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Desal plant contractor in default

A series of snags has pushed the plant past its completion deadline. The company now has 48 days to finish the job.

By CRAIG PITTMAN
Published October 2, 2003

Eight months after failing to meet its first deadline, the company building the nation's largest desalination plant has missed another one.

So on Wednesday, officials at Tampa Bay Water notified Covanta that it has defaulted on its contract to build the $110-million plant in Apollo Beach.

"We are quite a ways beyond the original obligation," said Tampa Bay Water general manager Jerry Maxwell.

The desal plant is seen as essential to ending the region's dependence on groundwater pumping, a practice that in recent decades depleted rivers, shrank lakes and drained swamps.

But construction has hit repeated obstacles, ranging from the bankruptcy of two contractors to Asian green mussels clogging the filters.

Maxwell said Tampa Bay Water has done all it could to get the plant up and running.

"We have certainly done everything possible to get the plant constructed on time and on budget," he said. "It would be extremely difficult - nearly impossible given our contractual arrangement with Covanta - to do more than we have."

Now the clock is ticking, in more ways than one. Penalties of $32,500 a day will begin piling up against Covanta, Tampa Bay Water said. If it is unable to finish the job within 48 days, Covanta could be fired. Tampa Bay Water officials are talking to other companies about taking over.

Besides the default notice, Maxwell notified the companies that hold a $23-million performance bond guaranteeing completion of the plant that he wants to meet within 15 days to talk about how to finish the work. One of those companies, Hydranautics, is Covanta's lead subcontractor on the plant. Its president, Ken Klinko, declined to comment.

Meanwhile, Tampa Bay Water officials are facing a deadline controlled by Mother Nature.

Tampa Bay Water hasn't needed the plant because of the summer's unusually heavy rainfall. When the rainy season ends next month, the desal plant must be ready to supply an eighth of the 200-million gallons Tampa Bay Water requires each day.

Should Tampa Bay Water be forced to rely on groundwater, it could incur fines from the Southwest Florida Water Management District, which helped finance construction of the desal plant.

Covanta officials, who last week were giving extensive interviews to reporters in which they complained about Tampa Bay Water's failure to help them, had little to say Wednesday about the default. In prepared statements, though, they made it clear they are not happy.

Covanta vice president Scott Whitney blasted the utility for issuing a default that "is totally without merit," and company officials said they "reject Tampa Bay Water's ability to simply cancel the contract, access the performance bond or levy damages."

The key to completing the plant is a 14-day test to show that everything is running smoothly. The New Jersey company ran such a test in May and failed to satisfy Tampa Bay Water, which is concerned about problems that could drive up the plant's cost of operation over the budgeted $10-million a year.

In June, the utility gave Covanta until Tuesday to complete and pass the 14-day test. But Covanta did not begin its second 14-day test until Monday. Whether it will pass is unknown, Maxwell said.

Begun with great fanfare two years ago, the plant is supposed to take 40-million gallons of seawater each day from Tampa Electric Co.'s Big Bend power plant next door and force it through 10,000 tightly woven membranes to produce 25-million gallons of potable water and 15-million gallons of brine.

The water goes to Tampa Bay Water's 2-million customers, while the brine is mixed with TECO's regular discharge into Tampa Bay.

After the original contractor, Stone & Webster, went bankrupt, Tampa Bay Water replaced it with Covanta. But Covanta's parent company went bankrupt last year, too. Tampa Bay Water stuck with the company, which Maxwell defended as the only way to keep construction moving forward.

But the company missed its initial deadline for completing construction in January. By March the plant was sufficiently finished for Tampa Bay Water officials to organize a grand opening, hailing the production of its first 3-million gallons.

But the company failed the 14-day test in May, prompting Tampa Bay Water to issue its first default notice. It noted 17 problems, not least of which was the filters clogging more frequently than expected, requiring cleaning with a stronger solution.

Covanta officials have blamed the clogging on Asian green mussels that stick to the intake grates outside the TECO plant, which Maxwell has greeted with bemusement and some skepticism.

Meanwhile, Hillsborough County balked at allowing large quantities of the cleaning solution in its sewer system, so Covanta was forced to store 2-million gallons in tankers parked around the site.

[Last modified October 2, 2003, 08:49:45]


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