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The Buckeye Institute: Competition is Critical When Replacing Aging Water & Sewer Lines

Nov 01, 2017

Columbus, OH – Following on The Buckeye Institute’s policy brief, Competition Saves Taxpayer Money on Water and Sewer Line Repair, Buckeye’s Greg R. Lawson submitted testimony (see full testimony below) to the Ohio House State and Local Government Committee on the policies in House Bill 121.

In his testimony, Lawson highlighted the issue of water and sewer infrastructure as one that is important “not only for taxpayers’ pocketbooks but also for their health and wellbeing.”

Lawson went on to note that there are a number of considerations engineers and local officials must take into account when determining the best materials to use for water and sewer pipes saying, “Many factors, such as soil conditions and load, influence the engineering specifications for such a project. Design engineers are qualified experts who must closely study the particular conditions of the project and take these factors into account. They are therefore in the best position to determine what material or materials are suitable.”

Of critical importance is to ensure that taxpayers get the best value and the best product for their infrastructure projects with Lawson stating, “Governments should embrace competitive bidding…[and] refrain from imposing regulations that negate the market incentives for industries to lower costs and provide better products.”

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Interested Party Testimony Submitted to the
Ohio House State and Local Government Committee on House Bill 121

Greg R. Lawson, Research Fellow
The Buckeye Institute for Public Policy Solutions
November 1, 2017

Chair Anielski, Vice Chair Hambley, Ranking Member Holmes, and members of the committee, thank you for the opportunity to testify today. My name is Greg Lawson and I am the research fellow at The Buckeye Institute, a think tank that advocates free-market policies for Ohio.

The policy under consideration addresses the funding and regulation of public water and wastewater projects. This is an important issue not only for taxpayers’ pocketbooks but also for their health and wellbeing, and one we looked at in our recent policy brief, Competition Saves Taxpayer Money on Water and Sewer Line Repair.

Many factors, such as soil conditions and load, influence the engineering specifications for such a project. Design engineers are qualified experts who must closely study the particular conditions of the project and take these factors into account. They are therefore in the best position to determine what material or materials are suitable.

If more than one material is suitable, economics will likely become a factor. The best value may not always be the cheapest bid. The lowest-cost material that meets the specification may indeed be the best value, or the highest-cost material may be the best value over the long-run, taking into account factors such as the durability of the material and financing terms.

To ensure that taxpayers get the best value, governments should embrace competitive bidding. Free competitive markets raise quality and lower prices. Governments should refrain from imposing regulations that negate the market incentives for industries to lower costs and provide better products.

Businesses should make their best proposal for the work required, and governments should select the bid that provides the best value for taxpayers. Taxpayers can and should make local officials justify their decisions and hold them accountable.

Indeed, Ohio recognizes the value of competitive bids and state law requires government contracts be open to competitive bidding in most situations.[1] As the Ohio Supreme Court has explained, competitive bids on government projects “protect the taxpayer, prevent excessive costs and corrupt practices, and provide open and honest competition in bidding for public contracts.”[2]

Engineers may worry that absent a restrictive ordinance, the county may be required to choose the lowest bid. But that is not the case. Ohio law instructs that contracts be awarded to the “lowest and best bidder.”[3] Thus, if, in the engineer’s professional opinion, the lowest bid is not also the best bid, the engineer may legally select the better product or service even at the higher price.[4]

As communities look to repair and replace expensive infrastructure, local leaders should embrace competition and accountability and respect the know-how of the trained professionals tasked with fixing the problems.

Thank you for your consideration. Appended to my testimony is a reprint of an op-ed that Buckeye recently published in a local Ohio newspaper which you may also find useful and informative.

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[1] Ohio Rev. Code Ann. § 307.86.

[2] Cementech v. City of Fairlawn, 109 Ohio St. 3d 475, at 477.

[3] Ohio Rev. Code Ann. § 735.05 (Emphasis added).

[4] Danis Clarkco Landfill Co. v. Clark County Solid Waste Management Dist., 73 Ohio St. 3d 590, at 603.