Today, the Taxpayer Won
March 16, 2011
4/1/11 Update: Wheelabrator has decided to protest the bid and will be heard at the SWA Board meeting on 4/13 at 9:00. They will have 45 minutes to make their case and B&W will have an equal time to rebut. See Agenda for more information.
Low-cost bidder Babcock and Wilcox recommended by committee for SWA mass burn plant.
This afternoon at the Solid Waste Authority Visitor’s Center on Jog Road, the committee tasked with selecting one of the three responders to the Waste-to-Energy plant RFP met to pick a winner to recommend to the board. The three potential vendors are Babcock and Wilcox Power Generation Group (Barberton, Ohio), Covanta Energy (Spring Hill, Florida), and Wheelabrator Technologies (Hampton, New Hampshire). B&W team member BE&K operates the existing county burn plant and Wheelabrator operates one in Broward.
TAB has not been actively following the SWA budget, but when one of the teams representing a responder suggested we take a look at how the county was about to spend $800M (the bonds having been already sold), we decided to do a little research and attended the meeting.
Last month, the 7 member committee, which includes County Adminstrator Bob Weisman and Gardens City Manager Ron Ferris, scored the proposals on their technical merits, and today heard the cost side of things. Technical scoring evaluated 10 attributes and assigned scores out of 100, and considered the design, aesthetics, energy efficiency, operations and maintenance, as well as the amount of local hiring projected. Three members selected Covanta as their top choice, 2 for Wheelabrator, and one for Babcock and Wilcox, but it needs to be said that all vendors scored better than 90% in aggregate and there were no disqualifiers.
The financial attributes were analysed by a computer model created by SWA Consulting Engineer Malcom Pirnie, Inc., and used a net present value measurement to take into account energy production revenue and maintenance costs over 20 years as well as the costs of construction. Construction costs varied from a high of $830M (Covanta) to a low of $606M (Wheelabrator) – a wide spread given the closeness of the technical evaluations. On the NPV measurement though, Babcock and Wilcox was the clear winner as they actually showed a positive cash flow of $171M from energy sales and yielded a $20M/year operating cost versus $28M for Wheelabrator and $24M for Covanta. The calcuated NPV was: B&W: $500M, Covanta: $779M, and Wheelabrator: $626M.
Fifteen minute presentations by the three vendors were given prior to discussion, and both Joseph Threshler of Covanta and Jack Ristau of Wheelabrator spent their time arguing that B&W should be disqualified for violating the procurement rules. They accused their competitor with changing the corporate makeup of their team after the original Statement of Qualifications (SOQ) was decided, and that their performance bond did not meet the requirements of the RFP. They also brought up design differences where they thought B&W was inferior – namely the location of the plant’s superheater and the cladding in the lower level of the furnace. One even suggested that B&W’s own engineering handbook “Steam” suggested their design was flawed.
John Kitto of B&W put the matter to rest, stating matter of factly that each of the procedural issues had been resolved with the evaluation team. He also pointed out that if they had used the 2005 version of “Steam” instead of the 1992 edition, they would know that the thinking about the issues had changed.
Discussion and analysis by the Malcom Pirnie team supported Mr. Kitto’s contentions, and in their opinion, the proposals were so close in technical merit that the cost estimate made the choice of Babcock and Wilcox clear. The seven members of the committee agreed and voted unanimously to recommend Babcock and Wilcox to the SWA board at their April meeting. If the board (which is made up of the seven county commissioners) agrees, the contract could be signed as early as May 1.
TAB has not researched the arguments that led the board to proceed with acquisition of the burn plant, but it is supposed to greatly extend the life of the county landfill and generate significant energy as well. Picking the clearly lowest cost of the alternatives would seem to be the logical choice and if the board follows the committee’s advice the Taxpayers will win.
It would defy logic for the board to decide against the unanimous opinion of their committee, but of course that will be a political decision. The board has the ability to reopen the cost question with the vendors and re-negotiate (something the committee could not do under the procurement rules). There were a large number of IBEW union members in the audience but since there was no public comment it was not clear which vendor they preferred. We do know that other unions (carpenters and ironworkers) have protested the current plant operator (BE&K – part of the B&W bid team) because they had brought workers from out of state.
We look forward to following the board’s actions at their meeting on April 13.