Veolia Sues MMSD, Alleges Biased Contracting Process

Jones Island Reclamation Facility. Photo by Urban Milwaukee staff.

The Milwaukee Metropolitan Sewerage District (MMSD) is being sued by its wastewater operator, Veolia, over an allegedly unfair contracting process.

MMSD is on the verge of awarding a new 10-year contract to operate the district’s two wastewater facilities: the Jones Island and South Shore water reclamation facilities. Veolia, a French transnational corporation, has operated the facilities since 2008. It was competing for another 10-year contract against Jacobs, a Dallas-based engineering firm.

Central to Veolia’s lawsuit is a claim that the community group Common Ground’s public campaign against Veolia distorted the procurement process and that Jacobs’ bid included unrealistically low pricing for maintenance and labor costs, effectively steering the contract toward Jacobs.

MMSD estimated the value of the new contract at approximately $700 million. In August, an ad hoc committee of former MMSD commissioners recommended selecting Jacobs for the next contract term. The committee’s decision was driven by Jacobs’ bid, which was substantially lower than Veolia’s, and by the perception that the company appeared more responsive to operational and policy changes at the two facilities. The MMSD commission is expected to vote on a contract award later this month.

Veolia filed a lawsuit Friday in federal court alleging MMSD did not follow its own procurement rules, unfairly favored Jacobs’ lower bid on the contract and allowed a community group to manipulate the contracting process. The company is asking a federal judge to block the award of a contract to Jacobs and order MMSD to restart the contracting process.

Veolia is also alleging that MMSD was unfairly influenced by a community organization’s public campaign against Veolia. In April, Common Ground launched a campaign calling for an audit of Veolia’s operations of the sewerage plants. Working with nearly two dozen whistleblowers, Common Ground alleged Veolia was intentionally mismanaging the sewage treatment plants to save money, causing the systems to run below capacity and increasing the risk of sewer overflows and basement backups. The MMSD Commission authorized an independent audit in June.

In a complaint filed in federal court, Veolia claims the contracting process was unfair from the beginning and that it gave “the appearance of a competitive procurement” when MMSD had already decided to award the contract to Jacobs.

“MMSD established its procurement process, criteria and timeline in 2024 and has followed it as outlined. Consistent with this process, an ad hoc committee comprised of former MMSD commissioners thoroughly reviewed both bids and made a recommendation based on the previously established criteria,” MMSD Commission Chair Corey Zetts said in a statement Friday. “The MMSD Commission has not made a final decision. We will continue to follow each step in the process on our previously established timeline to ultimately select our next operator.”

Veolia charges that Jacobs’ bid included unrealistic pricing for maintenance and labor that allowed it to propose a contract well below Veolia’s bid. These figures were not thoroughly reviewed or verified by the ad hoc committee, according to Veolia, which also referenced a document from MMSD staff that stated, “It is unclear to staff how Jacobs can offer such good pricing, and staff thinks that there may be future disputes/claims related to task order items.”

To back up its claims of Common Ground’s influence on the contracting process, Veolia references public records showing meetings, and messages, between Common Ground leaders and MMSD Executive Director Kevin Shafer, Zetts, the chair of the ad-hoc committee and MMSD commissioners before their campaign against Veolia went public. These meetings concerned Common Ground’s interest in an audit of Veolia, public records related to the privatization of the sewerage plants and Common Ground’s own investigation into Veolia.

“Veolia lost the contract in a fair and open process, and now they want to blame Common Ground and MMSD for their own incompetence,” Common Ground said in a statement Friday. “It’s a bunch of sour grapes. We never advocated for one company or another. We advocated for the plants to be run properly so that crap does not end up in our lake or our basements.”

The legal claim also suggests a member of the five-person committee established to oversee the independent audit has a conflict of interest. Tom Sigmund previously served as executive director the Green Bay Sewerage District. During his tenure the district contracted with Jacobs for work on part of it’s sewage treatment system.

Veolia also claims local political leaders wielded undue influence over the MMSD commission, pointing to a brief attempt by members of the Milwaukee Common Council to hold up appointments to the commission until Common Ground’s allegations were addressed.