Utilities Strive to Optimize Purchasing Power
By Dawn Kristof
One critical aspect of being able to offer optimum service to the end user — the consumer — is the ability of these municipal systems to procure products and services best suited for the job.
Competitiveness! Operational Efficiency! Cost Optimization! These are the fighting words of Corporate America. Yet these very same words are being espoused with greater frequency and urgency among our nation's public water and wastewater systems as they seek to comply with increasingly stringent environmental standards to protect public health, while remaining viable in today's competitive market.
One critical aspect of being able to offer optimum service to the end user — the consumer — is the ability of these municipal systems to procure products and services best suited for the job. Oftentimes the "best" does not necessarily equate to the "lowest purchase price." This can be seen as an impediment to purchasing agents who must work within public procurement edicts designed to safeguard the public's dollars. But are these procurement laws really an obstacle or do they offer more flexibility than originally thought?
"It was obvious to me that there were a lot of misconceptions, misinformation and lack of basic understanding of the procurement process," opined Ralph Charlton of the Alexandria (VA) Sanitation Authority. "People either took what they were told at face value or were not comfortable enough to question the status quo."
Challenging the status quo was a group of representatives from the Association of Metropolitan Sewerage Agencies (AMSA) and the Water and Wastewater Equipment Manufacturers Association (WWEMA) who took part in a year-long dialogue to examine the public procurement process.
The result of this dialogue was publication of a document titled "Optimizing Public Agency Purchasing Power." This document will serve as a useful guide to public officials in identifying the best procurement strategies to enhance their utility performance and improve customer service while protecting the public's investment.
"Publicly run utilities need to discover and learn about proven and effective approaches to procurement that compress the business cycle, preserve and enhance competition, and promote quality results," said Mike Sweeney of the Louisville and Jefferson County Metropolitan Sewer District, a participant in the AMSA-WWEMA dialogue.
He expressed hope that "managers in the trenches as well as the boardrooms will begin a dialogue that challenges status quo thinking of procurement as a disincentive to quality and timely delivery and, rather, regard it as a set of tools essential to ensuring excellent outcomes."
The procurement strategies identified in the document include: base bid; competitive sealed bidding; cooperative purchasing base bid; incentive contracting; leasing; prepurchase base bid; prequalification of bidders; request for proposals; and sole source procurement.
Recognizing that different projects and equipment require different approaches, the document provides a set of values associated with each procurement strategy to help purchasing agents determine which method is most appropriate on a case-by-base basis. These values include: purchase price; internal costs of procurement; time-value of money; after-purchase support; reliability; operating costs; and manufacturer's experience.
Another participant in the process, Pat Marchese of the engineering firm HNTB, offered his opinion that "in today's competitive world, we must optimize every opportunity to deliver value to the ratepayers, and that requires the best possible value from every piece of equipment. Getting the highest value for your dollars will be accomplished by effective collaboration of operations, procurement, engineering and equipment manufacturing."
Others in the group concur that the public procurement process must be more value-focused than price-conscious and that the benefits will include improved equipment and service quality and reduced equipment life-cycle costs.
Authors of the document include:
For AMSA:
- Ralph Charlton, Alexandria (VA) Sanitation Authority
- Pat Marchese, HNTB
- Mike Sweeney, Louisville and Jefferson County Metropolitan Sewer District
- Bob Tant / Billy Turner, Columbus (GA) Water Works
For WWEMA:
- Russ Komline, Komline-Sanderson
- Mike Miller, Parkson Corporation
- Tom Pokorsky, Sanitaire
- Bob Wimmer, Aqua-Aerobic Systems
David Dise of Fairfax County (VA) Water Authority was also instrumental in the development of this document, representing the views of the National Institute of Governmental Purchasing. WW/
About the author: Dawn Kristof is President of the Water and Wastewater Equipment Manufacturers Association, a Washington-D.C. based trade organization founded in 1908. The member companies of WWEMA are among the world's leading providers of technology to the water and wastewater industry, employing 43,000 workers with collective sales nearing $6 billion worldwide.
Copies of the document can be obtained through WWEMA by calling 703-444-1777 or e-mailing [email protected].