Accept Guaranteed Maximum Price of $1,003,753,656 from MWH-Kiewit JV and amend total contract amount to $1,290,000,000 for construction of the second and final phase of the Bull Run Filtration Facility Project (Procurement Report - RFP 00001428)

The purpose of this legislation is to allow Portland City Council the opportunity to review and accept the Guaranteed Maximum Price (GMP2) of $1,003,753,656 from MWH-Kiewit JV for the construction of the second and final phase of the Bull Run Filtration Facility Project (Filtration Facility) for a total contract amount (GMP1 and GMP2) of $1,290,000,000. The Environmental Protection Agency considers Cryptosporidium to be a health risk and issued the Long Term 2 Enhanced Surface Water Treatment Rule to reduce illnesses caused by Cryptosporidium and other pathogens in drinking water. In January 2017, Cryptosporidium oocysts were found in the Bull Run supply, exceeding what is allowable by these drinking water regulations. To protect public health and comply with these regulations, the City of Portland signed a Bilateral Compliance Agreement with the Oregon Health Authority requiring the filtration facility be in operation by September 30, 2027. City Resolution No. 37460 directed the Portland Water Bureau to plan, design, and construct the Bull Run Filtration Project (Filtration) to comply with federal and state drinking water regulations. Filtration includes the Filtration Facility planned on 95 acres of City-owned property and the Bull Run Filtration Pipelines Project to connect the facility to the existing water system. Ordinance No. 189146, passed by Council on August 29, 2018, authorized Procurement Services to use an alternative contracting method to select a Construction Manager/General Contractor (CM/GC) for the Filtration Facility. The Chief Procurement Officer advertised Request for Proposals (RFP) Number 00001428 on February 28, 2020, for pre-construction services and construction of the Filtration Facility. To meet the Filtration compliance deadline, the Water Bureau determined it is in the City’s best interest to implement the Filtration Facility in two phases with two GMPs (GMP1 and GMP2). Ordinance No. 191368, passed by Council on July 12, 2023, authorized the Water Bureau to implement the Filtration Facility in two phases with two GMPs and updated the estimated total cost of construction to $1,069,000,000. No revenues will be impacted by this legislation. This legislation does not change existing City policy.

The estimated total for the Filtration Facility CM/GC contract (GMP1 and GMP2) is approximately $1,290,000,000 including contingency and has a high confidence level as GMP negotiations are complete. This is an increase of $221,000,000 over the estimated total cost of construction for the facility. The Filtration Facility is in the Water Bureau’s 5-Year Capital Improvement Plan as part of the Treatment Program, with approximately $78,000,000 available in the revised fiscal year (FY) 2023–24 budget. Approximately $1,078,000,000 for FY 2024–25 to FY 2028–29 is in the FY 2024–25 requested budget. With the approval of the GMPs, the 10-Year Capital Improvement Plan will be adjusted to offset the additional amount of $221,000,000. Updates to the 10-Year Capital Improvement Plan will be made in the FY 2024–25 Mayor’s Proposed Budget. There is no impact to water retail rates. Funding for the Filtration Facility is from a combination of net proceeds from revenue bond sales, a low-interest Environmental Protection Agency Water Infrastructure Finance and Innovation Act loan, water sales revenue, and other construction fund revenues such as system development charges and interest earnings. Funds are available in the Water Bureau’s Owner Cost Center W02229. No present or future positions will be created, eliminated, or re-classified as a result of this legislation.

The Filtration Facility and related Filtration Pipelines are anticipated to create 4,700 to 7,500 construction jobs, offering opportunities for local businesses and supporting career opportunities in the construction trades. As part of the pre-construction services, the Water Bureau and MWH-Kiewit JV reached out to dozens of groups in the local contracting community to raise awareness of upcoming work opportunities and encourage equity contractor participation. This included outreach to LatinoBuilt, Oregon Association of Minority Engineers, Constructing Hope, Oregon Tradeswomen, Portland Youth Builders, Professional Business Development Group, and others. Using the CM/GC method for the Filtration Facility allows the City to monitor use of equity contractors and participation of people of color and women in the workforce to help the City achieve Regional Workforce Equity Agreement (RWEA) and Construction Diversity and Inclusion Policy (CDIP) objectives. It also helps set the City and local economy on a path toward more local contractors having the ability to provide CM/GC services while meeting the requirements established by the RWEA. The Filtration Facility is one of the City’s first RWEA efforts. RWEA is a collaborative effort between public owners and unions to promote hiring local vendors, suppliers, contractors, and subcontractors, as well as local area workforce, which will return long-term community benefits. RWEA centers workforce development and safe/anti-racist workspaces for women and people of color through the City’s core values of equity, fiscal responsibility, transparency, communication, collaboration, and anti-racism. MWH-Kiewit JV’s planned COBID participation exceeds the 25 percent goal for Filtration Facility construction, with $294,000,000 (26 percent) of hard construction costs going to COBID-certified contractors, including 18 percent to minority-owned contractors and 4 percent to women-owned contractors. Of the COBID-certified contractors, 38 percent are African American, 15 percent are Caucasian, 14 percent are still to be awarded, 12 percent are Hispanic, 12 percent are Native American, and 9 percent are Asian Pacific. This is in addition to workforce diversity commitments that set goals for work hours performed by apprentice-level and journey-level people of color and women in the construction trades. MWH-Kiewit JV has been instrumental in outreach efforts and developing respectful workplace training as part of pre-constructi on services. The City has reviewed the recommended GMP and confirmed that the proposal is consistent with the Procurement Plan. Three individuals will be invited to testify from OHA and the COBID community, and it is anticipated that community members will sign up to testify given known interest in the project. The Water Bureau will continue current outreach efforts regarding Filtration, including ongoing communications with customers and the neighboring community about construction milestones and safety.