In a competitive water services market, water and wastewater utilities depend on the effective procurement of equipment required to meet environmental standards yet maintain optimal levels in customer service, safety, and O&M. Utilities have the challenge of balancing regulatory compliance while remaining consumer conscious.
Municipal procurement procedures are a complex process involving policy makers, municipal purchasing staff, utility supervisors, legal advisors, consulting engineers, equipment manufacturers, contractors and customers. If the goal is obtaining equipment that ensures the lowest total cost to the public entity and its consumers, then a review of existing procurement practices is critical.
Value is a word that often gets over-used in buying and selling practices and thus its true meaning is often devalued. More than just meaning “better” or “lower” price, best value incorporates the total installed cost, which includes operating costs, durability of the equipment, and post-sale support. One must look past the emphasis on initial price and be value conscious.
Current procurement methods can often be an impediment to the success of any utility project. In bidding — a major aspect of the procurement process — contractors are not able to properly determine which equipment price should be included in their bid, particularly when the specification includes the ambiguous “or equal” phrase. Often contractors are at a disadvantage because of the lack of time to vet manufacturer’s scopes. Because the contractor is usually selected on the lowest price, less consideration is given to the ability of individual equipment to meet specifications.
Suppliers of quality water and wastewater equipment have always believed that the owner (city/utility) and the owner’s engineer should be the ones to select the equipment. Decisions are based on a professional analysis and experience, not just a low price. How can the engineer be sure they get what is specified? The key is in the upfront bid documents, the bid form. The bid form is as critical as the specifications. The equipment specifications should precisely detail the selected equipment, its construction, and operating parameters. The next thing to turn to is the bid form. There are at least three good ways to structure the bid format to maintain control over the selection of equipment. They are as follows:
- Pre-Purchase. Under this arrangement, the owner with its consulting engineer could pre-select and pre-purchase equipment prior to bid by negotiating directly with the equipment supplier. The owner would then supply the equipment to the contractor for installation under the bid contract.
- Sole Source Specification. An engineer is justified in writing a sole source specification: to comply with the owner’s standardization program, to optimize operation, maintenance, and safety programs, and to provide for interchangeability of spare parts. Only one manufacturer provides equipment compatible with the engineer’s design. The contractor must prepare their bid based on the named equipment and materials specified only.
- Base Bid Specification. In this example, the bid form lists the name of the selected manufacturer, and the award of the contract is made on the base bid manufacturer’s price. This allows contractors to operate without taking excessive or unreasonable risks to be the low bidder. Alternates can be evaluated, if desired, only after the award; thus, still allowing a competitive field. No unnecessary or unreasonable effort or work is required with this approach. Most importantly, control of the project is in the hands of the owner through the consulting engineer.
The three approaches discussed allow the owner and the engineer to select the equipment for their project. This will result in more cost-effective, better designed, better constructed, and better operating installations at public utilities; thus, long-term value is ultimately passed onto the consumer. WW
About the Author: William Flores is vice president, municipal systems & customer service with Smith & Loveless Inc. He is also a member of the Water and Wastewater Equipment Manufacturers Association (WWEMA) Board of Directors and serves on the Legislative/Regulatory Committee. WWEMA is a non-profit trade association formed in 1908 to represent water and wastewater technology manufacturers and related service providers. WWEMA is made up of many of the most prominent and influential companies in the industry that are working together to shape the future of water and wastewater technology in the U.S. and around the world. For more information about WWEMA, go to www.wwema.org. Interested in becoming a WWEMA member? Contact WWEMA Executive Director, Vanessa Leiby at [email protected].
