The costs of water and sewer contracts awarded to private firms by the Washington Suburban Sanitary Commission have dropped 25 percent since the agency reorganized its construction contracting practices in response to charges that bidding irregularities were causing inflated prices.
The agency, which controls the construction and maintenance of all water and sewer lines in Montgomery and Prince George's counties, recently eliminated two of five contracts for house connections, the pipes that connect individual homes and buildings to existing water and sewer lines in developed areas. Officials also reduced the amount of work in the three remaining contracts, and tightened bidding procedures in an attempt to force local firms to offer lower prices.
Following the changes, the specific prices in the house connection bids this week were about one-fourth lower than the last time the contracts were offered in May, WSSC contracting officer Robert Haven said. For example, he said, contractors charged $41 a foot to install one-inch water pipes six months ago, but this week bid only $30 a foot for the same work, a decrease on that item of 27 percent.
"Perhaps there was some sincere competition this time that might not have been there in the past," Haven said. "We tried to make the situation more competitive and we're just very pleased with the results."
The house connection contracts have given local construction firms the right to do all hookups between individual homes in developed areas and water and sewer mainlines for periods of six months or a year.
In past years, the five contracts, awarded by competitive bidding, often were worth millions of dollars, but were controlled by the same five local firms, each of which regularly won one of the jobs. WSSC officials have acknowledged that the costs of those contracts were inflated and were reflected in WSSC billings to homeowners and taxpayers.
Since September, a Montgomery County grand jury has been investigating charges that a "turf system" among local construction companies allowed the same firms to with the same contracts time after time. The term of the grand jury probe, which was ordered by Maryland Attorney General Stephen H. Sachs, was recently extended.
On Tuesday, when the revamped contracts were offered for bidding, only seven different firms -- less than WSSC officials had hoped -- tried to win one or more of the contracts, which differ mainly in the geographical zones involved. Two of the five firms that regularly have had house connection work did not win contracts, and two others won contracts different from the ones they have held in past years and were said to "own."
Haven said that some of the decrease in prices could be attributed to the WSSC's decision to remove "non-critical" house connections from the contracts. Instead of laying every pipe necessary to connect homes and small businesses with water and sewer mainlines in developed areas, the contractors from now on will do only those that are immediately necessary, such as when the septic system of a home fails.
The removal of the "non-critical" connections decreases the difficulty and some of the contractors' risk in taking the work, Haven said, and may have thus resulted in lowering the prices somewhat. But he acknowledged that these contract changes would not account for a drop of $11 per foot in the cost of installing one-inch pipe in a six-month period. "I don't really know entirely what made it happen," he said.
Haven said that the house connections not included in the semi-annual contracts will be grouped together and offered separately for bidding throughout the year. He said several contractors who have not competed for the house connection contracts in the past have indicated that they intend to bid on these jobs, even though only one new house connection bidder appeared at this week's session.
WSSC officials noted that it is difficult to estimate exactly how much the agency may have saved by reorganizing the house connection work because of the separation of the work into new kinds of contracts and the agency's decision to do some of it -- including one entire house connection zone -- with its own crews rather than contracting out.
None of the contracts bid this week were bid at more than $175,000, while prices on the five contracts offered under the old system last May ranged from $270,000 to more than $500,000.
Another change designed to increase competition involved the rules of the house connection bidding sessions, in which bids are opened separately for each one of the contracts at 15-minute intervals. Previously, contractors did not have to submit their bids for each successive contract until the previous ones were opened, and the company officials frequently altered their prices up or down by thousands of dollars at the last minute after seeing the outcome of earlier bids.
This week, Haven said, the contractors had to submit their bids for all four contracts at once, before any of the bids were opened, thus stopping some contractors practice of raising their prices on subsequent jobs by thousands of dollars after winning the job they usually held.
The contracting changes, which were recommended by a task force and recently approved by the WSSC commissioners, followed a series of stories in the Washington Post last summer reporting that many local construction companies had allegedly cooperated to arrange prices or sway the outcome of bidding on three varieties of water and sewer contracts, including the house connection contracts.
Several contractors and WSSC General Manager Robert S. McGarry denied the charges.