Water Board Approves $142 Million in New Design-Build, Construction, Maintenance Contracts

During its regular meeting on Wednesday, September 26, 2012, the Detroit Board of Water Commissioners approved four (4) new contracts, including two design-build, one construction and one as-needed maintenance contract in the total amount of $142,340,715. Walsh Construction (Detroit) was low bidder and awarded two of these contracts. 

(1)  Design-Build Contract DWS-882, "SCADA Radio Network Upgrades" was awarded to Detroit Radio Team* for $7,995,090 and a duration of 1,095 calendar days. Proposals for this contract were originally submitted in March, 2011. 

For a variety of reasons, which Deputy Director Darryl Latimer outlined to the Board during the meeting, it took DWSD more than 18 months to award this contract. The Board was assured, however, that the Contractor would not seek a change order for increased costs due to this delay. DWSD normally asks bidders to hold their prices firm for 180 days to allow for Water Board and City Council approval.

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(2)  Construction Contract SP-563, "1958 Filters Replacement and Facilities Rehabilitation at Springwells Water Treatment Plant" with Walsh Construction Company for $75,899,000 and a duration of 1,710 calendar days. 

This project was bid July 31, 2012 and took less than 2 months to be approved by the Board. During the Board's discussion of this contract, it was noted that the Springwells WTP was a major part of DWSD's water supply network, and that both the Northeast WTP and Southwest WTP were being looked at for future decommissioning. We first reported about this in August, 2011 (here) in the context of a CH2M Hill report on the subject.

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(3) Construction Contract PC-790, "Equipment Purchase and Installation on an As-Needed Basis" with DeMaria Building Co. for an amount (NTE) $20,457,244 and a duration of 1,095 calendar days. 

This project was bid just one month ago on August 21, 2012. Commissioner Fred Barnes reported that while his committee recommended approval of this maintenance contract, he hoped it would be the last one. He later referred to the DWSD maintenance contract as a "dinosaur" and "hopes its goes extinct."

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(4)  Design-Build Contract PC-791, "Sewage Sludge Incinerator Air Quality Improvements" with Walsh Construction Company for a cost (NTE) $37,989,471 and a duration of 1,676 calendar days.  

Assistant Director Sam Smalley reported during the Board Meeting that this contract involves upgrades to the 8 incinerators in Complex II, and is required to comply with new EPA regulations [40 CRF Part 60] that become effective in March, 2016. This contract also grew out of the March, 2012 Biosolids Management Symposium hosted by DWSD for academics and other experts in the field. The Department selected a design-build form of delivery, Mr. Smalley explained, to shorten the procurement process. Contract PC-791 is scheduled for completion by June, 2017.     

* (Update 10/5):  Detroit Radio Team is a Joint Venture between Motor City Electric and PCI (Process Control & Instrumentation, LLC). CDM Michigan is also reportedly part of this JV. 

For more about DWSD Update, click here.

Macomb Lacks Standing to Pursue Claims against 15 Mile Sewer Repair Contractors, Federal Court Rules

Earlier today, U. S. District Judge Robert Cleland ruled that the Macomb Interceptor Drain Drainage District lacks the legal standing necessary to maintain claims for racketeering and anti-trust violations it filed in July, 2011 against 25 of the 40 contractors involved in the 15 Mile Interceptor Repair Project. The Court granted summary judgment in favor of the contractors. The Court also ordered Macomb to show cause by September 24, 2012 why summary judgment shouldn't be entered in favor of the the remaining 15 contractors. 

In a 30 page Opinion and Order, Judge Robert Cleland determined that when Macomb County bought the Macomb Interceptor in 2009 from the City of Detroit, it did not acquire the rights to pursue all claims arising out of the repair contract. The assignment of rights provision only extended to "rights under all contracts, warranties and guarantees that apply to services or goods related to the Macomb System." Macomb County did not acquire rights to the non-contractual claims asserted in its July 18, 2011 lawsuit, which include racketeering (RICO), anti-trust (Sherman and Clayton Acts), and certain common law tort claims (fraudulent misrepresentation and tortious interference). 

Contrary to Macomb Interceptor's argument, the Bill of Sale does not grant it the right to prosecute "any and all claims" of every description, but only all such claims and rights transferred or assigned in the Acquisition Agreement. Subsection (b) strengthens the conclusion that section 2.4 did not transfer or assign non-contractual claims arising from the [15 Mile Interceptor Repair] Project and strengthens the court's determination that Macomb Interceptor does not have standing as an assignee to bring its non-contractual claims.

Judge Cleland also rejected Macomb's argument that it had standing on the basis that it allegedly paid an inflated price for the Macomb Interceptor or that it was allegedly overcharged between 2005 and 2009, when it bought the interceptor from the City of Detroit. 

The Macomb Interceptor Drain Drainage District, which did not exist in 2009, was an "indirect purchaser," Judge Cleland wrote, and "[u]nder the indirect purchaser doctrine, a plaintiff who does not purchase directly from an alleged antitrust violator generally lacks standing to sue under the antitrust statutes." 

Notwithstanding the Court's ruling, the 40 contractors involved in the 15 Mile Interceptor Repair Project are not yet out of the woods. The City of Detroit, which does have the legal standing to prosecute the non-contractual claims, was granted permission to intervene in the Macomb Interceptor Drain Drainage District's federal lawsuit in May, 2012. 

For more about DWSD Update, click here.   

DES/LaBelle JV Submit Low Bid on As-Needed Electrical Contract, DWS-885 (UPDATED)

DES/LaBelle Joint Venture, LLC submitted the low bid on September 13, 2012 for the project known as DWSD Contract DWS-885 “As-Needed Low Voltage Wiring III.”

Here are the as-read bids. It does not appear that equalization will change the outcome.

1. DES/LaBelle Joint Venture, LLC . . . . . . . .$4,707,318
2. Motor City Electric Technologies, Inc. . . . $4,775,066
3. Bayview Electric Company, LLC . . . . . . . . $5,990,000 
4. Shaw Electric Co. . . . . . . . . . . . . . . . . . . . .  $6,250,836 

Update (10/25): The Board of Water Commissioners approved Contract DWS-885 yesterday at its Regular Board Meeting in the amount of $4,669,337.67 for a duration of 1,095 calendar days. 

For more about DWSD Update, click here.

Walsh Submits Low Bid on Central Services Facility (CSF) Improvements Project (DWS-884)

Walsh Construction submitted the low bid on Wednesday, September 12, 2012 on the project known as DWSD Contract DWS-884 “Central Services Facility (CSF) Improvements.” 

Here is the bid tab with the as-read bids. Even after DWSD equalizes the bids, Walsh will be the low bidder. 

1. Walsh Construction . . . . . . . .$12,929,000
2. DeMaria Building Co  . . . . . . $12,989,000
3. Tooles Contracting  . . . . . . . . $13,560,542
4. Major Cement  . . . . . . . . . . . . $15,349,000
5. Sorenson Gross . . . . . . . . . . . $15,417,013

For more about DWSD Update, click here.

Kwame Kilpatrick, Victor Mercado Corruption Trial: There's an App for That!

I don't plan to cover the Kwame Kilpatrick trial in any great detail; I'm not a criminal defense attorney and the trial is expected to go on for months. Moreover, the local media are gearing up for what promises to be near round-the-clock coverage of the trial. And if you can't wait until you're home for an update on the evening news, you feel the need to track the trial, moment-by-moment, you're in luck. There's an app for that!  My wife spotted this new app for the iPhone developed for WDIV. Enjoy! 

Check out this application on the App Store:

Kwame Kilpatrick Trial - WDIV LSN Mobile Category: News Updated: Sep 11, 2012 7 Ratings

Additional Resources:

• Detroit News - Kwame Kilpatrick Trial Blog (here)
• Detroit Free Press - Trial Blog (here)

For more about DWSD Update, click here. 

Water Board Authorizes Director to Negotiate 5 Year, $48 Million Contract with EMA (UPDATED)

At a Special Meeting of the Board of Water Commissioners this morning, the Board unanimously approved a resolution that authorizes the Director, Sue McCormick, to negotiate and execute a 5 year professional services contract with EMA, Inc. for an amount not to exceed $48 million.

EMA is the consultant that on August 8, 2012 recommended that DWSD cut staffing levels within the Department by 81%.  Crain's Detroit Business also reported on this story here.  

The $48 million EMA will be paid over 5 years breaks down as follows:

• $19.5 million - Consulting Services ($17M) and Expenses ($2.5M)
• $21 million - Outsourcing Services
• $7.575 million - Contingency Reserve

This information was provided to Board Members by Matthew Schenk during this morning's Special Board Meeting.

Note: I realize the breakdown figures exceed $48 million a bit, but that's what I wrote down in my notes. Once the minutes for this meeting were published, or if I can get a copy of the full text of the Board resolution, I'll fix these numbers. 

Update (9/7): The Department published a press release this afternoon announcing the Board's approval of the EMA contract, along with a bit more explanation of what's expected to be part of EMA's contract. 

"In addition to the [consulting] services listed above, EMA will work on the development, assessment, and implementation of non-core outsourced services as originally identified within the 90-day operational assessment. Non-core services include building maintenance, grass cutting, snow removal, and janitorial services. Over the term of the agreement, it is anticipated that those outsourced services will come at a cost of roughly $21 million, resulting in an expected net savings to DWSD of more than $50 million." 

Update (9/10): Here's the breakdown of projected costs from Section 10.1 (Costs) of EMA's Phase 2 and 3 Proposal: 

 

Update (9/12): The Detroit News is reporting (here) that a formal contract with EMA is expected by October 1, 2012.  

Update (11/14): The Detroit News reports (here) that the Detroit City Council, which apparently has to approve EMA's contract, has put off a vote. One Council Member referred to the contract as "outrageous." No surprise. Its unclear, at least to me, why City Council is required to approve this contract after all of the steps taken in the past 12 months by Judge Cox and others to separate DWSD from the rest of the City of Detroit. DWSD now has its own general counsel, HR department and finance. Submitting a contract that is part of an 81% staff reduction to an elected body for approval is a suicide mission. The Board of Water Commissioners knows this; Judge Cox must know it too. This situation probably explains a November 8, 2012 Root Cause Committee Report that requests in part that DWSD be allowed to exempt certain contracts from City Council approval. Without the Court giving DWSD sole authority to approve the EMA contract, it will surely languish with the City Council for the foreseeable future. 


For more about DWSD Update, click here.