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Annual Service Contract - page 33 / 43

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There can be no argument that OMI can say it has no funds to allocate for ongoing repair and replacement maintenance. Built into the Fixed Service Fee is $650,000 (indexed beginning in the second year of the Contract) dedicated to cover the repair and replacement of the managed assets. The residents of Stockton’s water related fees provide for the repair and replacement activity. In the event of any repair or replacement in excess of the $650,000, the City is responsible for this expense as well. This method of dealing with repair and replacement, City pays Fixed Fee and City is responsible for excess of Fixed Fee funds, is the reason this Contract is an outsourcing vs. a partnership agreement.

Lack of scheduling capability and failure to develop maintenance guidelines creates a “management by crisis” style of operation. This method of management creates opportunities for work to go unfinished or backlogged.

If not addressed, backlogs can get out of hand. Monitoring of compliance with maintenance procedures falls directly upon Mr. Madison and his staff. As an example, from the July 2005 Monthly Report from OMI, the following scheduled maintenance repairs are backlogged:

1.

Main Treatment –

a.

Mechanical41%

b.

Electrical56%

c.

Engines100%

2.

Sanitary Pumping –

a.

Mechanical22%

b.

Electrical50%

3.

Tertiary

a.

Mechanical50%

b.

Electrical37%

4.

Stormwater Pumping –

a.

Mechanical82%

b.

Electrical100%

On page 45 of the July 2005 Monthly Operations & Maintenance Report, the first bullet point states that the HTE-PM system is out of service. This validates that the CMMS is not yet operational.

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