Cohasset Water RFP further scrutinized 3.09.2012

Note from Site Publisher: Cohasset Water commissioners will hold a public hearing on the Cohasset Water RFP on Monday, March 26 at 7PM at the high school. Thus far, only Cohasset’s Old Goats have heard the Cohasset Water RFP presentation and it is rumored that most of them didn’t care for it.  Tinytown Unleashed’s Water RFP expert told the publisher today that it is obvious that this RFP has not been vetted by an experienced engineer who should have been hired by the board of selectmen. No, as the great water heist of the century takes place, Acting-Up Town Manager Mike Milanoski under the direction of the board of selectmen is making the girls cry at town hall.

An un-manned water department?

Cohasset Water department chair Peter DeCaprio has stated in recent weeks that the concession operator of the plant might well operate the plant “unmanned,” via the wonders of technology.

Cohasset Water RFP Sect. 21.1:

… in no event shall manning (of the plant) be less than that required by the DEP. Contractor is to provide the above state required minimum staffing levels at the minimum hourly rates as required by applicable state and federal laws.

TU’s Water RFP Expert wants to know that the DEP/s manning requirements are, as well as any applicable federal requirements Cohasset may have entered into with regard to covenants and grants.

 

Performance Bond

Cohasset Water RFP Sect. 3.3.2 –  The Contractor shall provide evidence of ability to provide the required annual Performance Bond based on 100% of each year’s annual operating expense (including overhead and profit).

TU’s Water RFP Expert says: This section tells the reader what the face amount of the policy must be, but not what must be covered. Expect bonding companies to be picky. Also, don’t expect to get a bond for 10 years, so there will have to be a replacement or renewal. What will market conditions for these types of sureties be in a few years? A few years ago who would have thought that AAA-rated AIG would go over a cliff?

Concession fee

Cohasset Water RFP 3.3.2 Proposed Values – the RFP states the contractor will pay the Board of Water Commissioners $1,100,000.00 at the signing of the Concession Fee Contract.

TU’s Water RFP Expert asks: “More jello?  What we originally heard about Cohasset was that the concession fee quid would be $5MM to the Town for a 20 year contract. The quo (return) would involve the contractor getting a certain volume of surplus water each year for that period of time. Ten years is half of 20 years. And $1.1 million is less than half of $5 million. On a present value basis, half of the value being provided by Cohasset in terms of surplus water delivered would be more than $2.5 million because the value of water delivered in early years is higher than in later years when it is discounted, just like the cash payments you make on your mortgage, when the bank puts a value on that asset for the regulators and its balance sheet. If surplus water sales are really at the center of this RFP, why are they not included in the language? If they still are on the water department’s mind, we would like to see a reasonable model and some estimate of the market value of the water in question, probably based on avoided cost to (Aquarion?). Also, the RFP mentions increasing the capacity of the Town’s surface water treatment plant from 3.0 mgd to 4.0 mgd? Will any of this additional capacity be earmarked for use by (Aquarion?). If so, is the Town still on the hook for the cost of the related capital improvements?”

Capital Expenditures

Capital Expenditures Cohasset Water RFP Sect. 12.1.5 d. Capital Expenditures for the distribution system will be the obligation of the Board of Water Commissioners and shall include the replacement of existing water mains, values, hydrants and service connections and installation of new water mains including installation of new gate values and hydrants associated with such news water main projects and new service connections and replacing pumps within the pump stations.

TU’s Water RFP Expert asks:  “Does this mean that Cohasset keeps the liability and loses the control where capital expenditures are concerned? Looking back over the past two decades, deferred maintenance has been a source of nasty and expensive surprises. Plus it’s hard to determine what has actually been done to correct system shortcomings when the records are either a mess or just disappeared. What’s the CIP (capital investment plan) for the Cohasset system look like…or do we have one for that matter? Shouldn’t an RFP like this one be preceded by a survey of the system and an updated CIP? Shouldn’t the RFP then expressly state that contractor compensation will be tied, at least in part, to the Town’s ability to achieve the goals of its CIP (adjusted for inflation and growth, etc. of course)?

© Copyright 2012 Tanna K, All rights Reserved. Written For: Tinytown Unleashed
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  1 comment for “Cohasset Water RFP further scrutinized 3.09.2012

  1. Mary A. Parsons
    March 9, 2012 at 6:01 pm

    Will the winner of the RFP bid be able to jack up the water rates on the surplus water or will they be providing any new hookups and therefore own the surplus water ? If so, who will be the lucky ratepayers? I ask this because I suspect this is how the lucky bidder gets their return on investment (profit). If the concessonaire can run the plant unmanned, so can’t the town of Cohasset. I never did get answer to my two questions. Has a ratepayer study been done recently and has a future build out study been done?
    do not think for one moment that the RFP bidders have not carefully thought out their profit margin. They are in it to make as much money as they can.

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