Mayor Shirley Franklin today announced the preliminary findings of an independent committee appointed to review the City’s contract with United Water. Mayor Franklin also released the details of her letter sent to United Water on June 10, 2002 initiating discussions regarding the City’s dissatisfaction with the company’s performance under its contract to operate the City’s water supply system.

Mayor Franklin said, “It is no secret that for quite some time we have had serious concerns regarding United Water’s performance and commitment under its contract with the City.  Efficient and effective operation of the City’s water supply is crucial to the long-term health of the City and its citizens, and it is a basic obligation of the company under the contract.  United Water has not lived up to its responsibility, and it is past time that we address this problem.”    

In April 2002, the Mayor asked an outside committee to review the United Water contract and to give her an independent assessment of the company’s performance.  The committee members are John Arndt, a retired lawyer and certified public accountant; Cal Darden, an executive at United Parcel Service; Lee Dehihns III, an attorney at Alston & Bird; and Karol Mason, also an attorney at Alston & Bird.    

While the committee has not yet completed its work, it has made sufficient preliminary findings to advise the Mayor that the June 10 letter was necessary.

Among other things, the Mayor’s letter:

• advised United Water of the City’s ongoing review of the contract; 

• provided the company with formal notice of the City’s dissatisfaction with its performance under the contract; 

• outlined several specific key areas of concern related to the company’s performance; and 

• summarized the City’s plan for determining whether the contract should continue.
  

The letter also outlined four specific recommendations made by the committee to the Mayor:

1.      That the City demand payment from United Water for failure to “collect outstanding bills at a rate of 98.5% or better on a current annual basis”, as required under Schedule 19 of the contract.  (The company’s failure to collect this percentage from May 2000 to May 2001 resulted in a shortfall of $8,766,644 of City revenue.)

2.      That the City demand that United Water provide it with a Letter of Credit that complies with the contract requirements.

3.      That the City demand that United Water comply with its meter installation obligations under the contract.

4.      That the City demand that United Water adjust its staffing (both in numbers and qualifications) to be able to comply with its obligations under the contract.

“All of these issues are of concern.  But most troubling to me is the Committee’s conclusion that United Water does not have enough personnel to carry out its responsibilities or that its personnel are not qualified to perform the work.  It is critical that we resolve this issue,” said Mayor Franklin.

To resolve these ongoing issues, the Mayor stated that as soon as the committee completes its work and submits a comprehensive report on its findings, she will establish a “contract correction period” in which United Water will be required to address in earnest the non-performance issues raised in the written report.   During that period, the City will convene regular meetings with the company to assess the progress of the company’s efforts to cure its contract breaches and improve performance.  At the end of the contract correction period, the City will then evaluate whether the continuation of the contract is in the best interest of the City.