January 2019 Board Press Release

posted on Wednesday, January 30, 2019 in Board Meeting News

New Timeline for Fiber Proiect Reached

At Tuesday's meeting of the Board of Water, Electric and Communications Trustees, the Board was updated by Sal LoBianco, General Manager, on the status of negotiations with Atlantic Engineering Group (AEG), MP&W's contractor for its Fiber to The Home {FTTH) Project. As reviewed during previous Board Meetings, the schedule for the FTTH Project was falling more and more behind when Staff began discussions with AEG about what was needed to complete the project in a timely manner. MP&W and AEG, additionally and simultaneously, pursued arbitration over disputed matters.

Both MP&W and AEG had claims against each other that were before an arbitrator. MP&W's issues centered around the fact that construction progress significantly lagged behind schedule and AEG had not adequately staffed the underground construction part of the project. MP&W has been satisfied, overall, with the quality of work; however, the lack of resources assigned by AEG to the project locally has been the main concern. AEG disputed the scope and pay for a few key pay units related to the underground work. While Staff believes MP&W's legal position in the arbitration was very strong, consideration was given to the cost and effect of additional delays affecting the project if legal remedies continued as arbitration would have lasted well into 2019, continuing to delay completion of the project.

Talks between MP&W and AEG continued, and a new Term Sheet was agreed to in October; work then began to develop a contract amendment reflecting the revised terms agreed to by the parties. During the November Board Meeting, the Board authorized LoBianco to enter into the Contract Amendment subject to successful negotiation reflecting the newly agreed upon terms. Negotiations regarding the amended terms continued throughout December and January. LoBianco was finally satisfied that the amended language and contract change order met the spirit of the new Term Sheet and executed the documents in January. The Board ratified the Contract Amendment and Contract Change Order during the evening's meeting.

The new timeline for the FTTH project provides for all Communications' customers to be installed on the new fiber system by yearend 2019. As a compromise, MP&W agreed to modify the scope and pay for the disputed underground units. In exchange for the agreement to pay approximately $390,000 more for some portions of the underground work, AEG is now required to meet certain performance milestones throughout the next nine months and increase its staffing on the project. The milestones in the Contract Amendment include delay damages should AEG miss the timeline targets.

Departmental reports indicate approximately 26% of MP&W's Communications' customers have been converted to the all-fiber system. Although customer conversions are lagging, other facets of construction are 30 - 80% complete; therefore, both MP&W and AEG believe completion of the project in 2019 is achievable.

While MP&W is disappointed the FTTH project is extending into 2019 and recognizes the inconvenience this puts on the community, continuing to move forward with AEG under revised terms is a far more economical and timely option than litigation or rebidding the project with a replacement contractor. MP&W is also realigning its resource commitment to the project to keep pace with AEG's new timelines. Once the weather improves, a significant increase in work on the FTTH project is expected.

In other news, the Board:

  • Set March 7, 2019 as the date for the receipt of bids for the construction project to remodel the A/0 Center Main Lobby. The Public Hearing for this project was set for March 26, 2019.
  • Received a copy of an article written about MP&W by the Iowa Association of Municipal Utilities for their IAMU Connection Magazine. IAMU represents and advances the interests of over 750 municipal broadband, electric, gas and water utilities statewide.
  • The Board received a tour of the newly reinforced Network Operations Center which houses much of the equipment that is used to receive video, internet, and phone signals and then distribute those services to customers. The reliability project was undertaken to reduce the risk severe weather may have on the Utility's ability to deliver those services to its customers. MP&W will host a public Ribbon Cutting event with GMCCI February 12, at 11 :30 a.m.