Alpena approves one-year trial for Veolia to handle chemical purchasing for utilities

The Alpena City Council on June 16 authorized a one-year trial for Veolia (the city's water and wastewater operator) to perform bidding and procurement of treatment chemicals and to bill the city for chemicals with a standard 15% overhead for procurement services.

Public works staff explained Veolia has offered to use its corporate buying power to obtain lower prices for chemicals used at the city's water and wastewater plants. "As part of their monthly invoice, they will bill the city for the chemicals ordered and apply the standard contract 15% overhead for their time to handle the paperwork," staff told the council.

Staff cautioned that Veolia cannot solicit vendor quotes until the proposal is signed, so there are no guaranteed savings figures at the time of the vote. City staff reported the city spent about $220,000 on chemicals in the prior year; at that level a 15% procurement overhead would equate to roughly $33,000. Council members discussed the uncertainty and agreed to try the arrangement for one year and to ask Veolia to report price comparisons at regular intervals.

The contract can be terminated with 60 days' notice, staff said. Council members asked for an interim report and the city requested a first-quarter pricing update; staff said they would present results and could terminate the arrangement if it did not at least break even.

A motion to execute the chemical-purchasing proposal and authorize Mayor Johnson to sign passed by voice vote. Staff said the proposal is separate from the master services agreement and includes a 60-day termination clause.