgrading the City’s WWTP to achieve compliance with adopted treated wastewater effluent discharge requirements,” staff would later write. “Their recommended plan is a combination of innovative ideas and straightforward solutions which will meet the City’s goal of a reliable, lower cost project to meet current NPDES permit requirements, as well as integrating innovative features to facilitate meeting future regulatory changes.”
But it is based on three to four-year-old ideas and the process is now precluding the possibility of newer and more cost-effective alternatives that might have been developed in the ensuing years.
The decision to go forward with the Charrette Design Plan was made by the former council. As Councilmember Brett Lee noted in his back and forth with the mayor during a discussion of the RFQ on May 21, there are a lot of decisions that that particular council made that the current council is reviewing, undoing, and has determined to be unwise.
In April 19, 2011, on a council that would include Mayor Krovoza, Rochelle Swanson and Dan Wolk, council came forward will a recommendation on the project delivery methods recommending that the council select “the Charrette Panel’s recommended conceptual plan as the preferred project for upgrading the wastewater treatment plant to meet regulatory permit requirements” and “the design-bid-build (DBB) method as the preferred project delivery method.”
However, staff noted that, while it recommends the Charrette team’s recommendations, it suggests an alternative “to relax the project scope to allow other technologies and treatment processes.”
They argue, “The advantages of opening the project scope are that alternative technologies and processes might provide additional benefits to the city.” While they offer, “A disadvantage of opening the scope is the possibility of losing the synergies of the charrette plan – it is more than the sum of its parts.”
Key debate currently is whether the council should stick with the Charrette Design Plan or move to a more performance-based approach.
In 2011 staff wrote, “An important consideration for choosing a project delivery method was to determine if the majority of project requirements will be prescriptive or performance based. Staff believes that the best projects use a combination of prescriptive and performance requirements within the contract documents.”
While prescriptive would mean “owner control,” performance would place a higher priority with the outcome and less priority about how that outcome is achieved.
At the time, staff argued, “Because of the complexities of biological wastewater processes, the fact that the charrette plan was well-reviewed by a panel of experts, and the desire to remain flexible for future regulatory changes, staff believes that is important to be more involved in how the outcome is achieved.”
But that was several years ago now, and the prospect of saving tens of millions hangs over the process.
Staff found performance-based approaches offer the “maximum potential for cost savings through design innovation” – the exact point in question in the present discussion – while prescriptive based “can be more costly because of high level of design.” In a prescriptive process, the design risk “is more likely assumed by (the) owner.”
Staff argued that the DBB process was “more preferable when prescriptive requirements are a higher priority,” while if “higher priority is given to performance requirements (i.e. allowing a greater shift of responsibility from the owner to the project delivery team), staff would recommend the design-build method.”
Though they add that they were “confident” that “either method can result in an excellent, cost efficient project for the city.”
Despite these recommendations, the council chose the performance-based model and Design-Bid. Council made that decision based on the shifting of risk from the city to the DB firm.
However, the current RFQ is clearly prescriptive, despite even recent council directions which asked staff “to go back and rework the RFQ so that its focus is on the ability to provide a solution to our wastewater challenges, and specifically, with a concentration on performance criteria rather than a specific design. “
The question becomes how we went from the performance-based model to the prescriptive model today that is so exclusive that at least two notable firms have declined to submit bids.
“The RFQ as presently written is limited to very specifically qualify only those firms or teams that have prior experience with the design prescribed n the Charrette Design Plan,” the PERC Water writes in a letter to Michael Linquist.
The firm said it does not intend to submit a proposal, based on the likelihood “that our firm will likely be disqualified from the process, or at a minimum be considered non-qualified to receive a Request for Proposal (RFP) for the Project.”
Alder Construction is another firm that is not going to be pursuing the project under the current RFQ. As they told the city, “We feel that, while the RFP states that innovation is encouraged, the fact is that the Charrette Plan is so proscriptive it really eliminates the innovation side of the design-build process.”
However by May 21, the council was dead set against even looking into a performance-based bidding process, with three councilmembers seemingly comfortable going forward with the Charrette Design Plan.
—David M. Greenwald reporting
Why is Council Wedded to Nearly Four-Year-Old Charrette Design? Because the City spent millions of dollars planning this project, already is implementing the first phase of the project, and they have some very specific requirements they have to meet in their NPDES Permit that require action or risk of large fines.
But steeping back, I’d suggest taking a very detailed look at PERC Water’s track record before saying any of their ideas are better than what has been proposed. PERC’s MO, which they have done in many other locations, is to bypass staff and go to Council with an alternative that supposedly would save them money and time with promises that the plant will perform better and cheaper than what was proposed. So long as they can privately operate it and collect sewer rates for a long time period (30 years?), and in my opinion, skimp on the design and maintenance of the facility.
A few recent examples of how PERC does its business development can be found by searching Google about them in Morro Bay or Los Osos. Things ended badley for them there. Generally, PERC promises the moon, they negotiates hard on the details. If it doesn’t financially pan out for them, they’ll blame onerous requiremens (e.g. NPDES Permit, CEQA requirements, or something else) for backing out. Their strategy typically causes Councils to rethink their strategy, delay the project for 6-12 months, then go back to what they originally planned, which now will cost more because of all the delays.
PERC did convince folks in Santa Paula and Mountain House to build their plants, and they operate the City of Ione facilities. PERC operates Santa Paula and Ione, but they don’t operate Mountain House any longer. A simple call to Mountain House may add some background to how that plant is doing.
My advice is to not assume that just because PERC promises something, to consider it fact. If it was true and proven, there would be a lot more PERC designed wastewater plants in California.
Maconi,
Look at the Staff Report at http://city-council.cityofdavi…pgrade.pdf It clearly lays out the choices that Council had to choose from, and Council chose Performance and DB. Since that decision by Council, you are absolutely right that Staff has systematically pursued Prescriptive and D-B-B, spending millions of dollars along the way to complete the D part of D-B-B and thereby come up with the prescriptive criteria that are the hallmark of the RFQ/RFP process we are in the midst of. It really couldn’t be any more “black and white” and in Staff’s own words no less.
I will contact Morro Bay and Los Osos to get the whole story there. But this is not about PERC per se. It is easy to shoot them as the messenger. This is about millions of taxpayer dollars and risk management.
Matt:
I think this is the link to the staff report you referenced.
http://city-council.cityofdavis.org/Media/Default/Documents/PDF/CityCouncil/CouncilMeetings/Agendas/20110419/Packet/09-Wastewater-Upgrade.pdf
Also, of note, the City recently received tenStatements of Qualifications from design-build teams (http://daviswwtp.org/city-receives-statement-of-qualifications-from-10-design-build-teams/) to design and construct this project. PERC was not one of the firms who submitted.
Judging my their track record I’m aware of, I would surmise that PERC is trying to circumvent this procurement process and attempt to sole source this project. Which, IMO, would not be in the City’s best interest. If PERC can do the project better and less than these ten other firms, and have the best quals to execute the project, they should have submitted an SOQ and compete for this project like everyone else does.
Curtis
[url]http://city-council.cityofdavis.org/Media/Default/Documents/PDF/CityCouncil/CouncilMeetings/Agendas/20110419/Packet/09-Wastewater-Upgrade.pdf[/url]
Tetrying to post links
My point of the story is the $20 million, PERC being only one possible alternative. And again, as Brett Lee argued, there is no reason that they would necessarily earn the big, but why not at least entertain it as a possibility?
Maconi said . . .
[i]”A few recent examples of how PERC does its business development can be found by searching Google about them in Morro Bay or Los Osos. Things ended badley for them there.”[/i]
Maconi, I followed your advice and Googled “Los Osos” “Morro Bay” and “PERC Water” and the information that showed up was very interesting. The most succinct article (one of many) can be accessed at [url]http://www.investigation.com/articles/library/2011articles/articles12.htm[/url]. The problems at both Los Osos and Morro Bay were with the other bidding company MWH Americas, Inc. As best as I can tell the Los Osos issues significantly predated Morro Bay’s (see [url]http://www.newtimesslo.com/news/4954/bid-battles/[/url] and PERC was only asked to discuss options with Los Osos well after the problems with MWH.
So, my question back to you is, “What did PERC do in either situation that you wouldn’t have done yourself?
The bottom-line at Morro Bay was that there were problems illuminated in the EIR that made a WWTP upgrade at the existing location virtually impossible and PERC [u]acted responsibly[/u] and withdrew from the bidding for a project that will never be allowed to happen (see [url]http://www.morro-bay.ca.us/index.aspx?nid=352[/url].
maconi said . . .
[i]”Judging my their track record I’m aware of, I would surmise that PERC is trying to circumvent this procurement process and attempt to sole source this project. Which, IMO, would not be in the City’s best interest. If PERC can do the project better and less than these ten other firms, and have the best quals to execute the project, they should have submitted an SOQ and compete for this project like everyone else does.”[/i]
Curtis, your statement above clearly illustrates the precise problem with the RFQ/RFP process Davis has created. The RFQ requirements are so prescriptive of a specific technical solution that innovative companies are disqualified before the starting flag has even dropped . . . and that disqualification is going to cost Davis rate payers tens of millions of dollars.
You appear to believe this is all about one company. [u]The truth it is about the fiscal welfare of our City[/u]. Can Davis really afford to see another unnecessary $50 million extracted from its local economy. The ratepayers will have to pay that $50 million out of their pockets and as a result will not be spending that $50 million for goods and services offered by Davis businesses. Our City and its Staff should be doing everything they can to get the greatest possible value for each dollar they spend. That is clearly not being done in this case.
What makes this even more problematic is that the City is in the process of looking for $25 million to $55 million to repair Davis’ deteriorating streets. If the wastewater treatment plant upgrade were being handled in the Design-Build fashion (focused on Performance) mandated by Council in early 2010, the savings realized in the WWTP upgrade would fund the road repairs. $50 million is a terrible thing to waste.
Matt… I get your position… as a resident of El Macero, you contribute nothing towards the City roads you use… but it is fascinating that you oppose more costs for sewage treatment when El Macero is unwilling to pay for their CURRENT impacts on the City’s WW treatment costs. Do you want free fries with that?
hpierce, there is an old saying, if you can’t refute the message, then attack the messenger. Your comment strays in that direction. But I’m a big boy and I can take the heat. This isn’t personal. The amount of money I will personally save as my proportion of the $50 million saving is miniscule when compared to the amount of money that all the other Davis ratepayers will save. This is about 1) making a fiscally responsible decision, and 2) not seeing policy voted into being by the Council directly disobeyed by Staff.
Your point about my personal contribution to streets maintenance in the City Limits is probably a fair one. I don’t. You don’t contribute to the County streets maintenance, which I do contribute to, so we’re probably even on that score. But even if we aren’t I’d say my volunteer hours on the WAC, the NRC, at the Senior Center, etc. probably count for something in your balancing equation.
Since you brought it up, El Macero does pay each and every year for its proportion of the costs of the Wastewater treatment plant. In 2008 through a valid Prop 218 protest vote, El Macero residents clearly told the City that the new Sewer rate structure was not proportional because under that structure the City is charging sewage fees for substantial amounts of irrigation water that [u]never[/u] goes into the sewer pipes and [u]never[/u] gets treated at the WWTP.
All you have to do is read the simple straightforward mathematics of the Cost of Service study available on the County website (see [url]http://www.yolocounty.org/Modules/ShowDocument.aspx?documentid=21407[/url]), to understand that Davis’ current Sewer Rate structure does not meet Prop 218’s proportionality requirements. Despite the successful 218 protest, El Macero continues to pay the City the correct amount each year. It simply doesn’t pay the unConstitutional amount.
But as I noted above, your discussion of sewer rates for El Macero is an ad hominem digression from the true topic, the WWTP upgrade procurement process, and what it will do to the aggregate Davis economy.
Oops. The County website link for the Cost of Service study is [url]http://www.yolocounty.org/Modules/ShowDocument.aspx?documentid=21407[/url]
http://www.yolocounty.org/Modules/ShowDocument.aspx?documentid=21407
Matt:
My point was only based on the premise for the article topic, was because PERC said they could save $20M in capital costs, and $55M in life cycle costs, that the City should consider changing course. I wanted to point out that relying on PERC to make this course correction is likely unwise, and typically their MO is to circumvent the process to their benefit.
I would say in response to what you said that:
1) The project is clearly necessary (in some form), and saying that going with PERC will extract $50M from the economy is specious at best. Wastewater upgrades have been deferred for a LONG time, and now the costs are coming to bear. Lots of other communities have spent lots of money upgrading their plant, and now it is Davis’s turn. The plant, as currently set up, is simply not up to today’s standard.
The money (whatever it is) needs to be spent to meet the “prescriptive” NPDES requirements, which aren’t going to backslide to a number or set that will significantly reduce projects costs with any ease. There are anti-backsliding requirements and lots of other NPDES permits with similar restrictions that are all designed to benefit the beneficial uses of the receiving water and downstream water bodies. I think the cost estimate savings referred to are “red herrings” and was just pointing that out.
2) The DB process may produce lower costs than what was estimated, but no one really knows until the process is done. Part of winning a DB project is to reduce costs – that’s why you go DB and have bidders bidding against each other to add efficiencies out of the project. That’s how you win the project in the end. The numbers out there now are just estimates, and no one will have an answer – not PERC, not the 10 bidders, or the City, or West Yost – unless we let the process run its course and end up with a contract for an up or down vote. So saying that switching to this process or that will result in $50+M in savings is specious at best. Fortunately, the City has 10 potential bidders, which is a lot more than the one remaining for the WDCWA project…Actually, comparing the two procurement processes would be a nice story for this website.
3) With regards to information about Morro Bay, I would probably refer to the Morro Bay/Cayucos Agendas instead of the New Times or other third party websites. Info about the project is here:
http://ca-morrobay.civicplus.com/index.aspx?nid=352
Info about the PERC negotiations are on various JPA agendas and minutes between June and November 2010, which you will have to search for on their website. At the link above, just type PERC Water into the search box on the left, and review agendas around the June to November 2010 time period. I also uploaded a public document about Morro Bay’s staff tour of the Santa Paula and Mountain House plants. I think it is accessible at this location:
http://www.scribd.com/doc/153409772/PERCfacility-Tour-Final-Sept-2010
This is more of a technical document describing staff’s tour of two PERC plants.
My whole point for commenting on this particular article was the two posts in two days that portrayed the PERC offer as the reason to change course. It isn’t. Plus, I’m a long time wastewater engineer who grew up in Davis who doesn’t want to see Davis taken advantage of on this project. Anyway, that’s it for now.