Breaking Ground with DBO Contractual Issues

The City of Clovis (City) chose a public-private partnership approach for the design, construction and operation of the City's sewage treatment/water reuse plant (ST/WRF). The City chose this approach to achieve a number of advantages, including harnessing the innovation and efficiency of the private sector. The project resulted in execution of a contract for the design-build and operation of a state-of-the art reuse plant but the procurement process itself entailed some innovative approaches to address a number of challenges. The basic tool to implement these partnerships is the service contract which, when clearly defined and understood by both contracting parties, can eliminate contract disputes down the road. The service contract sets forth not only the legal provisions but also the technical requirements that describe the scope of services as well as the utility owner's expectations for performance. The ST/WRF project faced a number of challenges from the initial development of the plant performance guarantees through the negotiations and successful contract execution. Notably, state of the art performance requirements for the plant were developed and issues such as cost escalation and saving-sharing provisions were more complex than expected. These issues may have seemed complex and burdensome during the development and negotiation of the service contract but the effort to resolve these issues will pay dividends by setting the groundwork for a clear and successful public-private partnership. The paper describes some of the challenges faced by the project team and the solutions that were developed.