Clean Water Agency Awards Contract to CH2M Hill; Water Quality Control Board Approves Davis’ Wastewater Discharge Permit

Sacramento-River-stockThe Vanguard reported October 4 that CH2M Hill was set to be awarded the contract for the Woodland-Davis surface water project.  Last week, by unanimous vote, the Board of the Woodland-Davis Clean Water Agency formally approved that recommendation and awarded a $141.2 million service contract to CH2M Hill for the design, construction and long-term operation of a new surface water treatment system.

The service contract, which the agency claims will cost 25 percent less than the agency’s original estimate, will provide for the delivery of surface water to Woodland and Davis by 2016.

“The project is necessary to improve water supply reliability and water quality, and help the cities comply with increasingly strict state and federal water quality and wastewater discharge regulations. Project development started in 2007, but is really the culmination of two decades of planning by agencies responsible for providing water to more than two-thirds of Yolo County residents,” said a release late last week.

Davis Mayor Joe Krovoza and Board Chair said, “I’m very proud to have been able to work on this, and I offer a special thanks to Board Vice-Chair Bill Marble who has been the constant on this Board and behind this effort. As he noted, this is one significant decision in a string of 10 or 15 monumental actions by both communities. The water advisory committee in Davis is to be thanked for its role in reducing the scope and cost of the project. On behalf of the City of Davis, I would like to thank the City of Woodland for its partnership.”

“This vote represents a significant milestone in a chain of significant milestones over the past few years,” added Bill Marble, Board Vice-Chair and Woodland City Councilman. “It started with two cities working together to secure a water right in an effort some said would never happen, and certainly couldn’t happen in today’s environment. Along the way we purchased an additional water right. We engaged in a historic urban-ag partnership with Reclamation District 2035 on a joint water intake facility.”

Mr. Marble added, “We’ve achieved a savings of more than 25 percent from original project cost estimates. We’ve come a very long way. We should be proud and celebrate the signing of this contract.”

“It’s the leadership of bringing the communities together and working with a private partner, Reclamation District 2035, that makes this very significant,” said Board Member and Woodland Mayor Skip Davies.

He added, “Everyone has been working together for the interests of our collective citizens. We’ve overcome major obstacles and proven that as different as we are, the cities work well together. We are improving both the water quality and the economic stability of our communities. It’s especially important for those here, but even more so for those who will follow. I would also like to thank our state and federal elected officials and partners whose support has been very critical to our ability to approve this contract today.”

Board Member and Yolo County Supervisor Don Saylor, who along with Bill Marble is a founding member of the WDCWA, stated, “This is one of the most significant milestones in Yolo County history. I started working on this my first year on the Davis City Council in 2003, and at that time we began setting the stage for the good work this Agency has pulled together. The pursuit of a Design-Build-Operate contract has proven to be the right choice. The cost reductions, protections for the cities and quality assurances combine in to what is truly a good piece of work. This is a historic moment and also an amazing legacy.”

The agency began the competitive procurement process in January 2011 by issuing a request for qualifications from contractor teams with proven experience in the design, construction and operation of water treatment facilities. In June 2011, the Agency pre-qualified three contractor teams.

By June 2013, two of the three teams had bowed out because they were unable to deliver the project under the rigorous terms and cost limits established by the agency. CH2M Hill was able to submit a responsive cost and technical proposal that led to service contract negotiations, and today’s contract award.

The award comes after some questioning of the method that left CH2M Hill as the sole bidder after two previous companies – Veolia and United Water – dropped out of the bidding process.

“We set the bar high for our expectations for quality and maximum cost,” said WDCWA General Manager Dennis Diemer in a statement on October 4. “During the past three years, we systematically reduced the project cost estimate and set a maximum project cost for the regional facilities to be constructed by the Design-Build-Operate team at $151.5 million.”

“CH2M Hill’s fixed price proposal came in $10.3 million under the maximum project cost requirement,” he said. “We are very pleased that CH2M Hill was able to provide a proposal significantly below our maximum cost limit and in compliance with all of the Agency’s requirements for the operation and maintenance of the facility at a substantial savings. CH2M Hill has a proven track record for delivering high quality water facilities. We’re confident in their ability to deliver the Agency’s project on time and within budget.”

In July, Mr. Diemer came before the Davis City Council to discuss the progress of the surface water project.  While he discussed in general the entire project, much of the questions from the public and council related to the withdrawal of two of the three DBO (Design-Build-Operate) teams.

Among the key questions is how we get a competitive price with only one bidder.   If CH2M Hill does not meet the price ceiling, “then we’ll have some decisions to make,” Mr. Diemer said in response to a question from Councilmember Lucas Frerichs.

“At that point we’ll have to decide whether we want to reengage in another Design-Build-Operate procurement process or whether we want to shift to a design-build process,” he said.  “Shifting to an alternative bid procurement methodology at this point will take time and will be expensive.”

Councilmember Brett Lee asked how cost overruns are then handled.

“That is their guaranteed maximum price,” Dennis Diemer explained.  “There are essentially no allowances in the contract [for cost overruns].  Any issues or problems that they encounter in the design, operation or construction – they’re to bear those costs and those risks.”

This contract qualifies by falling inside the maximum price ceiling set at $151.5 million.

At the same time, as Councilmember Lee pointed out in July, in a competitive bid process maybe there would be incentive to find those last cost-saving ways to get the bid down to $135 million, but that does not exist in a single-bid system.  And, in fact, they never came close to reaching $135 million.

Central Valley Regional Water Quality Control Board Approves Davis’ Wastewater Discharge Permit

According to a release on October 4, 2013, the Central Valley Regional Board (Board) adopted the Davis Wastewater Treatment Plant National Pollution Discharge Elimination System (WWTP NPDES) discharge permit without opposition, concluding a multi-year process to renew the city’s permit and set the standards the city must meet when discharging treated wastewater.

The adopted permit maintains the October 2017 timeline to upgrade the facility in order to comply with more stringent discharge standards. The necessary upgrades to the facility have been anticipated and are being constructed as part of the current Design-Build upgrade project.

According to the release, “City staff successfully negotiated changes to the draft permit which allow the City to continue to discharge treated wastewater to Willow Slough Bypass without additional facility upgrades beyond those currently planned – saving the City approximately $3 million. Additional ongoing savings of $40,000 per year were realized with reduced levels of required monitoring for constituents in the treated wastewater and a reduction in the number of special studies required to be conducted.”

—David M. Greenwald reporting

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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  1. Matt Williams

    DP, I’ve probably shared this before, but it is worth sharing again.

    As a member of the WAC, and just as importantly as a ratepayer, I have followed the DBO selection process very closely. The personal experience I have brought to that observation/analysis process includes 10 years of direct experience dealing with “guaranteed level of service” contracts in the healthcare information technology (information services/solutions) industry.

    What the WDCWA procurement team did through the life of the selection process was to continuously evolve and refine the “level of service” specifications for the construction and operation of the surface water plant. Each time such an opportunity for evolution/refinement presented itself, Dennis Diemer and the WDCWA team amended the procurement document to lock in that increased level of legally committed “level of service.”

    Think of the process in much the same light as a pole vault competition at a track and field meet (or if you will a high jump competition). We started with four contestants, and at the opening height, one of those contestants (the Beatty-Balfour team) was unable to complete a clean vault without knocking down the cross bar. After each successfully completed round the height was raised and the contestants took their shots at the new height. The next team that was unable to complete a clean vault was Veolia, leaving CDM Smith/United Water and CH2MHill as the final two contestants. Then at the new elevated height CDM Smith/United Water failed to clear the bar, leving CH2MHill standing alone,

    However, the WDCWA didn’t simply award the blue ribbon and winners trophies to CH2MHill. The forced them to vault at two addition heights . . . both successively higher than the one they alone were capable of clearing. Only when they had done so successfully did the WDCWA team decide that the “level of service” had reached an optimal point and the price for that “level of service” was both fair and reasonable.

  2. Michael Harrington

    And Davis lacks constitutional water rates.

    Woodland has.some similar deficiencies. Paul N: Woodland is on my list, when I get to their rate system.

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