Agency to Consider Approval of Contract for Water Facility Construction

WOODLAND, CA – Following a nearly three-year competitive process for the selection of a contractor to design, build and operate a new surface water treatment system for the cities of Woodland and Davis, the Woodland-Davis Clean Water Agency (WDCWA) Board of Directors is to consider awarding a $141.2 million service contract to CH2M Hill, the sole bidder able to meet the Agency’s requirements for project costs, quality assurances and performance guarantees. CH2M Hill’s price proposal is approximately 25 percent lower than the Agency’s original cost estimate. The contract will come before the Board at its regular meeting at 3 p.m. on October 10 at the City of Davis, City Hall. If approved, construction of the facility is expected to begin in March 2014.

“We set the bar high for our expectations for quality and maximum cost,” said WDCWA General Manager Dennis Diemer. “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. 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.”

The Agency began the competitive bidding process in January 2011 when it issued a request for qualifications from a contractor teams capable of designing, building and operating the water treatment facility at a set price for a period no less than 15 years. In June 2011, the Agency approved three highly-qualified contractor teams for participation in its competitive bidding process. By June 2013, two of the three contractor teams had dropped out because they were unable to deliver the project under the rigorous terms and cost limits established by the Agency.

CH2M Hill submitted a proposal for the project in July 2013. Following an exhaustive review by the Agency, that proposal was deemed compliant with the Agency’s requirements for use of the latest construction technology and operating procedures. These requirements will best ensure full compliance with present and anticipated state and federal drinking water regulations. The Agency Board subsequently authorized the negotiation of a service contract with CH2M Hill. Key components of the proposed service contract include:

  1. Transfer of substantial construction, maintenance and repair risks to CH2M Hill. CH2M Hill will be responsible for: obtaining and maintaining numerous permits, licenses and other regulatory approvals; any additional design costs that exceed the fixed price proposal; increased costs associated with failure to complete design and construction on schedule; certain risks associated with differing site conditions; consistently producing treated water that complies with all federal and state drinking water regulations; costs associated with equipment breakdown and failure; and repairing and replacing facilities as may be required throughout the operations phase at a cost not to exceed the established service fee. In the event that any of these risks occur, CH2M HILL will be required to expend its own capital to address the risk and resolve problems.
  2. Unconditional guarantees to the Agency for the full and timely performance of the design, construction and operation obligations.
  3. Plans for the competitive subcontracting of approximately 70 percent of construction work, which includes materials and the construction of the pipelines and water treatment facility.
  4. Provisions for the “open book” review of costs for the roughly 30 percent of the work CH2M Hill will perform directly, such as project design.
  5. A program for the major maintenance, repairs and replacement of Project machinery, equipment, structures and improvements, and a method for funding that work as part of the annual service fee to be paid during the 15 to 20 year operations period.
  6. Partial design and construction financing in an amount equal to 10 percent of the designbuild price (approximately $14 million). Under these terms, the Agency will finance 90 percent of the design-build price and CH2M HILL will finance 10 percent on an ongoing basis until completion of construction. The Agency is obligated to repay the financing only after the satisfactory completion of design and construction.

Information on the service contract is available as part of the October 10 Board agenda packet, which can be accessed via the Agency’s website. The entire service contract is available on the Documents page of the Agency’s website. For more information, please contact WDCWA General Manager Dennis Diemer at (530) 747-8299.