Omaha's $411m Papillion Creek wastewater expansion faces intense pushback over CMAR bidding dispute

Omaha's $411m Papillion Creek wastewater expansion faces intense pushback over CMAR bidding disputeA proposed $411 million guaranteed maximum price amendment has sparked fierce debate in the Omaha City Council, as local contractors and council members question the legality of removing competitive bidding requirements for self-performed work.

The $411 million GMP amendment with McCarthy Building Companies is part of a broader $565 million CIP to replace 50-year-old infrastructure and meet new state ammonia and nutrient regulations.

Opponents, including Hawkins Construction, argue the city violated the original 2024 CMAR agreement by allowing McCarthy to bypass competitive bidding for self-performed work, claiming the project is significantly overpriced.

Public Works officials defended the 'open book' pricing model as a risk management strategy, noting costs were validated by third-party engineers from HDR and Jacobs.

The council is also considering an associated $88.4 million procurement contract with Aqua-Aerobic Systems for proprietary granular sludge treatment equipment.

The Omaha City Council is weighing a highly contentious $411 million contract amendment for the secondary expansion of the Papillion Creek Water Resource Recovery Facility (PCWRRF), following allegations that the city bypassed competitive bidding requirements to favor an "open book" pricing model. The proposed ordinance would establish a Guaranteed Maximum Price (GMP) of $411,028,480 with McCarthy Building Companies under a Construction Manager at Risk (CMAR) delivery method. The contract is the centerpiece of a broader $565 million capital improvement program aimed at replacing the plant's 50-year-old infrastructure and meeting stricter state ammonia and nutrient discharge limits. However, the March 3 public hearing was dominated by a fierce debate over the procurement process. Opponents argued that the city violated the original September 2024 preconstruction CMAR agreement, which required McCarthy to solicit competitive bids for all work, including portions the firm wished to self-perform. The proposed amendment would delete that requirement in favor of an open book approach subject to third-party review. Chris Hawkins, CEO of local competitor Hawkins Construction, testified that the failure to bid out the work resulted in exorbitant costs. Noting that the original construction estimate was $270 million, Hawkins claimed his firm produced an independent estimate showing the project could be done for tens of millions of dollars less. Jim Volkl, CEO of the Platte Institute, also spoke in opposition, calling the amendment a "slap in the face to ratepayers" that lacks transparency. City officials defended the CMAR methodology. Jim Tyler of Omaha Public Works explained that the open book process was chosen to manage the massive risks associated with the complex six-year project. The GMP includes $24 million in upfront contingencies to prevent the spiraling change orders typical of traditional design-bid-build contracts. Tyler added that the costs and productivity rates were vetted by third-party engineers from HDR and Jacobs. "We believe that managing the risk was important enough on this project to do the CMAR project," Tyler told the council, noting that a major failure at the plant three years ago left the facility limping along for eight months and struggling to meet compliance. The city's legal department, represented by Deputy City Attorney Ryan Wiesen, maintained that state statute permits political subdivisions to refine scope and price, and to make changes to CMAR contracts without invalidating them. Despite the assurances, several council members expressed deep skepticism about retroactively altering the contract language. Councilmember Brinker Harding questioned the legality of changing the rules after the fact, noting that the open book process is fundamentally different from the competitive bid process originally agreed upon. Councilmember Rich Pahls echoed concerns over the deletion of Article 10, which contained the original bidding mandates. Alongside the McCarthy GMP, the council is also evaluating an $88.4 million procurement contract with Aqua-Aerobic Systems for proprietary activated granular sludge technology. Tyler noted this equipment will allow the plant to achieve high-level treatment on a much smaller footprint. Both ordinances are expected to face a final vote at the next council meeting.