Sacramento’s new system for hiring water meter contractors likely will prevent companies from protesting if they lose out, and some firms say the change is unfair.
Hoping to speed up the project and reduce complaints from residents, Sacramento’s City Council voted in August to stop awarding contracts based predominantly on price. In coming weeks, the City Council will “clarify” whether the change to a more subjective process also means the work hired under the process no longer qualifies for bid protest procedures.
Jennifer Dauer, a local attorney who represents contractors, said removing the ability to protest could lead to unfair contract decisions.
“Anytime you have an award that considers something other than price, that evaluates experience or something along those lines ... you open the door to someone’s reaction to something if you don’t have the objective criteria,” Dauer said. “They’ve gotten rid of a real safeguard for ... making sure they’re properly awarding contracts with public funds.”
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Dauer, who specializes in contract law, said some of her clients are hesitant to speak publicly because they fear they would face repercussions under the discretionary system.
City Finance Director Leyne Milstein said anyone who wanted to dispute a contract could use the public comment portion of the City Council meeting when a contract is being approved. Milstein said the discretionary system doesn’t “lend itself to a protest” in part because it is subjective and allows for “qualitative” evaluation, giving the city the right to choose on criteria other than price.
“We have things we have to weigh in the delivery of a program that is not just straight price. ... I understand why that may be causing (contractors) consternation,” Milstein said. “It could be because they are going to be evaluated on other things than the cost of putting the meter in the ground.”
The city expects to award up to 10 contracts each year ranging in value from $2 million to $15 million until the water meter project is finished in 2020, according to a city report.
In August, the City Council voted to create a list of 12 pre-qualified contractors that can receive water meter work based on factors including past customer satisfaction, safety records and whether the company hires local employees from disadvantaged ZIP codes. Five firms did not meet minimum qualifications, according to a city report.
As the 12 contractors in the pool finish a job, they can receive more work as long as the city is happy with them. But if work is deemed “unsatisfactory,” a contractor “would not be considered for successive contract awards,” according to the city report. The report does not define unsatisfactory work.
Dauer said the new system may go “too far” in favor of city interests.
“The more discretion you work into the practice, the more important it is to have a robust protest procedure,” she said.
The city began installing and replacing water meters on more than 80 percent of water service connections in 2005. The project was initially slated for completion in 2025, but the city accelerated the program with a goal to finish by 2020. The city would save $65.3 million by retrofitting some connections instead of putting in new ones, and by installing some in front yards instead of under sidewalks.
As of December, the city has installed about 70 percent of required meters under the project, covering about 94,800 of the city’s 136,500 total water connections, according to Department of Utilities spokeswoman Rhea Serran. That leaves 41,700 connections, along with 80 miles of pipeline that need to be replaced.
The city expects to spend a total of $410 million on water meter installations. In 2015, The City Council approved $250 million to handle the accelerated timeline.
It also voted to increase water rates by almost 45 percent by July 2019 to fund infrastructure upgrades, including water meters. Revenue from that rate hike will help finance $265.5 million in water projects, mostly on the meters, along with $53.5 million for sewer projects.
The program has faced a series of problems. In 2015, the city auditor found that a Sacramento project manager on the water meter installation had sex with another city employee and used drugs and alcohol during working hours. Over the past decade, the department has weathered other criticisms, including that a system for vetting contractors was inadequate, misplaced equipment and a federal investigation after a supervisor was discovered selling water meters to a salvage yard.