Nagin proposes splitting up S&WB bids
into sewage and drinking water

Thursday September 18, 2003

By Frank Donze
Staff writer

In what appeared to be a last-ditch effort to unclog the stalled four-year effort to privatize management of the Sewerage & Water Board, Mayor Ray Nagin broached an unexpected idea Wednesday: breaking the massive public works contract into two parts and inviting separate bids.

The option surfaced without warning near the end of the board's monthly meeting when Nagin asked the agency's financial advisers to separate the estimate on what the board spends on services covered by the proposed contract into two categories: water and sewerage.

That might sound insignificant, but those who have been closely following the process say it signals that Nagin, who serves as the board's president, is considering a major change in the contract structure to attract more bidders.

Some board staffers privately said the move to split the job into parts could be at the behest of potential bidders who think the contract is too unwieldy as presently proposed.

Nagin spokesman Chris Bonura said Wednesday that the change in strategy was not requested by potential bidders.

"We are exploring all options to make the procurement as attractive as possible," Bonura said. "Narrowing the scope of the bid is one of several options that we have before us."

The accuracy of the cost analysis, which has been a subject of heated debate among board members on both sides of the privatization issue, is considered critical to determining how much bidders for the 20-year, roughly $1.5 billion contract can save taxpayers.

An analysis prepared by the Deloitte & Touche accounting firm and top water board staffers has determined that the agency spends $75 million a year on the items and services it is considering turning over to a private management company.

After Deloitte & Touche representative Steve Wilson reviewed the findings Wednesday, Nagin recommended that the board accept the report, pending a separation of the costs associated with "water and wastewater," the term commonly used to describe sewer-related functions.

Board members did not comment on Nagin's request.

The potential change in the board's approach to privatization wouldn't be the first engineered by Nagin since he inherited a process initiated by his predecessor, Marc Morial.

At Nagin's urging, the water board voted in July to abandon the process if only one private company bids.

The board voted last month not to give any more money to an employee group expected to bid on the contract until the board has evidence that at least two private companies also will submit proposals.

Last week Nagin said he hopes to put the job out to bid next month.

However, of the three companies previously qualified to bid during the board's failed bid process last year, US Filter is the only company still openly pursuing the contract.

City Hall sources have said Nagin administration officials are meeting with companies other than US Filter that might be interested in bidding.

Though aides confirm that Nagin has been working behind the scenes to drum up interest in the contract, they would not say whether the mayor has met individually with other potential bidders.

Ann Pettit, environmental chairwoman for the League of Women Voters who has been monitoring the privatization process, asked Nagin how long he intends to wait for other bidders to step forward.

Nagin said his administration is still talking to a "number of companies." He declined to elaborate, saying only that it is "more than two."

Noting that the effort to locate more bidders has been going on for two months, Petitt asked Nagin if he thought that was long enough.

"I don't know," Nagin said. "Is four years enough?"

Pettit persisted, saying if bidders haven't come forward by now, they probably won't.

"We'll see," Nagin said. "That's what this process is all about."

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Frank Donze can be reached at fdonze@timespicayune.com or (504) 826-3328.