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Budget review reveals surprise

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GREENFIELD — The city of Greenfield probably has been overspending on chlorine for years because the water department did not seek competitive bids for the material, local officials recently learned.

It’s hard to tell how much the city could have saved because no one knows how many years purchases have not been bid. But city officials now expect to save $15,000 to $17,000 a year.

The issue came before a surprised Greenfield Board of Works last week when water superintendent Michael Fannin made a presentation on the last five years of chlorine expenditures.

From 2009 to 2013, the city spent $14,000 to $26,000 on chlorine each year. New bids were opened, showing the city could be spending as low as $8,000 this year on chlorine. The chemical is used as a disinfectant in municipal water supplies.

Fannin, who started work with the city about six months ago, said he noticed Greenfield’s high per-pound expenditure for chlorine while looking through the department’s budget. It raised a red flag because, in his experience with other municipal utilities, the price seemed excessive. Fannin began asking questions about why the city hadn’t sought bids for chlorine in the recent past.

“It’s just one of those agreements that was made a long time ago,” he said, adding that he knew immediately the city could get a better deal if it was put out to bid. “As a leader of a municipality, that’s one of the ways that you’re watching out for the community, making sure you’re getting the best price as you can. I spent some time asking questions; I wanted to do a little bit of investigating. I could only find so much information, and some things became hearsay. I wasn’t here, so it’s hard to say (why it wasn’t bid competitively.)”

The city had been buying chlorine from Brenntag, a global chemical company. Greenfield had been paying roughly 98 cents per pound for the chemical and delivery. Bids opened from three companies last week put the price at between 32 and 40 cents per pound. Since the city typically uses about 25,000 pounds of chlorine a year, the bids came in between $8,000 and $10,000.

The lowest price actually came from Brenntag. Fannin said he had spoken with a company representative to find out why the company had been charging Greenfield so much.

“It was something that had just been in place, and as far as he was concerned, if the city didn’t have an issue with it he wasn’t going to change anything,” Fannin said. “But he wasn’t surprised when I told him we were going to put it out to bid.”

A representative from Brenntag could not be reached for comment Monday, nor could the city’s previous water superintendent.

Other companies to bid on the material were JCI at 40 cents per pound, and Hawkins at 39.5 cents per pound.

The board put the contract award decision on hold, and Fannin said he isn’t sure yet which company to recommend. Typically, contracts are awarded to the lowest responsible bidder.

Board members were surprised at the difference the city could be paying.

“It should have been price-checked more frequently,” said member Kathy Locke.

Mayor Chuck Fewell said he was surprised with the bids and will be looking into how long the city had been spending so much on chlorine and why.

That will be hard to determine. Clerk-Treasurer Larry Breese said he doesn’t recall the matter being discussed in his 18 years in office; the issue should be an example for other department heads to re-examine their expenditures, he suggested.

“I’m sure there are some things that we buy on a continuous basis, and maybe we’ve been buying it for a number of years and just really haven’t done our due diligence in making sure what we were purchasing was the best price possible,” Breese said.

Utility director Mike Fruth said he, too, was surprised at the difference in price for chlorine based on what the city had been paying.

Fruth, also fairly new to the utility director job, said he’s encouraged the street, wastewater and electric departments to look over their budgets to find savings. He was pleased Fannin caught an over-expenditure in the water department.

Fruth acknowledged it will be hard for the board to decide which company to go with. Brenntag offered the lowest price but had also been overcharging the city for years, Fruth said.

“The fault is ours; it’s not theirs,” he added. “Obviously those people are in the business to make money, and I don’t have a problem with that. But when it’s to the extent it was, yeah – it doesn’t make me feel good about the situation.”

Fruth said as a rule of thumb, the city’s utility departments should be seeking competitive bids on a regular basis for supplies and products.

“Oftentimes there are some products and materials that it’s hard to get more than one supplier that does that,” Fruth said. “But where we can, if we have multiple suppliers that supply the same type of product, we want to make sure we’re getting the best price…. Chlorine is chlorine. It’ll be the same quality material and the delivery and types of containers will be just what we’ve been getting. There’s no reduction in service.”

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