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Public-Private Partnership Agreement, Valued at $1.5 Billion, Is Nation's Largest for Water Services/Sets New Standards
The City of Indianapolis has selected USFilter Operating Services, Inc., a subsidiary of United States Filter Corp., to manage the city's waterworks system under a 20-year public-private partnership valued at approximately $1.5 billion. This move by the nation's twelfth-largest city marks the largest public-private partnership for water services in the United States.
USFilter will manage all operations, maintenance and customer service facets of the city's waterworks system that currently serves 1.1 million people. Out of the $1.5 billion contract, approximately $1.1 billion represents operations and maintenance service fees and approximately $400 million reflects capital improvement projects expected to be managed by the company.
Many factors were included in the city's selection of USFilter including transition plans, employee relations, technical approach, experience, management fees, customer service and local commitment. But key to the selection were the company's aggressive approach to resolving water taste and odor problems that have plagued the waterworks system for years, its commitment to invest in plant upgrades and the incentive-based compensation plan proposed by USFilter. Under that plan, a portion of the company's fees will be paid only if the company meets specified customer service, water quality, operations and other performance measures.
"Our team worked very hard to win this project, and we'll work with equal diligence to be an excellent partner with the City of Indianapolis," said Andy Seidel, president and CEO of USFilter. "Through our partnership, we'll continue to demonstrate that water rates can be stabilized while improving drinking water quality. In creating the best program for the city, our project team captured the intellectual capabilities of our organization's leading-edge technologies and services. We're very proud to have been selected for this important project."
Jim Keene, senior vice president of project and market development for USFilter Operating Services, said the partnership introduces a new level of performance in the water industry.
"By directly linking performance with compensation, this partnership establishes a new model in the water outsourcing industry," said Keene. "The Indianapolis waterworks system is in good condition and baseline standards are already high, but in collaboration with the city we have committed to an even higher level of performance. This is achieved through specific performance measures in the areas of customer service, water quality, capital improvements, operations and maintenance, and community involvement. We'll secure the fees linked to those performance metrics only if we meet specific standards and improve water services."
With a service area that encompasses a 25-mile radius around Indianapolis, the waterworks system serves approximately 1.1 million people and employs more than 460 people. It includes four surface water treatment facilities with daily water production averaging 143 million gallons per day (MGD) and peak demand capacity in excess of 200 MGD. The city is acquiring the waterworks system from NiSource as of April 30, 2002, and last year began a procurement process to identify and select an operator for the system.
"The City of Indianapolis should be commended on many fronts including its handling of the procurement process that focused on objective criteria, innovation, adherence to a disciplined schedule, and an ultimate outcome based on quality, value and price -- not just price alone," Seidel added.
Bowen Engineering and Philadelphia Suburban Corp. are just two of the many local and national firms USFilter will team with on this project. In addition, the company will implement an aggressive program to integrate minority- and women-owned businesses and contractors for ongoing projects.
Transition will begin immediately, with USFilter expected to commence management of the Indianapolis waterworks system on April 30, 2002.