When Your Financier Bellies Up to the Bar, and then Goes Belly Up (A Texas Story)

摘要

A large local water system in Texas identified the need for up to 20% more water in the next 30 years due to growth. The system had already begun diversification of its supply to include more than a single aquifer as its source. However, in a unique process, the system issued a Request for Competitive Sealed Proposals (RFCSP) that was, in effect, an operations agreement. The RFCSP requested that teams identify a way to provide the system with 50,000 acre-feet of water a year, design it, finance it, install it, and operate it for 30-years through an agreement that would pay the successful proposer an annual, set fee. Nine proposals were submitted, with a variety of combinations of designers, water purveyors, contractors and even multi-national companies that identified a means to finance the project as part of their proposals. A successful team was selected, which included local engineering firms, national construction firms and an international company to oversee financing and implementation. The system and successful proposer began negotiating the over 900-page agreement. Upon successful negotiation with the international company, the project began to acquire easements and complete design in earnest. Throughout the initial phases of the project, the international company assumed a significant amount of the construction decisions, without involving the national construction firm (Garney). As the early stages progressed, it became evident that the international firm was not accustomed to building a project to the standards used in the United States and the level of frustration between the design team and the international firm increased at a significant rate. Added to this frustration was an undertone of whether the international company was still fiscally solid. In the end, they were not and the project was put on hiatus once the international company entered bankruptcy in their home country. The local water system, however, still had the need for the water. The project could not remain on hiatus very long. Fortunately, the over 900-page agreement provided a way to "switch" the name of the principal in charge of the project. In an even greater stroke of luck, the national construction company that had been held at bay by the now-belly-up international firm had the wherewithal to take over the project, including the financing. Further, the involvement of the construction company on a day-to-day basis allowed the design team to develop a system that met standards while identifying construction savings. This paper will review the history of the project, the key items in the 900+ page agreement that facilitated the change in principal and the steps that were taken to meet schedule even after the bankruptcy hiatus.