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NTU Study on Water, Sewer Bidding Leaves Critics All Wet


Pete Sepp
February 11, 2014

After nearly 45 years on the job protecting taxpayers, NTU has encountered several eternal truths in politics, one of which is: if you rile up entrenched interests enough to lash out against you, you’re likely succeeding. So it is with an article in a recent edition of the journal published by the prestigious American Water Works Association (a group representing professionals of many disciplines in the water and wastewater sector).

It all began with a four-paragraph mention in AWWA’s September 2013 journal (subscription-based) outlining the main findings of NTU’s report, Reforming Our Nation’s Approach to the Infrastructure Crisis. There we recommended a more transparent, accountable, and fiscally responsible system of management for the nation’s water and sewer systems, which included more life-cycle cost analysis and competitive bidding in selection of piping materials.

Apparently that article yanked one chain too many, so to speak. The November 2013 journal contained a “Perspective” from AWWA’s Kenneth Mercer that claimed a “review” of NTU’s report “confirmed” the “concerned responses from some Journal readers who claimed it presented an incomplete picture in advocating for one pipe material over another.” The article actually makes many points with which NTU would agree; yet, its implication of bias was something we had to answer.

But before we could do that, we needed another answer – whether AWWA’s journal would print our response – and it was a polite “no.” Fortunately, Government Bytes is willing to provide a forum instead. Here in its entirety is the text of our response which AWWA did not print:

“December 17, 2013

To the Editor:

The reaction from an unidentified number of AWWA Journal readers (as well as the Journal itself) to National Taxpayers Union’s (NTU’s) report, “Reforming Our Nation’s Approach to the Infrastructure Crisis,” only illustrates NTU’s point: industry interests should avoid entrenching themselves in positions that are too deeply rooted to fear and orthodoxy (“Choosing the Right Pipe,” November 2013). The information we presented demonstrates that there are better strategies to attacking the $1 trillion liability that AWWA itself has identified in its “Buried No Longer” report.

The original article that prompted Mr. Mercer’s response (from the September 2013 Journal) actually cited not only a study from NTU, which has 362,000 members nationwide, but also a report from the U.S. Mayors Water Council,  which represents all mayors of cities over a population of 30,000.  These are diverse voices, but they are speaking from one common source: they’re using AWWA’s pipe data and cost data.

So why should AWWA, which highlighted this trillion-dollar liability in the first place, be surprised that a nationally-known organization would offer more cost-effective solutions than the federally-funded infrastructure bank that AWWA seems to prefer? How does this possibly answer the two major problems behind the future cost spiral, that pipes are failing from corrosion rather than age, and pipe thicknesses for DI are declining?

 

We sought some constructive answers. That’s why both NTU and the Mayors Water Council reports use the comparison of the two leading water pipes as examples, and then applied open procurement, asset management practices and financial analysis to recommend reforms.  

For the record, NTU is not involved in this issue to take sides within an industry. AWWA may represent a collective of water utilities, but in the case of public water systems, the “owners” (rate payers and taxpayers) are on the hook for all utility financial management decisions, including pipes. That’s why we’re engaging on this and other infrastructure issues at every level, every day.

In fact, AWWA’s “review” of our report, which essentially accuses NTU of being biased in favor of one pipe material, seems to have skipped over an important detail – the language of the report itself. Namely, the following, balanced assessment from the author:

The issue at hand is not really the selection of one pipe over another, but the ability for a utility to take advantage of all materials, processes, technologies and products that create the  most cost-effective solution while meeting sustainable performance goals. In fact, every pipe has its best use, but no single pipe is best in every situation. Open competition …will really reach the objectives of elected officials, rate payers and developers concerned with the rising costs of water infrastructure capital programs.

If we as a nation are to address the very real challenges facing water and sewer system replacements, organizations like AWWA need to lead the way by providing an open forum to discuss issues such as optimal consultative procedures for pipe selection; or, how the concepts of longevity and reliability are affected by corrosion and water main breaks; or, why AWWA standards and the National Association of Corrosion Engineers (NACE) are in disagreement over wrapping iron pipe in plastic.

In the absence of this vital dialogue, organizations like my own have to step in and develop a set of criteria, such as the 25-part “Yardstick” that utility rate payers can use to interact with elected officials. Journal readers deserve to know about all of them, but here are just five of those points:

8. Does the utility consider sustainability policies and life-cycle costs in the procurement process?

12. Has every fee and charge been reviewed as to its accuracy in the last 3 years?

16. Does the utility use a computerized maintenance management system (CMMS) to schedule all work orders?

21. Does the utility track and forecast the affordability impacts of current and future rate increases for each major demographic group within the utility’s boundaries?

24. Has the utility posted information pertaining to capital improvement plans, master plans, mitigation studies, cost-of-service studies, allocation studies, asset management issues, fee structures, and other key documents of interest to rate payers in an easy-to-understand format on the Internet? 

Who can argue with principles like these? Hopefully, no one who reads AWWA Journal. After all, even underground, there ought to be a way to reach common ground.”

Perhaps this blog post will be a start in the direction of that “common ground.”


 

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