City to end relationship with Jacobs

Sean C. Morgan

The Sweet Home City Council last week declined to negotiate with Jacobs Engineering to continue operating the city’s water and wastewater treatment plants.

In a work session held Tuesday, Jan. 14, the councilors made no official decision but indicated they would rather move forward with plans to operate the treatment plants with city employees or to engage the services of another firm.

Jacobs has operated the plants since 2006.

The council began looking at other options last year after city staff conducted an audit of the 10-year-old Water Treatment Plant and found numerous deficiencies. The council rejected a request for an increase in the fee the city pays Jacobs, and the company began addressing the deficiencies and offered to pay for additional repairs at no expense to the city.

Late last year, the council directed City Manager Ray Towry to send a letter outlining conditions under which the city would continue to contract with Jacobs:

– No increase to the base rate – approximately $1.03 million – charged by Jacobs for the 2019-20 fiscal year. Jacobs had requested a 3-percent increase, about $30,000.

– Because Jacobs failed to fulfill its obligations, it forced the city to hire a utilities manager to oversee Jacobs’ performance under the terms of the contract. The council is asking Jacobs to fund the position, salary and benefits of the manager, who was a Jacobs staffer before being hired by the city.

– All deficiencies must be repaired by Nov. 1, 2020 at the sole expense of Jacobs.

– And Jacobs must meet all obligations moving forward, including maintaining appropriate staffing levels.

Towry told the council that Jacobs had replied.

Jacobs was open to not raising the fee for 2019-20, according to a reply written by Jacobs Vice President Efrain Rodriguez, despite having delivered more than $800,000 in savings “by implementing strategies that help us control costs and deliver services to the city with a fee that has escalated at a rate lower than inflation.”

Towry said that Jacobs essentially agreed to fix everything found in the audit of the plant, but Jacobs wanted to remove language allowing for the contract to be terminated for convenience or to increase the fee for termination of the contract from 5 percent to 10 percent of the annual base fee.

Rodriguez said in the response that this would allow Jacobs to provide the requested savings by keeping the base fee flat for 2019-20, acknowledging Jacobs’ investment in and commitment to the project, while providing Jacobs the ability to recover its investment through the remainder of the agreement.

Jacobs declined to fund the utilities manager position. Rodriguez said that Jacobs in no way forced or caused the city to hire its former project manager as a city utilities manager.

“We understand that part of the reasoning for this hire were certain concerns regarding our performance, which were raised by the city,” Rodriguez said. “However, we addressed such concerns as soon as they were brought to our attention.”

Councilors were vocal about their dissatisfaction with Jacobs’ performance.

“I’m very concerned we’ve had to take all this time and energy to go into this,” said Councilor Diane Gerson, who said she was uncomfortable moving forward with Jacobs. With “a good community partner, we wouldn’t have to do this.”

The city’s letter to Jacobs was not “open for renegotiation,” said Mayor Greg Mahler. “They seemed to think it was. I didn’t appreciate their approach. I’m done with Jacobs.”

“I’ve never been happy with the contract we have with them,” said Councilor Dave Trask. “The contract, in my opinion, is not as strong and clear as it could have been, should have been. I’m done with them too. Now that they’ve been caught, they’re trying to make it OK, and it’s not. I have no confidence that they will adhere to what they say. I’m like you (to Mahler). I’m done.”

“I still want to move them out and move on with something different,” said Councilor James Goble, suggesting that the city bring in another firm for six months and then take over with city employees.

Councilor Lisa Gourley said it didn’t appear that Jacobs had pride in the community.

Public Works Director Greg Springman said the city has had two other firms, Veolia and Inframark, express interest in operating the treatment plants.

Both have offered to work with the city through a transition to city employees, Towry said.

Springman told councilors there is a shortage of plant operators, and he wants to make sure the city has a clear plan if it’s going to try to take the plants in-house.

In discussions, city officials have estimated a transition time of 180 days to begin using city employees, Springman said, but that could be accelerated.

The transition away from Jacobs in Sandy took 60 days, said Utilities Manager Steven Haney.

Towry said he would prepare a letter telling Jacobs the City Council was not open to any kind of negotiations and planned to look at other options.

Present at the meeting were Councilors Cortney Nash, Gourley, Mahler, Gerson, Goble and Trask. Susan Coleman was absent.