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District Saves More than $900,000 on Chemicals with Bidding Co-op
Situation: Recession Prompted Creative Approach to Controlling Chemical Costs
In late 2009, the economic downturn was hitting public agencies hard and everyone was looking for creative ways to reduce operating costs. Water and wastewater utilities in the northern Bay Area had formed a bidding cooperative that was generating lower prices on chemicals. After determining that the existing group was not interested in expanding to the East Bay, DSRSD began talking to purchasing and operations managers at nearby agencies about forming a new bidding cooperative, the Bay Area Chemical Consortium (BACC).
Chemical contracts are vital to water and wastewater agencies, which must ensure reliable supplies to keep treatment plants running around the clock. Price is also important. For many agencies, chemicals are a significant expense. DSRSD spends more than $400,000 a year on chemicals.
Solution: Joint Bids Produce Significant Savings
A supplier delivers sodium hypochlorite, an industrial strength bleach used for disinfection, to the District's wastewater treatment plant. In 2016 DSRSD paid half as much per gallon for sodium hypochlorite as it did in 2010 as a result of soliciting bids with other agencies through the Bay Area Chemical Consortium.
In April 2010, nine agencies teamed up on BACC’s first bid request for 2.5 million gallons of sodium hypochlorite, an industrial strength bleach used for disinfection. Due to the large quantity, participants saw their unit-costs drop by as much as 25 percent that first year. In 2017, DSRSD is still paying 40 percent less per gallon for sodium hypochlorite than in 2010.
Savings have continued to accumulate. Since creating the bidding cooperative eight years ago, the District has saved more than $900,000 on chemical purchases. In 2017, BACC issued bids for 15 chemicals.
Multi-agency bids often translate to lower prices because vendors have an opportunity to sell greater quantities of their products. As a result, participating agencies usually obtain lower prices than by bidding alone.
Savings vary greatly by agency and by chemical, depending on historical pricing, volume, and delivery distance. But with 67 public agencies now participating, significant savings for chemical purchases are being passed along to the agencies’ water and wastewater customers.
BACC is an informal cooperative that advertises and opens sealed competitive bids and then prepares bid recommendations. Once bids are opened, the participating agencies complete their own contracts with the lowest responsive bidder. DSRSD has continued to coordinate the program, receiving reimbursement from consortium members for the administrative cost of producing and advertising bids.
Read more about how the Bay Area Chemical Consortium works.
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