Water & Drought

Sacramento poised to scrap lowest bidder requirement in troubled water meter project

In 2014, workers with Teichert Construction work on Land Park Drive south of Second Avenue, replacing water mains.
In 2014, workers with Teichert Construction work on Land Park Drive south of Second Avenue, replacing water mains. Sacramento Bee file

Sacramento is considering scrapping the lowest bidder requirement in its water meter installation program, a step it says could get meters put in faster and reduce customer complaints. The change could also allow contracting bias in a program that has weathered setbacks and scandals, including the recent finding by the city auditor that its onetime project manager had sex and used alcohol and drugs on the job.

Under a proposal coming before the Sacramento City Council on Thursday, the city Department of Utilities would end the practice of awarding contracts to the lowest bidder and instead create a pool of pre-qualified companies that would win work based in part on subjective criteria, including customer satisfaction.

That would give the department greater leeway to weed out contractors that generate the most complaints from city residents. Those complaints can range from failing to provide notice of upcoming work to reacting when a gas line is hit. The department was unable to provide figures for the number of complaints received this year, but spokeswoman Rhea Serran said it receives many.

The proposed contracting change also would give city employees more influence over which companies would be hired to do hundreds of millions of dollars worth of work in the coming years.

“There’s a lot of construction that’s happening throughout our city and ... we’ve been hearing people want to know more what’s happening,” said Serran. “This is how we are going to meet our schedule, meet our budget, as well as meet quality control.”

The water meter project was scheduled to be completed by 2025, but last year the City Council expedited that schedule to a 2020 completion date, pushing the department to look for ways to speed up work. The shorter timeline is expected to save the city $65.3 million, according to a city staff report presented last year when the acceleration was proposed.

The project has been and continues to be very well managed.

Sacramento Department of Utilities Director Bill Busath

The city expects to spend a total of $410 million to outfit Sacramento with water meters. In 2015, the City Council approved $250 million of that for the accelerated installation program.

The Utilities Department, which administers the program, has been hit with a series of scandals in recent years. In, March, City Auditor Jorge Oseguera issued a report saying that a Department of Utilities employee in 2015 had sex with another city employee and used drugs and alcohol during the workday.

Melissa Marshall, the employee in question, served as project manager for water meter installations from March 2015 to her resignation in August 2015. Prior to that, she was a neighborhood project manager for installations. Marshall was not named in the city auditor’s report, but on Tuesday denied the allegations to The Bee after sources identified her. Marshall and the other employee cited in the auditor’s report – who was also not named, and doesn’t work on the water meter project – have since resigned.

Oseguera’s audit, prompted by a whistleblower report in early 2015, determined that Marshall and her co-worker, also employed by the Utilities Department, regularly met at a trailer during work hours to engage in sexual activity. The auditor also found that cocaine was “bought, sold and used during work hours at the trailer” and that alcohol was consumed. Sometimes Marshall and the unidentified employee used a city vehicle to reach the location, according to the report, and “both ... admitted that it was possible that either of them could have driven the city vehicle while under the influence of alcohol or narcotics” and returned to work in an impaired state.

The investigation marked the second time Marshall had been sanctioned for inappropriate sexual activity at work. In 2013, Marshall received “minor punishment ... such as a temporary decrease in pay, revocation of vacation time, and a ‘Do no (sic) fraternize’ order” after a witness allegedly saw her and the co-worker engaging in sexual activity in the backseat of a city vehicle during work hours.

Reached by phone Tuesday, Marshall said that she disputes the allegations and they are “not true and not fair.” She added that she was a “good employee” and respected by colleagues.

Serran, the department spokeswoman, defended the department’s oversight of the installations and said there was “never a lapse in management,” due to Marshall’s management.

“The project has been and continues to be very well managed,” said Department of Utilities Director Bill Busath in a statement. Busath added that the project has exceeded goals by installing 3,000 more meters to date than planned and 17 miles more of water mains.

But Oseguera said the case raises questions.

This is a profoundly mismanaged department and a profoundly mismanaged project.

Craig Powell, president of the public watchdog group Eye on Sacramento

“(G)iven this particular case, it does raise concerns regarding proper oversight and accountability in that department, and so based on this case it should result in the department making some changes regarding its oversight of how its employees account for their work and their time,” he said.

Marshall’s tenure isn’t the only scandal the program has weathered.

Sacramento Water Meter Program 

Over the past decade, the department has faced criticisms regarding misplaced equipment, failure to adequately vet contractors and a federal investigation after a supervisor was discovered selling water meters to a salvage yard.

“This is a profoundly mismanaged department and a profoundly mismanaged project,” said Craig Powell, president of the public watchdog group Eye on Sacramento. “It has been a disaster from inception to execution and it’s still a disaster.”

Powell said he is concerned that a lack of oversight has led to public safety issues, including a failure to provide information when gas lines are hit.

The department said the new plan will allow better communication with residents by allowing it to hire contractors with a proven track record of neighborhood outreach. It is also hiring outside contractors to serve as on-site project managers.

Dan Sherry, engineering and water resources manager for the department, said if Thursday’s plan is adopted, contractors will be ranked in part by the number of complaints they received on prior water meter jobs. That evaluation process will be “soft” to allow the department to assess the validity of complaints before downgrading a contractor’s status.

Ian Pietz, the current manager of the project, acknowledged that including subjective factors could allow for bias, but said the department would work to make the process fair and transparent. “Right now I don’t have the best answer for that other than to say all of this will be open,” he said.

Hiring workers from high-poverty areas including Meadowview, Oak Park and Del Paso Heights would also be part of how contractors win work.

The new system would award contracts based on a 100-point system. Twenty of those points would be awarded based on how many workers a contractor hires from nine distressed ZIP codes, according to the department.

Councilman Larry Carr fought to include that criteria in the bidding proposal before the council. “Year after year, decade after decade, we watch the same communities in Sacramento struggle,” he said. “So we are either going to do something about that or be satisfied with the status quo.”

The local hiring requirement may favor big contractors with the resources to hire workers to fill those quotas.

Sherry said the city doesn’t want “small local contractors to be excluded.” But Pietz, the project manager, said big contractors could have a leg up because of their capacity. “If you have a big contractor with a big workforce that can knock out more than one job at time, that’s what we are looking for,” he said.

In March, the City Council voted to increase water rates by nearly 45 percent by July 2019 to pay for infrastructure upgrades, including the installation of water meters. Revenue from that increase will help finance $265.5 million in water projects, mostly on the water meter work, plus $53.5 million for sewer projects.

Sacramento has installed about 93,000 meters throughout the city since it began the massive undertaking in 2005, about 70 percent of the total, according to Serran. About 40,000 meters and 80 miles of pipeline still remain to be done.

Anita Chabria: 916-321-1049, @chabriaa