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Case Study: Wastewater

The City of Bridgeport had a contract with Professional Services Group, a company owned by U.S. Filter, to run the city’s sewage treatment system. The contract, first signed in 1996 for three years, was intended to save money and lower sewer fees. It was extended by 18 years in 1999. However, the contract was terminated in 2001 following controversy.

The dispute concerned money each side contended the other owed it, and state-mandated staffing levels at the plants. Under the deal, the city would pay PSG annual service fees. The company was also required initially to give the city money that would be used to lower sewer fees. When the contract was terminated, PSG alleged that the city owed it $800,000, while the city maintained that the company owed it $3 million. In addition, the city maintained that, based on the amount of sewage PSG was treating, as opposed to the estimated amount used to draft the contract, it was overpaying PSG.

In early 2001, the state Department of Environmental Protection informed PSG that staffing levels were below those established in a consent order executed between the state and the city’s Water Pollution Control Authority (WPCA). PSG’s contract required that the consent order be followed. The dispute came to a head when the WPCA notified PSG that it was in default of its contract. PSG responded that it would not contest the allegation and it would immediately begin the 60-day transition needed to withdraw. The hiring of PSG in 1996 also became a major issue in an ongoing federal probe into city corruption.

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