OF CHARLOTTE, NC
DESCRIPTION OF PARTNERSHIP ARRANGEMENT
In January, 1996 Charlotte conducted a managed competition for operation and maintenance of two of the department's eight treatment plants, one a water treatment facility, the other a wastewater treatment facility. The city department bid team, referred to as Charlotte Mecklenburg-Contract Operations or CM-ConOp submitted the lowest bid and won a 5-year operating contract. Under the contract, CM-ConOp is responsible for operation and maintenance of the facilities, including routine, preventive and predictive maintenance and minor corrective maintenance. Major corrective maintenance (single repairs more the $25,000) will be covered by the Charlotte Mecklenburg Utility Department (CMUD). Regulatory compliance and testing is the responsibility of CM-ConOp. CM-ConOp is also responsible for risk of inflation with the exception of changes in electrical rates or chemical cost increases from suppliers.
ESTIMATED/ACTUAL COST SAVINGS--IMPACT ON RATES
Under the contract with CM-ConOp, the city expects to save $4.2 million over five years. First year net savings (after employee gain sharing ) for both plants is approximately $68,000. The rate increase of water and wastewater rates for Charlotte customers decreased in FY98. The department attributes this smaller increase to two factors--operating results at the two plants which underwent competition and efficiencies gained at its other plants (optimization) through lessons learned in the competition process.
Total staffing for the two plants was reduced from 29 to 16 positions. An incentive
system designed to reward performance was implemented. Under the plan, 50 percent of any
operational savings below the bid are returned to the plant staff. The remaining 50
percent is retained by the plant and can be accumulated as a operating buffer or make
minor purchases or improvements. Payout to employees is contingent upon full regulatory
compliance and no lost time accidents at the plant. Salary increases of up to 20 percent
were built into the bid. Benefits remain unchanged. Training funds were also included in
CM-ConOp's bid. A memorandum of understanding between the City and CM-ConOp, while not
legally binding, states that both parties will honor their commitments according to the