Presentation Title. Subtitle (optional) Wastewater Treatment Operations. O&M Contract Procurement. Vancouver City Council Workshop/Public Hearing
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1 Wastewater Treatment Operations Presentation Title O&M Contract Procurement Subtitle (optional) Date July 20, 2015 Vancouver City Council Workshop/Public Hearing Brian Carlson, Public Works Director Staff, Title Dan Swensen, Engineering and Staff, Title Construction Services Manager Wastewater Treatment O&M Contract - 1
2 Presentation Overview City of Vancouver contract operations experience Overview of procurement process and results Overview of CH2M proposal and proposed service contract Westside Headworks project and SCADA Upgrade Contract transition process Questions, discussion and next steps Wastewater Treatment O&M Contract - 2
3 Vancouver Wastewater System City staff operates and maintains the sewer collection system including 32 pump stations; provides planning, development review and engineering services; industrial waste pretreatment program; NPDES and other environmental permit compliance; treatment plant capital; and treatment plant contract oversight. Since 1978, operation and maintenance of the Marine Park and Westside Water Reclamation Plants, the Industrial Food Waste Pretreatment Lagoon, and 8 pump stations performed by contract operator (currently Veolia Water). Wastewater Treatment O&M Contract - 3
4 Facilities managed under Contract Wastewater Trea=O&M Contract - 4
5 COV experience with Contract Operations Has been very positive with proven results: Environmental excellence in treatment Professionally operated and maintained facilities Innovation, continuous improvement and nimbleness Cost-effective operations Wastewater Treatment O&M Contract - 5
6 COV experience with Contract Operations continued What contract operations is and is not: Experts hired to operate the facilities Guarantees on facility performance and costs, shared and transferred risk Not privatizing, leasing or handing over facilities to corporate control City maintains control of utility, rate setting, policy control, NPDES permits, relations with customers, and control of collection system Wastewater Treatment O&M Contract - 6
7 COV experience with Contract Operations Public/Private partnerships What makes them work? Common goals and shared objectives continued Routine communication and consultation, close working relationships and continuous collaboration and cooperation Accountability, flexibility, risk sharing and fair compensation for services Longer term contracts typically function better allow contractor to invest in facilities and receive return, grow pride in operations and community, ownership in results. Wastewater Treatment O&M Contract - 7
8 Decision to seek proposals City has utilized the private sector to operate wastewater treatment facilities since Veolia Water has provided these services under several contracts and under different company names for that duration. January 2011 Veolia contract extended to Dec 31, 2015; decision made to engage in an open competitive process prior to contract expiration. January 2014 Workshop regarding proposed schedule and process. Confirmed continued use of private contractor. Periodic process updates through City Manager communications. Wastewater Treatment O&M Contract - 8
9 Procurement Process Planning work began mid-2013 Retained Eisenhardt Group in early 2014 to assist with RFQ and RFP development. RFQ issued June Received responses from three qualified firms (American Water, CH2M and Veolia) by August 2014 deadline. Retained law firm of Hawkins, Delafield and Wood to assist with drafting the service contract. Issued RFP on Dec. 16, 2014 to the three pre-qualified firms Proposed contract included. Wastewater Treatment O&M Contract - 9
10 Procurement Process continued Proposal preparation December 2014 April 2015 Detailed proposals submitted April 15, 2015 by all three firms. Proposals reviewed and evaluated. Process included interviews. A six member proposal evaluation committee scored proposals. Other staff and external resources also participated and contributed to the review process. Recommendation made to enter into contract negotiations with top-ranked proposer early June. Contract negotiations completed June 18, Wastewater Treatment O&M Contract - 10
11 Results of Procurement Process Three prequalified proposers submitted proposals American Water, CH2M and Veolia Water A best value selection process Proposals evaluated based upon: Proposer information and qualifications (30%) Technical proposal (40%) Financial proposal and costs (30%) CH2M was the highest ranked (scored) by the evaluation committee. Recommendation was unanimous. Wastewater Treatment O&M Contract - 11
12 Key Points of Scoring Results Meets, Exceeds, Outstanding Wastewater Treatment O&M Contract - 12
13 Overview of CH2M Employee Owned Company Started in 1946 in Corvallis Oregon 25,000 professionals worldwide $5.5 billion 2014 revenues Recognized leader in fullservice operations for public and private clients More than an operator - OMI is a wholly owned subsidiary Wastewater Treatment O&M Contract - 13
14 CH2M In the Northwest 5000 employees in the Northwest O&M for: Seattle Wilsonville Spokane County Walla Walla Twin Falls Knows Vancouver s facilities and operations Wastewater Treatment O&M Contract - 14
15 CH2M Operations Record CH2M s operating record and history is excellent: Environmental compliance and stewardship Asset management SCADA systems Continuous improvement and innovation Safety Good neighbor status Employee satisfaction Community involvement Wastewater Treatment O&M Contract - 15
16 Highlights of CH2M Proposal Westside Influent Headworks proposal SCADA System upgrade plan Strong asset management proposal including ISO compliance Experienced and very strong operations and management team Access to technical and engineering expertise and support for improved plant operations and regulatory trends and issues Continuous improvement focus including a cost savings sharing proposal Cost controls and guarantees Emphasis on transparency and access to records, data and costs Wastewater Treatment O&M Contract - 16
17 Overview of Contract New contract contains current industry contract best practices reflected in language Operations and Maintenance, Asset Management, Risk Assumption, Cost Controls and Guarantees Is performance oriented and results based not methods based 10-year initial term with the possibility of two 5-year extensions Early termination clause for convenience Anticipates undertaking two major capital projects: Westside Headworks and SCADA control system upgrade/replacement Wastewater Treatment O&M Contract - 17
18 Overview of Contract continued Contractor payments combination of a base service fee and certain pass-through and reimbursable costs City will now pay facility electric and natural gas bill directly subject to upper usage caps Potential additional reduction of service fee based upon contractual cost savings sharing approach Initial (2016) contract value = approximately $7 million per year including service fee and pass-through costs Wastewater Treatment O&M Contract - 18
19 Westside Influent Headworks $1.63 million project (est.) Results in operational efficiencies and reduces risk CH2M partnership 50/50 City costs capped at $800K 18 months after implementation base fee reduced $180K/year ROI of 4.5 years Wastewater Treatment O&M Contract - 19
20 Planned SCADA System Upgrade Existing SCADA system outdated and at end of life 30-yearold technology RFP contemplated SCADA replacement project CH2M is a leader in SCADA control New system will integrate current facilities with state-of-art industry standard technology Improve operations, reliability, security, transparency and availability of data and reduce risk Wastewater Treatment O&M Contract - 20
21 Proposed Contract Costs CH2M projected 2016 costs $7.0 million 2016 costs that COV will start to pay directly: Utility costs Estimated at $1.1 million including electricity and natural gas. Comparable 2014 total billed costs $9.7 million (includes utilities) COV total costs will reduce by $1.6 million annually, propose to reinvest into capital upgrades Wastewater Treatment O&M Contract - 21
22 Transition CH2M and Veolia have extensive experience in managing similar transitions. CH2M proposal outlines transition plan emphasizing collaboration, transparency and communication. Experienced team leading transition. Transition efforts sensitive to existing staff s situation and availability. City staff will work closely with CH2M and Veolia to plan, coordinate and ensure a seamless transition occurs. Transition can be completed by 12/31/2015. Wastewater Treatment O&M Contract - 22
23 Existing Employees Very specialized talent currently working at the facilities. CH2M recognizes value of that talent and the roots existing employees have in our community. Upon contract approval, CH2M will immediately begin recruitment efforts of existing employees to identify possible employees. CH2M anticipates many existing employees will be offered employment. Wastewater Treatment O&M Contract - 23
24 Next Steps/Timeline July 27, 2015 Seek Council approval of proposed contract Early August 2015 Begin transition period with workshops for current on-site employees January 1, 2016 New contract operations begin Note: Contract is currently being reviewed by WDOE Wastewater Treatment O&M Contract - 24
25 Follow-up Questions and Discussion Dan Swensen, Engineering and Construction Services Manager (360) Brian Carlson, Public Works Director (360) To request other formats, please contact: City Manager s Office (360) WA Relay: 711 Amanda.Delapena@cityofvancouver.us Wastewater Treatment O&M Contract - 25
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