Competitive Bidding Saves Money for Municipal Water Systems

Competitive Bidding Saves Money for Municipal Water Systems
November 13, 2012

Water infrastructure across the country is deteriorating and will cost municipalities $1 trillion over the next 25 years, according to the American Water Works Association.

However, a recent study prepared by Bonner Cohen of the Competitive Enterprise Institute suggests ways to bring down those costs. “Fixing America’s Crumbling Underground Water Infrastructure” instructs city governments to replace “outdated and prohibitive local procurement policies … that discriminate against the use of innovative, more cost-effective material” with a system that encourages competition and innovation.

The report notes some municipalities are embracing changes to procurement systems and saving money. Unfunded mandates, shrinking tax bases, and increasing federal and state regulations all contribute to the fiscal woes local governments are confronting. This makes it more important than ever for political leaders to change the way they do business, Cohen says.

Indy’s Mayor on Board

Mayor Greg Ballard of Indianapolis, writing in the “Mayors Water Council” newsletter, explained the city has saved money by rethinking its materials procurement system “because the repair and replacement of collection systems was driven by aging pipes that were corroding and leaking water.”

As municipal governments move to an open and fair competitive bidding process, it drives down costs and encourages the use of newer and better practices and materials for water projects.

Ballard added in his article, “a lifecycle analysis found that PVC has both a longer useful life than traditional pipe materials, and has a lower cost to both install and maintain.” PVC now comprises 28 percent of Indianapolis’ total water distribution system with a 2.5 times lower failure rate than traditional iron pipes.

Indianapolis is a model for other cities such as Dalton, Georgia, the carpet capital of the world—nearly 90 percent of all carpet in the United States is made within a 25-mile radius of Dalton. This makes the carpet industry a significant user of the municipal water system.

Dalton, Georgia Saves Big

Dalton Utilities officials visited Indianapolis and saw the difference competitive bidding can bring to water infrastructure projects.

“Dalton has installed 750,000 feet of [polyethylene pipe] in the first phase of our project and went from a leaking, corroded system to a completely fused, homogenous system that won’t corrode,” said Steve Bratton of Dalton Utilities.

Dalton awarded its system improvements work to a local contractor who bid $5 million below the estimated $25 million price tag and completed the project in one year, three years sooner than DU officials expected. Finishing the project early has enabled Dalton to collect water revenue earlier than anticipated.

Other local governments in Georgia, including Cobb and Henry Counties and the Cities of Conyers, Sandersville, and Garden City, all have adopted the use of PVC in their water systems.

Jeff Edgens (jedgens@ega.edu) is an assistant professor of political science at East Georgia State College and an adjunct scholar with the Competitive Enterprise Institute in Washington, D.C.

 

Internet Info

 

“Fixing America’s Crumbling Underground Water Infrastructure,” Bonner Cohen, Competitive Enterprise Institute: http://cei.org/sites/default/files/Bonner%20Cohen%20-%20Fixing%20America's%20Water%20Infrastructure.pdf