City spending millions on problems involving Siemens contract

By ANTHONY WARREN,

The city of Jackson has spent close to $3 million since last April to address problems associated with the Siemens contract.

Now, the city is trying to recoup those costs and much more.

The Lumumba administration recently filed suit against the firm and some of its subcontractors seeking $225 million in damages.

In 2012, the city awarded Siemens a roughly $91 million contract to completely overhaul its water system.

The project included replacing some 65,000 residential and commercial meters, making some infrastructure repairs and building and installing a new billing system.

The agreement was approved under former Mayor Harvey Johnson, who said the improvements would help cut costs, increase collections and help customers better detect leaks.

The new “customer care and billing software” (CC&B) system went live in 2015.

Despite promises of improved meter readings and more accurate bills, many customers reported receiving grossly inaccurate statements, or worse yet, no statements at all.

Some customers didn’t receive a bill for months, only to get a statement for thousands of dollars owed after months of not getting a bill at all.

Problems culminated last spring, when the Lumumba administration learned that more than a third of the city’s water customers were not receiving regular bills and the water/sewer enterprise fund was about to go belly up.

Since then, Jackson has spent roughly $2.8 million to correct bills and make emergency repairs.

Hundreds of thousands more will likely be needed to permanently fix the system. The additional expenditures will place continued strain on the city’s water/sewer enterprise fund, which is funded through monthly collections.

Right now, Jackson is bringing in about $6 million a month, enough to cover maintenance and operations, but not enough to begin rebuilding the fund’s cash reserves.

Among contracts, in April 2018, the city rehired Siemens to help correct the 23,000 stranded accounts. Responsibilities

also included making sure meters were working with the new billing software and providing additional training for employees.

The $1.12 million agreement was for five months and was paid for with funds left over from the initial Siemens contract.

Work on that project wrapped up on September 30, with the majority of the 23,000 accounts fixed.

With that work was ongoing, Jackson brought on West Monroe Partners, a private consulting firm with offices in Dallas, to assess the Siemens work. The contract was for $88,400 and was paid for with revenues from the water/sewer enterprise fund.

West Monroe finished its review in October. A copy of the report can be found on the Sun’s website. The report outlines 24 fixes needed to prevent bills from being stranded in the future.

In November, the city re-hired West Monroe for to $209,760, to oversee the implementation of some of those fixes.

Origin Consulting, a subcontractor who worked with Siemens on the $91 million water overhaul, has received numerous contracts since October to help correct stranded accounts and provide business support, with payments totaling nearly $1.26 million.

Origin also received a $4,390 contact to restore the billing system after it crashed in March.

“Our automatic collections process system crashed and this person was brought on to fix the issues, so we could continue sending out final notices,” said Carla Gammill, deputy director of public works administration.

A number of factors have contributed to system failures, from employees not being properly trained to use the billing software to a myriad of equipment failures in the field.

As part of the initial overhaul, Siemens replaced the city’s previous analog meter system with a meter network. In addition to installing new, automated meters, the firm installed a series of “collectors” and “repeaters,” which collect and relay meter data to the billing department.

Public Works Director Robert Miller previously told the Sun how the system was supposed to work: “The meter … registers consumption, accumulates data (and) transfers the data to the collectors. The collectors go to the repeaters, which carry the data to the system.”

Hundreds of customers can be impacted if repeaters or collectors fail. Individual accounts can also be affected if the system doesn’t recognize the meter, or if the system doesn’t accept the information transmitted by the meter.

When the system malfunctions, billing will issue “estimated bills,” based on previous months’ consumption. After three estimated bills, the system quits sending out statements and accounts become “stranded.”

To help maintain equipment in the field, the city has twice used Mueller Systems LLC. The first contract was for $80,000, and paid for by Siemens. The city re-hired the firm in February for another $80,000, this time with the funds coming from water/sewer.

Gammill said the city would have to retain a maintenance contract even if the system had been working properly.

Last week, the city filed suit in Hinds County Circuit Court seeking damages related to the contract.

According to court documents, “this case involves a massive fraud orchestrated by Siemens under the guise of an energy performance contract promising $120 million in guaranteed savings for the city. Siemens was paid $90 million to install a new automated water meter and billing system and to make repairs to the city’s water treatment plant and sewer lines.

The city goes on to state that Siemens “committed fraud with respect to who was performing the work on the project, what the system would do, and what savings the system would generate, among other things.”

Other firms named in the case include Chris McNeil, U.S. Consolidated Inc., M.A.C. & Associates LLC, Invision IT Consultants LLC, Garrett Enterprises Consolidated, and John Does 1-10. Other contractors, including Mueller Systems and Origin Consulting, were not named in the suit.

One Siemens spokesperson said she had not seen the suit, but was disappointed Jackson was taking legal action. “Siemens has gone above and beyond its contractual obligations to help address the city’s well known challenges.”

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