Privatization-Differing Views, Similar Objectives

For the 21st consecutive year, the American Consulting Engineers Council (ACEC), the Associated General Contractors of America (AGC), and the Water and Wastewater Equipment Manufacturers Association (WWEMA) held a Joint Committee meeting to discuss issues common to all three industry groups.

For the 21st consecutive year, the American Consulting Engineers Council (ACEC), the Associated General Contractors of America (AGC), and the Water and Wastewater Equipment Manufacturers Association (WWEMA) held a Joint Committee meeting to discuss issues common to all three industry groups.

Forty six individuals braved the notorious South Florida El Nino weather and met in Marco Island to discuss this year’s theme, the Outlook for Privatization in both the municipal and industrial marketplaces.

The format of this year’s clambake broke ranks from the traditional freewheeling discussions of past years to include three formal presentations, followed by a question & answer session. Three speakers representing the perspective of each of the Associations made a presentation. They examined the current state of privatization, speculated on the future direction of the movement, and recommended how the three organizations should approach this trend in the future.

Al Curran of Woodward and Curran Inc. of Portland, ME, and representing the views of the consulting engineers, kicked off the meeting by calling on the three organizations to join forces and lobby Congress, the States and the EPA in support of legislation and regulations that favor and encourage privatization for water and wastewater facilities. Specifically, he pushed for changing existing laws to allow state revolving funds to be used for privatization projects.

Curran cited a recent BTI survey that found 40 percent of industry is currently interested in outsourcing. He also stated that the ACEC is currently discussing adopting a position against the use of concessionary fees for purposes other than the environment. Drawing on his New England heritage, Curran commented that the “use of these fees for general obligation bonds is like the Boston Tea Party — taxation without representation — since the concession is based upon the guarantee of income from future user fees.”

Chris Matthews of Chris Matthews Construction, Birmingham, Ala., presented the general contractors perspective on how to make the design/build concept an attractive project delivery option.

Matthews said that contractors will need to more aggressively market themselves since, in the brave new world of privatization, projects will no longer simply be awarded on the basis of the lowest bid price. He cautioned the audience that the selection of team members will be critical and that they will need to mesh together, as opposed to the somewhat adversarial attitude that colors the current way business is conducted.

Matthews observed, “The design/build team must be prepared to accept greater risks than would normally be borne out by a municipality in a public works project.”

Making the case for the equipment manufacturers was Denis Dandaneau of U.S. Filter Operating Services of Naperville, Ill. Dandaneau began his presentation by exploring the issues that are driving the privatization movement. He felt the trend is not being driven by environmental concerns, but by economic and risk reduction issues. As the true cost of water becomes known and as it is valued accordingly, there will be increasing pressure to privatize plants. This will free up capital for municipalities to invest in other areas and to provide other services for their residents, he said.

Dandaneau called for the three organizations to work together to remove both real and perceived obstacles against the formation of private partnerships. He advocated pushing the EPA to reduce its arduous review process of privatization projects and for the industry to work with the government to develop standard RFP/RFQ proposal packages for the cities and municipalities to use on these types of projects.

Following the formal discussions, the meeting participants engaged in a wide range discussion of how the three organizations should work together in the future. The consensus opinion was that the organizations need to get more involved with the EPA and remind the agency of the three organizations presence. The Associations should rally around one or two issues and continually remind the EPA that the joint organizations are a group to be reckoned with.

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