The consulting group overseeing repairs of Miami-Dade’s aging sewage system wants a $48.8 million increase in its county contract to manage a court-ordered upgrade that’s expected to cost nearly $2 billion.
Mayor Carlos Gimenez recommended the 53 percent boost for AECOM’s existing $91 million management contract in a memo issued Monday night as a last-minute addition to the Tuesday meeting of the County Commission’s infrastructure committee.
The original 2014 contract, awarded after a fierce lobbying battle with rival CH2M Hill, put AECOM in charge of a historic reworking of Miami-Dade’s aging and troubled sewage system through a multi-year construction program agreed to in a 2013 court settlement with the Environmental Protection Agency.
Known as the “consent decree” program, it’s one of the largest contracts available in Miami-Dade’s nearly $8 billion budget.
The actual project, including new pump stations, pipes and other infrastructure upgrades, is expected to cost about $1.8 billion, according to the latest estimates by the county’s Water and Sewer Department.
That includes AECOM’s fee to oversee the work. AECOM’s 2014 contract capped its fee at $91 million. Now, Miami-Dade says it will run out of money to pay AECOM and needs to increase the cap to $140 million.
“What increased is the construction cost,” said AECOM vice president Pete Hernandez, a former Miami city manager. “There was more complexity to the projects.”
Gimenez’s memo cited a cost review in late 2016 that set new estimates for the project, and said changes tied to sea-level rise helped boost some expenses.
The overall cost of the project hasn’t changed drastically. When AECOM announced its 2014 win before the County Commission, the press release described a $1.6 billion project, the same estimate Miami-Dade used after reaching the federal settlement.
The county’s 2019 capital budget now lists consent-decree projects costing $1.8 billion, with some of that work already completed. That would mean about a 15 percent increase in the overall budget, while AECOM is on track to receive a bump of more than 50 percent for its portion of the work.
Kevin Lynskey, the county’s water and sewer director, said Monday he did not want to comment ahead of Tuesday’s hearing before county commissioners. The memo the department prepared for Gimenez to send to commissioners described a dramatic increase in construction costs — from $732 million to $1.1 billion — but doesn’t address why the overall price tag hasn’t soared, too.
AECOM and other water and sewer contractors are paid from water fees collected from homes and businesses across Miami-Dade. Those rates have been going up in recent years to pay for repairs linked to the consent decree, as well as to state mandates to reduce the amount of treated sewage pumped into the ocean.
Based in Los Angeles, AECOM is already one of the best-paid services firms in Miami-Dade government, and the top company tapped by the Water and Sewer Department for outsourcing work. A September review of county contracts, requested by Commissioner Joe Martinez, said AECOM was assigned contracts worth $53 million in water and sewer between 2012 and 2017.
Miami-Dade says the consent-decree program will finish ahead of the 15-year deadline imposed by the court. Of the 81 projects in the program, 27 are done and the rest are expected to finish by 2026. The finished projects cost about $345 million, leaving 80 percent of the budget still to be spent.
Lynskey is the county’s third water and sewer director in four years, and took over in early 2018 after serving as deputy director of the county port. He has been reviewing existing contracts and estimates, and oversaw negotiations with AECOM as the company pressed for higher fees.
Hernandez said the shift in leadership added more time to settling on a figure to take to county commissioners, which would take a final vote on the proposed fees if it passed through committee on Tuesday.
Hernandez said AECOM had a good idea of rising costs in 2015, when the company reviewed estimates in place when the contract began the year before. A subsequent review in 2016 confirmed the higher costs. “At the time, it was [in the] $140 million to $150 million range,” he said, “depending on how you do the estimating.”
This post was updated to correct an inflated cost for the finished consent-decree projects.