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San Antonio Water System faces another hurdle for its Vista Ridge pipeline, one that could leave its customers on the hook for hundreds of thousands of dollars per day in water the utility can’t receive.
At its September meeting Tuesday, the SAWS board of trustees voted to approve three construction contracts totaling nearly $70 million as part of its Central Water Integration Pipeline. That’s the name SAWS has given to improvements necessary to begin accepting water from Vista Ridge in 2020.
The board awarded the largest of the three contracts, worth more than $48 million, to Guy F. Atkinson Construction. Atkinson is a Colorado-based subsidiary of commercial and civil contracting giant Clark Construction.
Now, the lowest bidder for the job plans to challenge SAWS’ decision in court.
A joint venture between Oscar Renda Contracting and Southland Contracting submitted a bid for the same job for a little more than $31.4 million – $16.6 million less than Atkinson’s bid. Both Oscar Renda and Southland are owned by Roanoke, Texas-based Southland Holdings.
Before the vote, the companies’ lawyer, Allen Wilson, told SAWS board members that the lawsuit could delay construction by 12 to 18 months if a judge were to grant an injunction in the case.
“Unfortunately, with the award coming today on … this contract, my client is going to be left with no other options than to file a lawsuit,” Wilson told the SAWS board.
In a followup interview after the meeting, Wilson and Southland Holdings partner Rudy Renda cited the huge difference in price between their bid and the bid that SAWS accepted. Renda called it “unprecedented in this part of the world.”
Three other companies submitted bids on the project worth $32.5 million, $45.5 million, and $54.5 million. An estimate by SAWS engineers put the project’s cost at $39.8 million.
“We feel we have provided the best-value bid for this project,” said Wilson, an attorney with construction law firm Sanderford & Carroll. “A critical factor to deciding to file a lawsuit or pursue a claim is feeling confident that the bid package meets the bid requirements set by SAWS and that the bid package does provide the best value.”
SAWS used a procurement procedure that allows it to focus on qualifications and the tight schedule – not just the price tag – in awarding the contract, SAWS Director of Engineering Alissa Lockett Lockett said. The technical term is a request for competitive sealed proposals.
“We were able to use more than just price as the evaluation criteria,” she said. “Most of the weighting was focused on technical evaluation of similar prior experience, the team, past experience, the project approach, the schedule, and also the resources.”
If the lawsuit delays the project significantly, SAWS could have to pay $220,000 per day for water it cannot receive, SAWS President and CEO Robert Puente said.
“That water [will cost] us $220,000 per day, and we have to pay for it, period, whether we’re ready for it or not,” Puente said.
By January 2020, according to the Vista Ridge contract, the pipeline’s builder is supposed to begin delivering water to the pipeline endpoint in northern San Antonio. By that time, SAWS also is obligated to have finished upgrading its pipes, pumps, and storage tanks to receive the water. SAWS would have to start paying for the water in April 2020.
That puts contractors on a tight schedule to build the Central Water Integration Pipeline, Lockett explained.
The construction dispute is not the first issue SAWS has faced over Vista Ridge, a roughly 140-mile steel pipeline 4½ feet in diameter that will deliver water to San Antonio from prolific aquifers below Burleson and Milam counties.
The question of who bears the risk for Vista Ridge if the project fails has long been a focal point in the public debate over the controversial project.
During a series of public meetings and hearings over the past few years, Puente and other SAWS officials have repeatedly said that the Vista Ridge contract shields SAWS customers from risk if the private firms building the pipeline fail to deliver. SAWS must only pay for the water that shows up in 2020.
What’s often been left out of the discussion, at least publicly, is the risk that SAWS customers bear from the Central Water Integration Pipeline, the SAWS portion of the project.
Asked about this on Tuesday, Puente said, “It’s a risk just like every other project is at risk.”
“It’s a very manageable risk,” he said. “It’s not something that is totally outside of what we do on a day-to-day basis.”
Puente also said that he conveyed this risk to Council members “every chance I got.”
Capable of annually delivering up to 50,000 acre-feet, or 16.3 billion gallons, Vista Ridge will be the municipally owned water and sewer utility’s most ambitious supply project yet and the largest water transfer in Texas history.
The pipeline suffered a serious setback in late 2015. That’s when the over-extended Spanish energy and water conglomerate Abengoa, which SAWS selected in 2014 to build the pipeline, began bankruptcy proceedings.
SAWS officials at first denied Abengoa’s bankruptcy would affect Vista Ridge, then scrambled behind the scenes to use Abengoa’s misfortunes to their advantage. SAWS was able to lock the price of Vista Ridge water into a lower rate than expected, along with other concessions.
In 2016, Kansas City-based Garney Construction took an 80 percent controlling stake in the project, though Abengoa still retains 20 percent of its ownership. Since then, construction has been completed on a significant portion of the pipeline’s route.
The portion of Central Water Integration Pipeline job awarded to Atkinson will connect Vista Ridge to an existing pipeline through Hollywood Park and Hill Country Village. It involves “the most complicated tunnel project we’ve ever done,” Lockett said.
Lockett said SAWS did not accept the Renda-Southland venture’s bid for two reasons: a construction schedule that did not meet an “intermediate milestone” by a certain deadline and plans to use one tunnel-boring machine drilling in one direction, rather than two drilling at the same time.
However, Renda told the Rivard Report that his bid did include a proposal to use two drilling machines simultaneously. He acknowledged submitting an alternative construction schedule but said they would have been able to finish the project on time.
“We presented a schedule that made more constructability sense,” Renda said. “If we wanted to make it more difficult on constructability, that milestone is easy to make, it just makes the construction more challenging.”
Renda and Wilson both stressed that they did not harbor any ill will towards SAWS or Atkinson, their competitor.
“[SAWS is] a good owner to us, and we’re a good relationship for them,” said Renda, who added that he has been working on these types of projects with for SAWS for 20 years.
Renda’s company is currently working on multiple sewer projects for SAWS, one that Renda says involves a tunneling job that he said is more complex than that of the Central Water Integration Pipeline.
“We have a long history of similar or much more challenging projects with successful client satisfaction and completion,” Renda said.
Wilson said they plan to file a petition in district court in Bexar County “as soon as practical” seeking to have SAWS award the contract to them.