The Issue
Indianapolis’ two wastewater treatment plants were the crown jewels of the City’s Department of Public Works. Well-regarded nationally, the facilities had won numerous regional and national awards for environmental compliance and operational efficiency. In fact, a national consultant had concluded that outsourcing the operations and management of the treatment plants would save no more than five percent. At the same time, however, the City was facing a sewer user rate hike of nearly 38%. Both the treatment facilities as well as the sewer collection system had significant unfunded infrastructure needs, including costly challenges related to combined sewer overflows.
The Team
Skip Stitt, then the City’s Director of Enterprise Development, helped lead the City’s efforts to develop a wastewater treatment partnership that would save money, improve environmental compliance, and fully and fairly address the needs of incumbent City employees.
The Strategy
Using a competitive Request for Proposals (RFP) process, the City solicited proposals from the world’s leading water and wastewater services providers. The City’s process was designed to find a highly qualified provider that could lower costs, improve infrastructure asset maintenance and management, and improve on the already high levels of environmental compliance. The winning proposal was submitted by a partnership that included a global services provider, the region’s existing private water provider, and a number of local minority and women-owned businesses.
The Impact
Despite projections that no more than five percent savings were achievable, the City’s private management partner delivered initial savings of nearly 44% or about $12 million per year. In addition, the partner helped to identify additional savings related to the City’s capital plan. The previously scheduled rate hike was postponed for a number of years. The project was also an environmental success. The quality of the effluent produced at the plants was higher than under City management and both plants subsequently won the Gold Award from the Association of Metropolitan Sewerage Agencies. Using leading-edge maintenance practices, the plants’ assets received improved maintenance, and high-tech vibration analysis documented the condition of key equipment (e.g., motors, turbines, fans) improved over time. Most interesting, however, was the impact on the incumbent City employees who transitioned to working for the private management partner. Although they were initially anxious about the transition to private sector employment, the move turned out to be a winning strategy for the employees. No public employees lost their jobs in the transition and the private partner offered comparable wages and benefits to employees and recognized their union. Union employee grievances fell 90% and reported accidents fell by over 75%. Finally, nearly 19% of the goods and services procured by the private management partner were purchased from local minority and women-owned businesses.