City releases bids on water plant project
WOONSOCKET – As previously reported, the city recently signed a contract of roughly $56.8 million for the construction of a new water treatment plant in what was described as the most competitive of three offers – but it had never divulged what those other offers were – until yesterday.
Indeed, the others were markedly higher and included a proposal of $73,375,846 from Veolia Water North America and another from CH2M Hill Engineers, Inc., for $71,251,243, according to documents made available for review by Public Works Director Steve D’Agostino.
Asked to explain the timing of the release of the information, D’Agostino said he wanted to release it earlier but waited for a clearance from the city’s consulting lawyers on the project. He said he wanted to make sure there would be no legal repercussions.
“I waited until the attorneys told me that I could,” said D’Agostino. “Nothing to hide, just didn’t want to put the city in a compromising position unnecessarily.”
D’Agostino said the original offer tendered by the winning bidder, AECOM-Suez, was actually $61,388,000 – substantially higher than the contractually agreed-upon deal. But D’Agostino said the city’s negotiating team, in consultation with City Engineer John Pratt and Consulting Engineer Robert Otoski of Camp Dresser McKee Smith, were able to approve some changes to the contract that resulted in a savings of more than $4.6 million.
The city has been under orders by the state Department of Environmental Management since 2008 to replace the antiquated Hamman Water Treatment Plant on Manville Road, which dates back to the 1960s. DEM and the state Department of Health say the plant is no longer capable of meeting stringent new federal standards for drinking water and also discharges sludgy filtration byproducts into the Blackstone River that are harmful to fish and other river life.
After many delays and adjustments to the construction deadline,
the city issued a request for proposals last year and received responses from the three global engineering firms in February. The City Council unanimously authorized Mayor Lisa Baldelli-Hunt to enter negotiations with AECOM-Suez on July 10. AECOM-Suez is two companies that have formed a partnership called Woonsocket Water Services LLC to execute the terms of the contract.
Like the Regional Wastewater Treatment Plant on Cumberland Street, the city’s water department would essentially become privatized under the pact, which calls for Woonsocket Water Services LLC to design, build and operate the proposed plant, to be located on a parcel of about 20 acres off Jillson Avenue, for 20 years.
The two bidders who did not receive the contract were both familiar to city officials. CH2M Hill is the company that currently operates the regional wastewater treatment plant and oversaw the design and construction of some $38 million worth of purification improvements that went on line last summer. Veolia North America is the company that had the contract to run the plant before CH2M Hill.
D’Agostino pointed to market dynamics to explain the gap of nearly $10 million that separates the offers tendered by Woonsocket Water Services LLC and its nearest competitor.
“They came in with their pencils sharp, and they really wanted the job,” said D’Agostino.
Moreover, said the public works director, the AECOM-Suez partnership very likely had a better handle on its profit margin because it had recently built a carbon copy of the plant it proposes for the city in Portsmouth. Like the local facility, the Portsmouth Water Treatment Plant was also built on a site that is particularly challenging because of an abundance of underground ledge.
If the release of the competing bids proves anything, it’s that former City Council President Robert Moreau wasn’t just pulling numbers out of thin air when he predicted the new plant could cost an estimated $74 million months before the bids were discussed publicly. Moreau divulged the figure during his final speech as an elected official during Baldelli-Hunt’s second inauguration, on Dec. 6, 2016.
Earlier this month, the city council authorized members of BaldelliHunt’s administration to begin borrowing up to $65 million from the Rhode Island Infrastructure Bank to build the facility. The figure exceeds the price tag of the plant by some $8 million, mostly to allow for the possibility of creating a sort of contingency fund to make sure the lender gets paid if the city runs into a cashflow problem. The cushion, known as a debt service reserve fund, is required by the lender.
AECOM-Suez’s contract with the city indicates that the company is shooting to begin construction of the new plant by the end of next year, after final designs are completed and approved by state regulators. Construction costs will be borne entirely by ratepayers of the Woonsocket Water Department, but city officials are reluctant to predict how much those rates will rise.
Because the water department is a state-regulated public utility, any rate hikes that are proposed to pay for the new plant must be approved by the Public Utilities Commission, which is required to solicit feedback and air the details at public hearings.