Officials want to open competition for public pipe projects

Sen. Rand Paul (R-Ky.) has introduced a bill to amend three federal acts and open the bidding process for government-assisted water infrastructure projects to all materials, including plastic.

Senate Bill 3121 calls for "maximum open and free competition" in procuring projects receiving federal tax dollars under the Federal Water Pollution Control Act, Safe Drinking Act and Water Infrastructure and Innovation Act.

Introduced June 25 and referred to the Senate's Committee on Environment and Public Works, the so-called Water Infrastructure Transparency Act is similar to legislation proposed in March by U.S. Rep. Brian Babin (R-Texas). Babin introduced the Municipal Infrastructure Savings and Transparency Act to open the bidding process for publicly-funded projects, such as roads, bridges and dams in addition to water systems, to cost-effective building materials.

The federal legislation comes at a time the plastics industry and American Chemistry Council have been pushing for open bidding at the state level in Arkansas, Indiana, Ohio, Michigan, North Carolina and South Carolina. ACC retained BCC Research to study pipe installation data nationally. One finding indicates increased competition decreases pipe capital costs by 32-35 percent.

However, no state bills have passed. Tony Radoszewski, president of the Plastics Pipe Institute, which is based in Dallas and represents many polyethylene pipe producers, blames strong lobbying by iron and concrete associations and their allies in state capitols and on Capitol Hill.

"These two industries have a long and storied presence in both state and federal agencies," Radoszewski said in an email. "That is to say they have a lot of friends, a lot of money and a lot of boots on the ground."

Opponents of open-competition policies say they would complicate bidding, slow down projects and lead to lawsuits. Some see the state and federal bills as attempts to use the government to promote plastic pipes.

Not so, say supporters of the policies. They contend neither federal bill calls for use of any specific material.

"Legacy material interests are trying to make it a plastics preference issue as they realize advanced materials — that is plastics — offer better long-term performance and economics, and that their monopoly in the pipe arena is being threatened," Radoszewski said. "There is also a ruse being employed by both iron and concrete concerns that such legislation would take away the authority of the design and specifying engineer to choose which material to use.

"The hypocrisy of this position is simply breathtaking since a closed competition environment is truly the only way an engineer loses the ability to choose," he said.

Adopting open competition policies at the federal level is a no-cost way to help state and local governments save billions of dollars to repair aging water infrastructure, according to Steve Russell, the ACC's vice president of plastics. Paul and Babin have demonstrated "real thought leadership" on the issue, he added.

"We urge Congress to include these sensible bills as part of legislation to repair our failing infrastructure and help communities across the country," Russell said in an email.

For the nation's water systems, aging infrastructure and quality concerns pose serious challenges. The American Water Works Association says an estimated $1 trillion will have to be spent during the next 25 years to meet needs for drinking water.

The American Society of Civil Engineers says it will cost $2 trillion over the next 10 years to improve the nation's infrastructure.

Open-competition policies offer two main benefits, Russell said.

"First, they help break through outdated regulatory barriers to let project managers consider all technologies and to select the most innovative and cost-effective solutions for the job instead of being mandated to use pre-selected materials," he said. "Second, open competition brings market forces to bear on project funding. Competition drives down prices, and a federal open competition policy could save over $370 billion on water infrastructure projects alone."

Babin's legislation, which applies broadly to infrastructure, could drive those savings even further, Russell added. It also has provisions to protect engineers and their professional judgment in choosing the materials they deem appropriate, he said.

If either Babin's or Paul's bill passes, open bidding would remain tied to federal funding only. Overall, federal spending is a "surprisingly small component" of water infrastructure spending, Russell said. He pointed to the U.S. Conference of Mayors Water Council, which says 98 percent of the financing to build water supply and sewer/wastewater infrastructure is made by local government. In the U.S. Environmental Protection Agency's budget, for example, Clean Water and Drinking Water Revolving Funds only totaled about $2.7 billion in fiscal year 2018.

"However, these federal dollars spread widely as they flow into state coffers and local projects, and the policy requirements can have an outsized impact," Russell said.

The main options for pipe replacement are traditional materials like concrete and ductile iron and newer materials like PE and PVC, which have been around for some six decades. Plastic pipes are replacing older materials across the country for drinking water, sewer, wastewater and storm water applications. The city of Burton, Mich., which is a neighbor to Flint, reportedly saved $2.2 million by using PVC pipes to update its water system for 30,000 residents. And, in Virginia, the Arlington National Cemetery used PE pipes to replace underground water infrastructure because it could be installed using trenchless technology, which didn't disturb the graves of fallen soldiers.

JM Eagle, which manufactures both kinds of plastic pipe for water, sewer and other applications, saw estimated sales increase 11 percent to $2.8 billion, keeping the Los Angeles-based company the No.1 pipe, profile and tubing extruder in North America, according to Plastics News' latest ranking.

Both PVC and PE pipes are lightweight, durable and resist corrosion. Introduced to North America in the 1950s, recent studies indicate PVC water mains have fewer breaks than traditional materials and have a reliable service life of more than 100 years. Used since the 1960s, PE pipe has heat-fused joints that don't leak and is flexible for easy installation, yet strong enough to withstand earthquakes. PPI says the service life is 100 years.

Advanced Drainage Systems Inc., in Hilliard, Ohio, which offers mostly PE products for storm and sanitary applications, retains the third spot in the newly updated ranking with sales of $1.33 billion, which is up 5.8 percent from a year ago.

The estimated sales of other plastic pipe producers ranking among the Top 15 extruders increased 3.4 percent to 25 percent except for Performance Pipe in Plano, Texas. The PE pipe producer, which serves the water, waste water and gas distribution markets, held onto the No. 6 spot despite a sales drop of 8 percent to $450 million. The company closed its Williamston. Ky., plant in fall 2016 and laid off 48 employees due in part to a drop in PE pipe demand for oil exploration and production. The Fairfield, Iowa, site also closed recently.

The big estimated sales gain of 25 percent happened at Charlotte Pipe and Foundry Corp., in Charlotte, N.C., which acquired Accord Industries of Winter Park, Fla., in April 2017 and is running the company as its irrigation division. Charlotte produces PVC, CPVC and ABS pipes and fittings for residential and commercial uses.

The other plastic pipe producers in the Top 15 include Dura-Line US/Canada (PE gas distribution pipe), Ipex USA LLC (PVC water pipe), WL Plastic Corp. (PE pipe for potable water, wastewater, oil and gas gathering) and Diamond Plastics Corp. (PVC water, sewer and irrigation pipe).

"In hot and cold climates, highly corrosive soils, difficult terrain, or complex urban environments, plastic pipes have numerous advantages that may make them preferable to alternate materials," Russell said.

Plastic pipe use is increasing but breaking down the market share of the major materials is complicated because there more than 50,000 public and private U.S. water utilities. Radoszewski said older data suggested iron pipe — ductile, cast and steel — at about 55 percent share and PVC at 30 percent with cement, clay and HDPE making up the rest. But trends indicate the ductile iron market has been steadily declining at the expense of plastics.

"Extrapolating this data indicates PVC is now equal to iron pipe and HDPE has nearly doubled," Radoszewski said, adding that market share for HDPE pipe is slightly less than 10 percent for potable water and about 15 percent for sanitary sewers.

"In storm water management systems, which is dominated by reinforced concrete pipe, HDPE pipe has gained significant market share, predominantly in private work," he added. "Use of HDPE pipe in public work projects, namely DOT [Department of Transportation] controlled, has grown but at a much slower rate."

Bruce Hollands, executive director of the UniBell PVC Pipe Association, also based in Dallas, agreed that market numbers are hard to come by. He said water utilities are one segment of the market where PVC has made strides.

"PVC pipe acceptance in North America has increased from 60 percent to 74 percent from 2012 to 2018, a 23 percent increase," Hollands said in an email about a 2018 survey that asked respondents what water main pipe materials are currently approved for use at their utility.

For open cut installations, PVC and ductile iron pipe are the predominantly accepted materials while HDPE pipe has 66 percent allowance for use in water systems, particularly where trenchless applications, such as pipe bursting and directional drilling, make sense, the survey also says.

The number of utilities approving of ductile iron, concrete steel cylinder, and steel pipes for use in water systems remains essentially the same, according to the survey.

Hollands said open competition keeps infrastructure expenses under control, which benefits rate payers and taxpayers. Almost all spending on transportation, drinking water and wastewater infrastructure is done by the public sector. A March 2017 report by the Congressional Budget Office says $416 billion was spent in 2014 with roughly $100 billion from the federal government and more than $300 billion from state and local governments

The U.S. Department of Agriculture (USDA) has a policy that calls for open bidding for rural utilities projects to receive federal loans, grants and loan guarantees. The goal is to build reliable and affordable systems in places with 10,000 people or less.

Holland said it should be expanded.

"PVC pipe is up to 70 percent less expensive, so more pipe can be put in the ground and fixed," Hollands said. "Studies also show that when PVC pipe is included in bids, the cost of ductile iron pipe is 30 percent cheaper. The USDA program, which funds rural water and sewer projects, has included open competition stipulations since the 1970s."

The Vinyl Institute, a trade group that monitors policies and regulations for an industry with 2,900 manufacturing facilities and 350,000 employees, likens Rand's legislation to extending the USDA policy.

"It will allow municipalities to stretch taxpayers' dollars and lower local ratepayers' costs," Vinyl Institute President and CEO Richard M. Doyle said in a statement. "Studies have shown that when municipalities require open design and bidding for piping systems the project costs are 30-50 percent less, regardless of the type of piping material selected."

For example, in North Carolina, the ACC says pipe costs nearly $305,000 per mile in Raleigh, which is closed to competition, compared to about $149,000 per mile in Charlotte, which has an open-competition policy.

"Costs savings from competitive design and bidding policies result in more pipe installed per project which is essential to addressing the dire needs of our nation's decaying water infrastructure," Doyle said.