Part 2 of 5
Antiquated Procurement Practices
We have learned that there is growing bipartisan support in Congress to require state and local governments to maintain open and fair competition for materials used by public water systems when using federal financing programs. According to some members working closely on the proposed infrastructure package Congress hopes to pass this year, they recognize that at all levels of government there are some that continue to sole source their materials based on old, biased, and outdated information.
This challenge was recognized earlier by the U.S. Conference of Mayors (@usmayors). In his March 2013 document, Municipal Procurement, Procurement Process Improvements Yield Cost-Effective Public Benefits, Dr. Richard Anderson, Director of the U.S. Conference of Mayors Water Council, raised a critical fact that likely continues today. Dr. Anderson pointed out, “…there is a certain habituation factor that renders certain practices in the procurement of goods and services wasteful by virtue of their fundamental, if hidden, flaws. Thus, there is a paradox here, while the procurement process is a highly accountable activity, when executed it is subject to habitual decision making in many instances that result in suboptimal choice of goods and services and their valuation.
Habituation- describes a process where one grows accustomed to certain habits, and the probability of repetition becomes so-called second nature. With regard to government procurement the habituation factor suggests that procurement officials exercise their duty without questioning the fundamental factors that may have guided, perhaps dictated, the choice of, the price of, the size of, the color of a good or service. Habituation tendencies associated with procurement of materials, in particular, can pose a real financial danger because as manufacturing technology and materials science advance the procurement official may be making spending decisions today based on information from yesterday, last year or the last century for that matter.”
Addressing Antiquated Procurement Practices
In his follow-up report Municipal Procurement: Competitive Bidding for Pipes Demonstrates Significant Local Cost-Savings (September 2018) Dr. Richard Anderson, U.S. Conference of Mayors Water Council offered examples of how innovative Mayors across the country are opening up their city’s procurement process to bidding of different materials and it resulted in significant cost-savings for ratepayers.
Dr. Anderson’s report pointed out, “Piping is remarkably inter-changeable and many of today’s modern water systems use a variety of materials. However, many systems restrict themselves to a single material for all uses (e .g . “all storm pipes must be concrete”) or some categories of use (e .g . “all water pipes 12” and larger must be ductile iron”). These restrictions are often written into a city or county specification or ordinance and prevent engineers and contractors from considering otherwise acceptable materials. These restrictions create a ‘closed’ system, while expanding old standards to include alternative materials provides for ‘open’ competition.”
As Mayors and other policymakers continue to understand that new, safe and certified drinking water conveyance technologies are available their leadership will be needed to reverse antiquated specifications and ordinances to allow other materials that will help water systems achieve their infrastructure goals, as well as realize savings for water ratepayers. Engineers in the drinking water industry have done their part over the past decades to research and develop new innovative drinking water technologies. It’s now up to policymakers to renew their procurement policies and practices.
Dr. Anderson’s report highlighted communities that have exhibited success with their innovative open bidding process when compared with others that don’t. For instance in Ohio, the cities of Columbus and Dayton did not have open bidding processes. When comparing average cost per foot of pipe materials including ductile iron and plastic with Delaware County, Ohio “the closed bid systems using majority ductile iron paid average cost 32%-35% higher per foot for pipe. Delaware County had an even blend of pipe materials (ductile iron and plastics).
Challenges to improved infrastructure and procurement practices are exacerbated by antiquated regulations that remain in place. In our next segment we’ll talk about these regulations and how they lack acknowledgement of new, innovative drinking water conveyance technologies that are currently available to water systems . These regulations are also contributors to project delays and increased costs to ratepayers.