TO: Mayor and City Council
THROUGH: Krishna Namburi, City Manager
FROM: Brian D. Martin, PE, Public Works Director
SUBJECT:
title
Exemption from Typical Competitive Bidding Process and Authorization of an Alternative Contracting Method for the Willow Lake Water Pollution Control Facility South Secondary Clarifiers Rehabilitation Project
Ward(s): All Wards
Councilor(s): All Councilors
Neighborhood(s): All Neighborhoods
Result Area(s): Safe, Reliable and Efficient Infrastructure
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SUMMARY:
summary
The current City of Salem Budget and Five-Year Capital Improvement Plan (CIP) allocates $14.9 million for the Willow Lake Water Pollution Control Facility (WPCF) - South Secondary Clarifiers Rehabilitation Project (Project). Staff recommends a Construction Manager at Risk (CMAR) alternative contracting method to rehabilitate the four south secondary clarifiers at the WPCF. The CMAR process allows contractor involvement during the design phase to provide critical input on cost, schedule, and constructability elements that will influence and improve the design. The CMAR will be selected competitively via a Request for Proposal (RFP) process.
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ISSUE:
Shall City Council, acting as the Local Contract Review Board, adopt Resolution No. 2025-29 in support of an exemption from the competitive bidding process and use of a CMAR contracting method for the WPCF - South Secondary Clarifiers Rehabilitation Project?
RECOMMENDATION:
recommendation
Adopt Resolution No. 2025-29 in support of an exemption from the competitive bidding process and use of a CMAR contracting method for the WPCF - South Secondary Clarifiers Rehabilitation Project.
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FACTS AND FINDINGS:
The full findings for exempting the project from competitive bidding are attached to Resolution No. 2025-29 (Attachments 1 and 2).
The CMAR form of contracting (also referred to as Construction Manager/General Contractor (CM/GC)) uses an open and competitive RFP process to select a contractor. This is the same delivery method used to deliver recent Geren Island Water Treatment Plant and Aquifer Storage and Recovery system improvement projects. The competition will be open to all qualifying proposers and City staff has already begun communication with the local construction contracting community about the CMAR contracting method. The proposal process will be open and impartial with selection made based on scores derived from price, experience, quality, innovation, and other factors. The process used to award subcontracts for all competitively bid construction work will be specified in the CMAR contract and will be monitored by the City.
Awarding the Project contract under the exemption will likely result in substantial construction cost savings and other benefits to the City and the public. The CMAR method uses a Guaranteed Maximum Price (GMP). The CMAR contract allows the City to obtain the full savings if actual costs are below the GMP.
Integrating the CMAR contractor into the design process allows for early identification of risks and facilitates teamwork between the City, designers, and the contractor. The Project requires expertise regarding the constructability and long-term cost/benefit analysis of innovative design, knowledge best obtained directly from the construction industry. Many decisions arising during the design process will require immediate feedback on constructability and pricing. Under the traditional design-bid-build contracting method, there is a higher risk of increased change orders and schedule impacts for a project of this complexity. Since there are significant costs associated with delay, timely project completion is critical.
When the CMAR team includes the construction contractor participating in the design process, fewer change orders occur during project construction than in the traditional design-bid-build contacting method. This is due to the CMAR contractor’s better understanding of the City’s needs and the design intent. Additionally, contractor involvement throughout the design process on constructability and impacts of innovative methods significantly reduces the potential for change orders from the contractor during construction as they have already been addressed, and the risk has been transferred to the CMAR team. Fewer change orders reduce the administrative costs of project management for both the City and the CMAR team.
Change orders are processed at less cost under a GMP because they are less frequent. The design-bid-build method typically results in the contractor charging up to twenty percent markup on construction change orders. The GMP method applies a lower predetermined markup. The experience of the industry is that the markup is in the range of three to seven percent.
The Project includes the rehabilitation of the four clarifiers - Nos. 1 through 4 - while continuing to operate the wastewater treatment plant to treat wastewater and meet the U.S. National Pollutant Discharge Elimination System (NPDES) permit requirements. This includes permitted requirements for discharging treated effluent to the Willamette River. Therefore, one of the clarifiers needs to be rehabilitated each dry-weather period (summer) over a four-year period. The risk associated with not having a clarifier back in service by the wet-weather winter season with higher wastewater flows will result in the WPCF violating their NPDES permitting requirements for discharge to the Willamette River. Early involvement by the CMAR team will provide a better opportunity to coordinate the details of how to sequence the contract work safely and efficiently.
BACKGROUND:
The Willow Lake Water Pollution Control Facility located in Keizer, Oregon, has been providing the cities of Salem, Keizer, Turner, the community of Four Corners, West Salem, and unincorporated Marion County with safe wastewater treatment since 1967. Salem provides treatment of wastewater to more than 234,000 residents and businesses in the cities and communities cited above.
The South Secondary Clarifiers have been involved in the treatment of wastewater since 1978. Two of these clarifiers are currently undergoing critical emergency maintenance repairs following the rotation mechanisms failing due to severe corrosion. Due to the nature of wastewater and the gasses produced during the treatment process, the clarifiers are experiencing deterioration and need to be rehabilitated to maintain operation.
The City has allocated $14.9 million in Utility Rates in the current budget and CIP for the rehabilitation of these four secondary clarifiers, with additional funding pending in future CIP years beyond Fiscal Year 2030.
Oregon Revised Statues (ORS) Chapter 279C and the City’s Public Contracting Rules (PCR) 9.7, allow City Council, acting as the Local Contract Review Board, to exempt a public improvement from typical competitive bidding requirements if, after a public hearing, they find that such an exemption is unlikely to encourage favoritism in the awarding of the public improvement contracts or substantially diminish competition for public improvement contracts, and will likely result in substantial cost savings and other substantial benefits to the City or the Public.
James Winslow, PE
Assistant City Engineer
Attachments:
1. Resolution 2025-29
2. Exhibit A (Facts and Findings)
3. Presentation - South Secondary Clarifiers