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3.27.07 M.U.D. opts for own employees for project The Metropolitan Utilities District board narrowly rejected the idea of having an outside firm install a high-pressure natural gas main, opting instead to have the district's union and other employees undertake the project. Contracting out this type of work would have set a precedent for M.U.D., but it was something that the utility's management had proposed doing as a way of avoiding internal expenses that it said could result in a rate increase. M.U.D. President Tom Wurtz said the district won't know until December, when it prepares next year's budget, whether it will have to raise rates to compensate for the extra workers and equipment it may have to add to accomplish the project. Senior Vice President Ron Bucher had advised the board before its vote Friday that the difference in cost between an additional M.U.D. crew and the contractor's low bid was the equivalent of a 60-cent increase in the monthly service fee. Board member Dave Friend, who was among those voting successfully to turn back what he saw as a precedent-setting decision, said the question boiled down to safety, not dollars. Additionally, he said he believed that expenses not included in the bid would have pushed the contractor's final cost much closer to the amount M.U.D. will spend doing the work. "I feel much more comfortable having our people install the main," Friend said. "I think it's a safety issue, although I know some of my colleagues on the board would disagree." The main that M.U.D. is installing will run through a densely populated section of Omaha -- from about 21st and Martha Streets to about 55th and Cedar Streets -- and will carry natural gas at the highest pressure in M.U.D.'s system. The utility plans to install the four miles of steel pipe over three years, with the total cost of the project estimated at $4.5 million. Bucher has advised the board that the utility's staff and equipment is stretched thin, so doing this project would require adding on. Board member John McCollister said he voted to contract out the project in deference to management's advice. By staying in-house, he said, it's possible that other district projects won't be completed as scheduled. This project has highlighted a larger issue that McCollister believes the district needs to review, he said. M.U.D.'s employee costs are 20 percent to 30 percent higher than private firms, he said. The district's pay scale is eroding its ability to keep expenses in check, McCollister said. According to M.U.D., a veteran meter reader with five or more years experience, earns $43,805 a year. A veteran pipe layer is paid $45,323. Terry Moore, president of the Omaha Federation of Labor, said M.U.D.'s problem isn't that it is overpaying its workforce, but that it's not staffed and equipped adequately to keep up with its workload. McCollister's figures are outdated, he said. The prevailing wage for an experienced welder, he said is $27.98, while M.U.D. pays $28.22, a difference 24 cents. Tom Riley, president of the International Brotherhood of Electrical Workers Local 1521, said contracting out the gas main project would have been too risky. The project, he said, "has a little danger to it, you have to know what you are doing." While M.U.D. does contract out the installation of water mains to outside firms, it traditionally has not done so with natural gas mains, Riley said. He said M.U.D. employees are not overpaid. "You get what you pay for anymore," Riley said. "Our crews are highly qualified . . . I don't think M.U.D. customers are unhappy with what M.U.D. employees earn." Pipeline Services of Iowa had been the low bidder for this first phase of the project. The five bids ranged from $725,000 by Pipeline to about $2 million. Voting to award the contract to an outside firm were Jack Frost, Tim Cavanaugh and McCollister. Voting to reject the outside contract were Mary Kay Begley, Mark Doyle, Tom Dowd and Friend. |
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