Friday, September 7, 2012

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.

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