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City hears plan to use Indiana 'build‑operate‑transfer' procurement for large water/wastewater project
Summary
City engineers and consultants told the council that the Fokagen project — a large, IFA‑funded water and wastewater package — came in well over the engineer’s estimate and that using Indiana Code 5‑23‑3 (a build‑operate‑transfer model) could help secure a single contractor and manage scope within the IFA funding cap.
City engineers and the project design team updated the Angola Common Council on March 17 about procurement alternatives for a large water and wastewater project funded through the Indiana Finance Authority (IFA). The team recommended using the Indiana build‑operate‑transfer (BOT) procurement method to assemble a single contractor and jointly scope the project to match the available funding.
Aaron Hutton, with Westler Engineering and part of the design team for the wastewater portion of the project, told the council that the project’s bids arrived “over the engineer’s estimate” and that the design team and agency partners have explored dividing the work into multiple bid packages but found that approach “a lot of coordination and a lot of risk.” Hutton said the BOT method, authorized under Indiana Code 5-23-3, would allow the city to select a contractor by qualifications, enter a scoping period where the contractor works at risk, and negotiate a guaranteed maximum price and scope that fits the IFA funding cap.
“We can work with them to define what are the scope items that have to be done, what ones are maybe less priority that can be on the back burner, and if funds allow it as the project continues, then those can get added in,” Hutton told the council. He added the IFA is familiar with the method and that performance and payment bonds remain required under project rules.
Hutton said the wastewater bid received to date included lift‑station estimates that were “$2,000,000 higher” than the engineering estimate for the same work, and that the water side bids were similarly above the estimate. He described the BOT approach as a way to let the city and the contractor collaborate during a scoping phase to define a guaranteed‑maximum‑price contract that seeks to put as much scope as possible into the IFA funding cap.
Council members asked about bonding, schedule and whether the process would lengthen the work. Hutton said the financing and repayment structure would remain governed by the same public‑funding rules (the code follows funding‑source repayment provisions similar to IC 36‑1‑12) and that performance bonds and payment bonds would still be required. He said the BOT approach should not lengthen the actual construction duration and that the scoping phase allows schedule flexibility depending on contractor availability.
Hutton said there is nothing for the council to vote on at this meeting; the council will need to pass either an ordinance or a resolution adopting the use of this procurement method before staff may advertise an RFQ. He indicated the administration may present that ordinance at the next council meeting and could request three readings in one night to begin the RFQ process quickly.
No formal action was taken on the procurement method at the March 17 meeting; the presentation was informational and staff requested time for legal review before presenting an ordinance for council consideration.
