Water and Sanitation Operating Contracts
This library presents key documents from a USAID workshop “Making Cities Work: Operating Contracts for Water and Wastewater Services,“ held in March 2008 in Cairo, Egypt. The workshop was attended by USAID staff and local partners from Afghanistan, Egypt, India, Jordan, Montenegro, and Mozambique.
The workshop focused on a range of operating agreements: performance agreements (e.g., agreements between national and regional water authorities and local water utilities); service contracts; management contracts; leases and affermage agreements; and concessions. A priority of the workshop was to have participants understand the importance of performance targets and associated incentives in operating contracts, regardless of the specific contract form. Presentations made at the workshop are provided below.
- Introduction to Water Operating Contracts, U.S. Agency for International Development
- Incentives & Targets Key Features of Successful Operating Contracts, U.S. Agency for International Development
- Operating Contracts for Managing Infrastructure Enterprises under Difficult Conditions, James B. Sullivan, Energy Markets Group and SNCT, and Allen Eisendrath, Office of Energy and Infrastructure, U.S. Agency for International Development
- Successful Implementation of Operating Contracts in WSS: A Case of NWSC-Uganda, Silver Mugisha, National Water & Sewerage Corporation
- Operating Contracts in Water – Latur, S.R. Ramanujam, CRISIL Infrastructure Advisory
- Performance Incentives and Penalties in U.S. Operating Contracts
- Contract Issues: Lack of Data, John Sitton, Emerging Markets Group Ltd.
Designing Operating Contracts
A key objective of the workshop was to equip USAID and partner organizations, water supply and sanitation professionals, with the tools needed to design contracts to procure the services of experts to manage various aspects of water and sanitation operations. To this end, workshop participants were provided with tools to design an operating contract. A template (download Word file) was provided that participants could use to organize the process of designing a water and sewerage operating contract. The Word template included four design aspects/sessions intended to guide the user through major questions that need to be answered in designing an effective contract strategy, including:
- Target Locations and Objectives;
- Key Design Problems and Challenges;
- Operator Compensation, Performance Targets, and Incentives; and
- Basis for Tendering and Award.
Next, workshop participants were provided with another template (download PowerPoint file) to develop the terms of their operating contract.
The operating contracts that were designed by USAID Missions during the workshop are presented below:
Sample Contract and Tender Documents
- Request for Proposal for Latur Water Supply – Management Contract, Maharashtra Jeevan Pradikaran
- Request for Proposal: Part 2 – Schedules, Maharashtra Jeevan Pradikaran
- Request for Proposal: Part 2 – Principles of Management Contract, Maharashtra Jeevan Pradikaran
- Management Contract – Jinja Water Supply Service Area, Document, National Water and Sewerage Corporation, December 2003
- Request for Qualification for Latur Water Supply – Management Contract, Maharashtra Jeevan Pradikaran
- Selected Contract Clauses from Maharashtra Jeevan Pradikaran, Maharashtra Jeevan Pradikaran
- Request for Proposal – Karnataka Urban Water Supply Improvement Project, Karnataka Urban Infrastructure Development and Finance Corporation
- Request for Bids for Branch Managers under KW – Branch Performance Contracts, National Water and Sewerage Corporation and Kampala Water
- Branch Performance Contract between Kampala Water and Branch, National Water and Sewerage Corporation and Kampala Water, July 2006
- Guidelines for Preparation of Expressions of Interest, National Water and Sewerage Corporation and Kampala Water
- Guidelines for Preparation of Business Plans, National Water and Sewerage Corporation and Kampala Water
- Urban Water Supply Innovations in Côte d’Ivoire: How Cross-Subsidies Help the Poor, Article, Water and Sanitation Program – Africa Region, The World Bank, August 2002
- Operating Contracts for Managing Infrastructure Enterprises under Difficult Conditions, Report, James B. Sullivan, Energy Markets Group and SNCT, and Allen Eisendrath, Office of Energy and Infrastructure, U.S. Agency for International Development
- Operating Contracts for Water and Wastewater Services, Summary & Participant Evaluations, ARD, Inc., March 2008
- Approaches to Private Participation in Water Services: A Toolkit, Appendix A, pages 157-199, Public Private Infrastructure Advisory (PPIA) and World Bank © 2006
- Addressing Labor Concerns During Privatization: Lessons from the Metropolitan Waterworks and Sewerage System, Paper, Wilfred Cruz, July 2001
- D20 WaterTime Case Study – Gdańsk, Poland, Paper, Robin de la Motte, January 2005
- Troubled Partnerships: Problems and Coping Strategies in Jakarta’s Water Concessions, Paper, Olivia Jensen, October 2005
- The Design of the Manila Concessions and Implications for the Poor, Paper, Asian Development Bank & Public-Private Infrastructure Advisory Facility
- Using Internal Incentive Contracts to Improve Water Utility Performance: The Case of Uganda’s NWSC, Paper, Silver Mugisha, Sanford V. Bergb and William T. Muhairwea, © IWA Publishing 2007
- Turning Around Struggling State-Owned Enterprises in Developing Countries: The Case of NWSC-Uganda, Paper, Silver Mugisha and Sanford V. Berg, June 2006
- Innovative Contracts, Sound Relationships: Urban Water Sector Reform in Senegal, Paper, Clarissa Brocklehurst and Jan G. Janssens, January 2004
- What Went Wrong with the DAWASA Lease Contract, Presentation, John Sitton, Emerging Markets Group Ltd.