A meeting of the Board of Directors of the Massachusetts Water Resources Authority was held on June 13, 2001 at the Authority Headquarters in Charlestown. Present: Chairman Robert Durand and Lucile Hicks, Gubernatorial Representatives; John Carroll, Norman Jacques and Andrew Pappastergion, Advisory Board Representatives; Vincent Mannering, Antonia Pollak and Robert Spinney, City of Boston Representatives. Absent: Donald Mitchell, Gubernatorial Representative; Joseph MacRitchie, City of Quincy Representative; Marie Turner, Town of Winthrop Representative.

AGENDA

Report of the Chair

Chairman Durand offered thanks to Secretary Norman Jacques who is retiring from the Board of Directors after 11 years as a Board member and five years as a member and Chairman of the Advisory Board, for a total of 16 years serving the ratepayers. Mr. Jacques stated that it has been a pleasure.

Chairman Durand recognized the new Executive Director, Fred Laskey, stating that he brings a wealth of experience with him to the MWRA to face the great challenges ahead. Further, Chairman Durand offered thanks to Barbara Gottschalk who served as Interim Executive Director prior to Mr. Laskey's arrival.

Report of the Executive Director

Fred Laskey, MWRA Executive Director, thanked staff and Board members for their warm welcome and sound advice. He stated that MWRA is in the midst of the move to the new Chelsea North Maintenance Facility; Consumer Confidence Reports are in the process of being mailed to consumers and a Public Awareness Program with DEP and DPH was scheduled for the next day in Cambridge.

Mr. Laskey reported that the Senate budget has been released and includes Rate Relief funding that will meet MWRA's requirements. Further, there is a change in the structure of the MDC account in which the Watershed Division has been broken up and put into various funding areas with less direct accountability. Mr. Laskey stated that it would be up to the House/Senate Conference Committee to determine the final language for the budget.

APPROVALS

Approval of the Final FY02-04 Capital Improvement Program

The Board voted to approve the FY02-04 Capital Improvement Program (CIP), with a three-year budget of $1.13 billion and a ten-year budget of $1.98 billion, and to approve a ten-year CIP spending cap of $2.09 billion with FY02, FY03 and FY04 spending capped at $457 million, $329 million and $347 million (including inflation), respectively.

Response to Advisory Board Comments and Recommendations on the Proposed FY02-04 Capital Improvement Program and the Proposed FY02 Current Expense Budget

The Board voted to approve the Response to the Advisory Board's Comments and Recommendations on MWRA's Proposed FY02-04 Capital Improvement Program and Budget and the Response to the Advisory Board's Comments and Recommendations on MWRA's Proposed FY02 Current Expense Budget.

The Authority initially disagreed with Advisory Board Recommendation No. 46, which states "MWRA staff should add a section to the Yellow (monthly) and Orange (quarterly) Notebooks to track the implementation of all CIP and CEB recommendations made by the Advisory Board. Team leaders should be assigned for each item to assure accountability. MWRA should meet with Advisory Board staff at the end of the first quarter of Fiscal Year 2002 for a progress update." Staff stated that the Yellow and Orange Notebooks were intentionally designed to focus on day-to-day operational issues that need ongoing management attention. Authority staff, however, reconsidered the initial rejection of Item 46 and will have further discussion on items to report on a regular basis.

June PCR Amendments - FY01

The Board voted to approve amendments to the Position Control Register. One amendment had a financial impact as follows:

The estimated financial impact of the amendments will range from ($10,633) - $3,536; however, the actual impact will depend upon the salary levels of the employees that fill the vacant positions.

Appointment of Senior Program Manager - Plant Engineer, Deer Island, Maintenance

[Postponed.]

Extension of Six Contract Employees and Appointment of One Contract Employee, Operations

The Board voted to approve one-year extensions to the following employment contracts in the Operations Division:

Ed Boyajian, Project Manager, Deer Island, from July 1, 2001 to June 30, 2002, increasing the hourly rate from $32.30 to $33.27, annual compensation not to exceed $69,202;

Michelle Levasseur, Contract Laboratory Technician, Laboratory Services, from June 13, 2001 to June 12, 2002, increasing the hourly rate from $14.00 to $14.56, annual compensation not to exceed $33,500;

Paula Philbin, Work Management Analyst, Field Operations, from July 1, 2001 to June 30, 2002, increasing the hourly rate from $36.25 to $37.30, annual compensation not to exceed $34,913;

Rocco DiMeco, Technical Specialist, Field Operations, from July 1, 2001 to June 30, 2002, at the current hourly rate of $25.00, annual compensation not to exceed $8,500;

Robert Johnson, Structural Engineering, Field Operations, from July 1, 2001 to June 30, 2002, at the current hourly rate of $33.00, annual compensation not to exceed $17,500; and

Thomas J. Myron, Jr., SCADA Project Manager, Field Operations, from June 5, 2001 to June 4, 2002, at the current hourly rate of $40.00, annual compensation not to exceed $38,440.

Further, the Board voted to the following new employment contract in the Operations Division:

Suh Yuen Liang, Marine Information Analysis Consultant, ENQUAD, from June 15, 2001 through October 14, 2001, at the hourly rate of $35.00, annual compensation not to exceed $22,313.

CONTRACT AWARDS

Legal Services Regarding FRSA Property: Craig & Macauley

The Board voted to authorize the Executive Director, on behalf of the Authority, to increase the amount of the contract for legal services with Craig & Macauley for representation of MWRA in bankruptcy matters in an amount not to exceed $50,000 and to extend the contract term to April 1, 2002.

Craig & Macauley represent the MWRA in a matter involving MWRA's position as mortgagee on certain property in the Fore River Staging Area (FRSA) and the related bankruptcy filing of FRSA's owner, Massachusetts Heavy Industries, Inc. and MHI Shipbuilding LLC (collectively "MHI"), and to provide advice regarding such matters on an as needed basis.

The U.S. Maritime Administration (MARAD) notified MWRA on February 25, 2000 that due to MHI's inability to make payments on its outstanding loan to Fleet Bank, MARAD had exercised its rights as Fleet's loan guarantor and first mortgage on the FRSA land to pay the outstanding Fleet Bank loan and thereafter to seek the surrender of FRSA. On March 13, 2000, MHI notified all affected parties, including MWRA, that it was seeking the protection of the U.S. Bankruptcy Court. MWRA retains a fourth mortgage on the FRSA securing a promissory note in the amount of $7 million.

At this time, MHI has notified the bankruptcy court that it is finalizing a plan of reorganization for consideration by the court and the creditors. If approved, the plan would provide a schedule by which MWRA is expected to receive payment of its loan.

Mr. Spinney expressed that it seems like a lot of money to spend since MARAD may get all of any funds that may become available. Mr. Spinney asked if the reorganization plan is accepted, does MWRA still need this service. Staff replied that MWRA, as a creditor, has a vote to determine whether the plan is accepted; that is where counsel is needed. If the plan is implemented, Craig & Macauley's services will no longer be needed.

Renewal of Contract for Water Supply Citizens Advisory Committee

The Board voted to authorize the Executive Director, on behalf of the Authority, to execute a contract with the Water Supply Citizens Advisory Committee for a two-year period beginning July 1, 2001 at a cost of $109,990 for the first year and $112,647 (a 2.5% increase) in the second year, totaling $222,547.

Renewal of Contract for Wastewater Citizens Advisory Committee

The Board voted to authorize the Executive Director, on behalf of the Authority, to execute a contract with the Wastewater Citizens Advisory Committee for a one-year period beginning July 1, 2001 at a cost of $49,000.

WAC's Current Expense Budget funding level for FY01 was $48,093. The proposed budget for FY02 of $49,000 represents a 2% increase. Wages and Salaries are budgeted at $47,000 and miscellaneous expenses at $2,000. Office space and support services for WAC are provided by MWRA in the Charlestown Navy Yard.

Mr. Carroll inquired on how many people the Wages and Salaries line item supports. Pam Heidell replied that the line item covers the Executive Director and an intern. The current Executive Director plans to resign from the position in two months. Resumes are coming in and interviews will be scheduled for the end of the month. The current plan is to have the new Executive Director work less than forty hours per week and focus on a few key issues. Personnel are only reimbursed for actual hours worked based on time sheets.

Wastewater Hydraulic Optimization, Metcalf & Eddy, Inc., Contract 6733

The Board voted to approve the recommendation of the Consultant Selection Panel to select Metcalf & Eddy, Inc. to provide consulting services for Wastewater Hydraulic Optimization and to authorize the Executive Director, on behalf of the Authority, to execute a contract with Metcalf & Eddy, Inc. in an amount not to exceed $800,100 for a term of 18 months from the Notice to Proceed.

The overall goal is to make the most of current and future capital assets, ensuring wastewater is transported to the place where it will receive the highest level of treatment. The contract is to include an update to MWRA's wastewater hydraulic model, development and evaluation of optimization alternatives during typical storm events, and development and evaluation of alternatives to better manage extreme wet weather events.

The FY01-03 CIP includes a budget of $772,000 for Contract 6733. The contract award amount is $800,100, or $28,100 over budget. Staff states in its summary that if this amount causes the CIP budget to exceed the ten-year spending cap or the cap for any of the first three years, reductions will be taken elsewhere to offset the increase.

Deer Island Ancillary Modifications 2 - Electrical Modifications: The Chappy Corporation, Contract 6536

The Board voted (with Mr. Spinney abstaining) to approve the award of a contract for Deer Island Ancillary Modifications 2 - Electrical Modifications, to the lowest responsive bidder, The Chappy Corporation, and to authorize the Executive Director, on behalf of the Authority, to execute and deliver said contract in an amount not to exceed $2,997,500 for a contract term of 550 calendar days from the Notice to Proceed.

Mr. Spinney inquired whether Contracts 6536 and 6590 were covered under the Project Labor Agreement. Staff stated that they would look into signatories, causing Mr. Spinney to abstain from both votes.

Deer Island Ancillary Modifications 2 - 1, Resident Inspection Services: American Electrical Testing Co., Inc., Contract 6590

The Board voted (with Mr. Spinney abstaining) to approve the recommendation of the Consultant Selection Panel to select American Electrical Testing Co., Inc. to provide resident engineering services under Contract 6590, Deer Island Ancillary Modifications Phase 2 and to authorize the Executive Director, on behalf of the Authority, to execute said contract in an amount not to exceed $521,282.66 and for a contract term of 670 days from the Notice to Proceed.

Leadership Training: Gerard Bruno Associates

The Board voted to approve the recommendation of the Consultant Selection Panel to select Gerard Bruno Associates to provide management development/leadership training for MWRA managers and to authorize the Executive Director, on behalf of the Authority, to execute a contract with Gerard Bruno Associates in the amount of $279,816 for a contract term of two years.

Mr. Carroll asked where meetings would be held. Leroy Walker stated that training would occur on-site.

CONTRACT AMENDMENTS/CHANGE ORDERS

As-Needed Technical Assistance, Deer Island: Metcalf & Eddy, Contract 6233, Amendment 2

The Board voted to authorize the Executive Director, on behalf of the Authority, to approve Amendment No. 2 to extend the time for completion of Contract No. 6233 with Metcalf & Eddy, Inc., As-Needed Technical Assistance Consulting Services - Deer Island, by 790 days to May 31, 2003.

This construction project had originally been scheduled for completion during the existing M & E contract. However, the project was substantially delayed, therefore a time extension is required. This Amendment will have no budgetary impact.

BHP Lead Design Engineering Services, Metcalf & Eddy: Contract 5534, Amendment 28

The Board voted to authorize the Executive Director, on behalf of the Authority, to approve Amendment No. 28 to increase the amount of Contract No. 5534 with Metcalf & Eddy, Inc. (M & E), BHP Lead Design Engineering Services, in an amount not to exceed $735,692.

MWRA's Internal Audit Department has completed an audit of M & E's incurred costs for the years 1991 to 1995 and determined that M & E is entitled to a net adjustment of $735,692 in indirect costs for direct labor expended under Contract 5534. The issuance of the final audit report was deferred pending resolution of MWRA's claims on this contract. The Internal Audit Department will also be auditing costs incurred on this Contract after 1995. Any resulting adjustments will be addressed in a subsequent amendment.

The FY01-03 CIP includes a budget of $86,263,000 for Contract 5534. Including this Amendment, the adjusted subphase total will be $82,189,089, which includes off-contract costs and credits to this subphase. This budget line has been reduced as part of the Final FY02-04 CIP.

Chelsea Branch Sewer Relief Project: Modern Continental Construction Co., Inc., Contract 6263, Change Order 6

[Change Order 6 was originally processed for execution under delegated authority. In light of the considerable discussion related to this contract and delegated authority at the May 23, 2001 Board meeting, staff have decided to submit Change Order 6 to the Board for its consideration and approval. The Board of Directors approved Change Order 7 to Contract 6263 at the May 23, 2001 meeting. Change Order 7 will not be executed until Change Order 6 is approved.]

The Board voted to authorize the Executive Director, on behalf of the Authority, to approve Change Order No. 6 to increase the amount of Contract No. 6263 with Modern Continental Construction Co., Inc., Chelsea Branch Sewer Relief Project, in the amount of $245,458.69.

The Contractor had completed approximately 750 feet of microtunneling when the microtunnel-boring machine encountered a boulder, which stopped its forward progress. Change Order 6 instructed the Contractor to excavate a shaft in order to view the obstruction; then to remove the obstruction, which had to take place during premium labor time since this stoppage occurred during the weekend.

Change Order 6 increases the cumulative change order total to $3,081,840.47, added to the original contract amount of $15,377,445, for a revised contract total of $18,459,285.47. The FY01-03 CIP includes $15,377,000 for Contract 6263, resulting in a $3,082,285.47 budget deficit. Staff states in its summary that if this amount causes the CIP budget to exceed the ten-year spending cap or the cap for any of the first three years, reductions will be taken elsewhere to offset the increase. Change orders now total more than 20% of the original contract price.

Mr. Carroll requested that staff talk more about changes in delegated authority at the next Board meeting.

Upgrades at Prison Point Facility: Harding and Smith Construction Company, Contract 6269, Change Order 11

The Board voted to authorize the Executive Director, on behalf of the Authority, to approve Change Order No. 11 to increase the amount of Contract No. 6269 with Harding and Smith Construction Company, Upgrades at Prison Point Facility, in an amount not to exceed $44,000 and to extend the contract term by an additional 120 days to June 11, 2001. Further, to authorize the Executive Director to approve additional change orders as may be needed to Contract No. 6269 in amounts not to exceed the aggregate of $250,000 and 180 calendar days.

Change Order 11 covers the installation of: Limit Switches; Explosion-Proof Switches; a Fire Alarm Strobe Beacon Light; SCADA Uninteruptable Power Supply; and Concrete Parking Barriers.

The cumulative value of all change orders to Contract 6269 total $106,589, added to the original contract amount of $3,258,000, for an adjusted contract amount of $3,364,589. The FY01-03 CIP includes a budget of $3,441,000 for Contract 6269.

Norumbega Reservoir Design/Build: Norumbega Constructors JV, Contract 6213, Change Order 4

The Board voted to authorize the Executive Director, on behalf of the Authority, to approve Change Order No. 4 to increase the amount of Contract No. 6213 with Norumbega Constructors - J. F. White Contracting/Slattery Skanska, Inc., Norumbega Covered Storage Facility, in an amount not to exceed $350,000. Further, to authorize the Executive Director to approve additional change orders as may be needed to Contract No. 6213 in amounts not to exceed the aggregate of $250,000.

An additional hydraulic review of the water transmission system determined that three pressure relief/ overflow structures should be added at the Norumbega/Shaft N facility. These structures will protect against inadvertent pressure surges that could be caused by improper operation of new valves in the tunnel and aqueduct system. If not relieved, these surges could damage the metropolitan Boston water distribution system. The integrated start-up of the MetroWest Tunnel and the Norumbega tank cannot be safely achieved without design and construction of the pressure relief facility.

The cumulative value of all change orders to Contract 6213 totals $572,779.17, added to the original contract amount of $89,400,000, for an adjusted contract amount of $89,972,779.17. The FY01-03 CIP includes a budget of $89,495,000 for Contract 6213, resulting in a $477,779.17 budget deficit. Staff states in its summary that if this amount causes the CIP budget to exceed the ten-year spending cap or the cap for any of the first three years, reductions will be taken elsewhere to offset the increase.

Chestnut Hill Pumping Station Supply Main: Fay, Spofford & Thorndike, Inc., Contract 6141, Amendment 2

The Board voted to authorize the Executive Director, on behalf of the Authority, to approve Amendment No. 2 to increase the amount of Contract No. 6141 with Fay, Spofford & Thorndike, Inc., Chestnut Hill Pumping Station Supply Mains, in an amount not to exceed $25,000.

The Division of Capital Asset Management (DCAM) recently informed MWRA that the Chestnut Hill property could be made more attractive to potential developers if four small buildings on the site were demolished prior to DCAM issuing their Request for Proposal. Commissioner Perini has requested that, with funds from DCAM, MWRA handle the demolition and begin the site clearance in preparation for future disposition by DCAM. Demolition of the buildings will also provide a much-needed staging area (thereby reducing costs) for MWRA's upcoming work at the site.

DCAM has committed to provide funding for engineering and construction costs associated with demolition up to $100,000. If after bids are received, costs for demolition are projected to exceed the $100,000 limit, staff will report back to DCAM and the Board with a recommendation either to continue with the demolition or not to proceed and return any unspent funds back to DCAM.

Joseph Favaloro, Executive Director of the MWRA Advisory Board, cautioned the Authority not to limit DCAM's exposure by assigning a preset dollar value to the work, but rather that any Agreement should be prefaced by the "cost of doing the work".

Boston Low Service Pipeline Improvements: Black & Veatch, Contract 5122, Amendment 3

The Board voted to authorize the Executive Director, on behalf of the Authority, to approve Amendment No. 3 to increase the amount of Contract No. 5122 with Black & Veatch, Boston Low Service Pipeline Improvements, in an amount not to exceed $410,360.95 and to extend the contract term by 18 months to December 2003.

The construction contract award was delayed due to a subcontractor with questionable qualifications. A significant amount of effort was expended to review the qualifications of the cleaning and lining subcontractor. Black & Veatch was also directed by MWRA to prepare revised bid documents for the construction contract in the event the bids would be discarded. Although the contract was not rebid, significant effort and time was expended to produce these documents and to finally proceed with a delayed contract award.

The cumulative value of all change orders to Contract 5122 totals $1,052,697.08, added to the original contract amount of $698,538.42, for an adjusted contract amount of $1,751,235.50. The FY01-03 CIP includes a budget of $1.342,000, resulting in a $409,235.50 budget deficit.

INFORMATION REPORTS

Update on Elimination of Vacant Positions

Mike Hornbrook stated that in September, staff presented 60 positions to be eliminated with the promise to eliminate an additional 25 positions in FY01. The staff summary provides 41 positions for elimination, which will not impact the Authority's ability to provide water and sewer services. Additionally, staff committed to the Board to eliminate another 50% of the remaining unfunded vacant positions in steps during FY02.

Mr. Mannering stated that at some point the MWRA should be an "Operation" Agency that should know the positions it needs and should have a limited number of vacant positions as its goal. Mr. Carroll observed that is was his view that the goal should be zero unfunded vacant positions. He challenged the staff's view that unfunded vacant positions provide needed flexibility in adapting to changing staffing needs: "If you want organizational changes, come to the Board to create new positions, if needed."

Mr. Spinney asked if the bargaining units were given the opportunity to comment on the elimination of these positions. Leroy Walker responded that one bargaining unit commented, but did not request that the MWRA not go forward with the elimination.

Chairman Durand questioned if there is an advantage in terms of the Unions. Mr. Walker stated that there are some issues with the Unions, such as loss of career ladders. Mr. Spinney noted that the Unions should have a chance to review these eliminations as a stakeholder.

Mr. Laskey stated that there is merit to the comments made by the Board members and suggested that staff provide a better explanation as to why flexibility is needed in particular areas for the next meeting.

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This summary does not include every item discussed by the Board, nor the full extent of the discussions. Please contact Mary Ann McClellan at the Advisory Board Office with questions, comments and requests for additional information.