OMI’s Origins and First Four Years of Operation
The late 1970s and 1980s saw significant expansion to CH2M HILL’s water/wastewater market. That expansion was in both geographical and service areas—really a continuation of CH2M HILL’s traditional pioneering spirit.
From as early as 1977, Bob Chapman, then Redding Water/Wastewater Division Manager, had tried to compete for the then just-emerging wastewater treatment plant contract operations market. These were still small projects, but Bob sought to compete anyway. The first proposals found our price way out of competitive range. In looking at our proposals vs. the winning proposals, we determined that we just could not compete when carrying the firmwide overhead (at that time still probably 140 percent or more). And, that since this was a different business, we should not have to carry that overhead. In 1978, Bob brought his frustrations to John Filbert, then Wastewater Treatment Discipline Group Director. John led in producing an in-house study that proposed to Gene Suhr (Water/Wastewater Discipline Director), Sid Lasswell (Technology Director), and Harlan Moyer (CEO) that we establish a separate operations and maintenance (O&M) company for the purpose of competing in this market.
The company leadership, particularly those mentioned above, was very interested in the idea; however, it was not without controversy. The main concern was that CH2M HILL’s entry into such an endeavor would put us in internal conflict between “professional engineering” and “blue-collar” businesses. This brought up a then-continuing concern about conflicts between the marketing of these different services to the same client and the possibility of organized labor getting a foothold within the organization, along with numerous other issues that we did not have ready answers to.
As a result, leadership decided that the further development of the O&M organization be given further detailed and unbiased study before implementation. About the time this decision was taken, CH2M HILL was just beginning discussions with Dr. Kent Robinson (co-inventor of the high-purity oxygen activated sludge wastewater treatment process) about his leaving Union Carbide for a career in CH2M HILL. We had not come up with an initial assignment to justify his being brought on board at that time, until someone suggested that Kent be the one to undertake the study!
Before joining CH2M HILL in June 1979, Kent Robinson spent his last 5 years in Europe with Union Carbide Europe, S.A. A business that he was responsible for was the UNOX System, a wastewater secondary treatment process. This led to frequent contact with the French water and wastewater contractors, Degremont (now Suez Lyonnaise des Eau) and O.D.A. (later Societe General des Eau, now Vivendi). These contractors then, as now, share the French public sector water and wastewater design/build and O&M markets on a 50:50 basis.
Degremont and O.D.A. disclosed that they were very interested in entering the U.S. market to secure design/build contracts for water and wastewater facilities. However, they realized that local U.S. law did not permit this type of project delivery approach in what was then, and has been until 2000, a design/bid/build market controlled by the U.S. consulting engineers establishment. These French firms felt that the U.S. consulting engineers were vulnerable since they did not provide contract O&M services along with other consulting services. The French speculated that they might enter the U.S. water and wastewater markets via the long-term O&M services route and then convert these clients to design/build delivery.
In early 1980, Kent Robinson had furthered his independent study to the point where he recommended to CH2M HILL management that it needed to set up a contract O&M services business, if for no other reason than as a defense against the loss of existing clients to companies that might offer such services. At that time, Envirotech’s former EOS Services Group (now part of U.S. Filter) was leveraging the 1978 EPA wastewater Treatment Plant Operations Needs Survey to aggressively market wastewater O&M services to CH2M HILL clients. EOS was actually providing contract O&M service for about eight plants, mainly in California. Kent was asked to complete the market survey and prepare an initial business plan to form a CH2M HILL O&M company.
As luck would have it, this decision coincided with CH2M HILL finally realizing Bob Chapman’s initial dream and bring operations for a wastewater treatment plant in Maui, Hawaii, as a part of a broad engineering plus O&M services contract. Also at this time, CH2M HILL was selected as the preferred program manager of the Mississippi Gulf Coast Authorities major wastewater program, which was to include management, engineering, and O&M services. As a condition of the contract award, the Authority General Manager, Jackson Balch, insisted that the O&M services be provided by a separate company from the management/engineering company, but be fully owned or controlled by the management/engineering company. We had to rush OMI’s formation to obtain this strategic contract, and the Gulf Coast contract was in place actually before the OMI paperwork was completed. Sometimes, it happens that way. This coincidence was very important to the future growth of OMI because these three Gulf Coast plants plus the one Maui plant provided the basis for a “hot start” of the O&M Company that we were establishing.
At a CH2M HILL Board meeting in the fall of 1980, the proposed business plan to create an O&M company subsidiary was approved. Kent Robinson was given the task, along with Mike Fisher, to evaluate the various legal, financial, and operating issues that would be involved in a setup of the company. A key issue was finding someone who could lead it. Harlan Moyer was convinced that we did not then have a person with the needed entrepreneurial skill and concluded that we should search outside the firm. Mike Fisher was also concerned about the legal and tax issues that could result for CH2M HILL. He insisted that successful address of these issues would require the new O&M company to be set up as an arms-length subsidiary that would not use the CH2M HILL company name and would not employ any existing CH2M HILL employees. These limitations, as it later turned out, led to the formation of a company that for the first several years gained very little leverage from being a part of the CH2M HILL family of companies.
In late 1980, Kent Robinson and Mike Fisher began the tasks associated with incorporating the new O&M company (initially as a California company) and recruiting the first president to lead the operation. After a good deal of unsuccessful search, George Gunn, then the Reston Office Manager, introduced Mike Stark, then National Sales Manager for Calgon Corporation. Harlan Moyer was convinced that Mike Stark was the type of entrepreneurial leader that we needed, and he was hired to be the president of the new O&M Company. Even before Kent came on board, we had an internal “company naming contest” within the Wastewater Treatment Discipline Group. Kathy Ritter/CVO won the contest with “Operation & Maintenance, Inc” — hence the OMI origin—which didn’t change, whereas the base name under it was changed by Mike Stark and Kent Robinson to Operation Management International.
OMI, Inc. was incorporated in April 1981. The company’s formation and first Board Meeting was held on April 14, 1981, in Denver. Present were Mike Stark, Archie Rice, Harlan Moyer, Mike Fisher, Len Weber, and Kent Robinson. Mike Stark (now President of U.S. Filter) was elected as President. Archie Rice, who at the time was a retired employee of CH2M HILL, was elected as the first OMI, Inc. Chairman. At that time, OMI, although a wholly-owned subsidiary of CH2M HILL, Inc., had its own operating Board of Directors. Kingwood, Texas, was selected as OMI headquarters. Mike Stark lived in Kingwood, Texas, located near Houston and Houston Intercontinental Airport. Therefore, for lack of a better idea, offices for OMI were obtained in Kingwood where they would remain for the next 10 years.
Almost immediately, in the spring of 1981, OMI was faced with the takeover of four CH2M HILL executed O&M contracts to provide the “hot start” for the company. Therefore, setting up the company administrative systems and processes was an urgent matter. An initial equity contribution of $300,000 was made by CH2M HILL, Inc. to get things going. And Mike Stump, then Treasurer of CH2M HILL, Inc., was given the job of setting up accounting and other administrative processes and systems.
New employees were added swiftly led by the hiring of Bernie Miller, now COO of OMI, to manage the first OMI project for Maui, Hawaii. Bernie was employee number 3 after Mike Stark and an administrative assistant. Almost simultaneously, three new OMI contracts were added for the Mississippi Gulf Coast Authority by transfer from the old CH2M HILL Montgomery Region. The result was that OMI was well underway as a profitable operation by the summer of 1981, only a few months after its formation. Aside from the initial $300,000 equity contribution from the parent, CH2M HILL, Inc., OMI never again required any further equity investment. This was a result of innovative contracting processes that OMI adopted. These required that clients pay monthly in advance for manpower, chemicals, materials, and utility costs. This approach left OMI in a strong cash flow position from the very first year.
In late 1981, OMI undertook a very aggressive marketing campaign, including national advertising. This campaign, led by a New York public relations firm, led to many amusing incidents. For example, in early 1982, OMI held a press conference in New York City to announce the company and get some traction in trade press. At the time, the CH2M HILL policy was to give as little publicity as possible to the relationship of OMI to CH2M HILL. While Mike Stark and others from OMI conducted the press conference (at the Club 21 to attract press representative attendance), Kent Robinson had to attend incognito. He carried press credentials for “The Tie Line” of Corvallis, Oregon. “The Tie Line” was the name of the CH2M HILL company newsletter at the time!
The publicity that OMI received in 1982 led to an avalanche of inquiries and requests for proposals, far beyond the new company’s ability to respond. New contracts were added in 1982, but considerable stress was placed on the new organization to successfully operate the facilities under contract while at the same time starting up new ones. OMI quality programs, in the sense of those that enabled OMI to win the Baldridge Award in 2000, were unknown. Nonetheless, the company’s annual gross revenues grew to about $6 million.
Late that year (1982), OMI was contacted by the Envirotech Operating Services (EOS), then for sale. After much negotiation, it was decided that the $5 million price tag was not justified by the EOS annual gross revenues of $12 million. This is of interest since EOS, now a part of U.S. Filter, later sold for $60 million.
In October 1983, OMI’s first president, Mike Stark, was hired away by a firm in an unrelated business. Harlan Moyer selected Mike Stump, CH2M HILL’s Treasurer, to be the new OMI president. Mike Stump was very entrepreneurial and had been very much engaged in setting up OMI. Therefore, he was a logical choice. Mike continued the very aggressive growth of OMI, acquiring several new O&M contracts even in the face of unfavorable economic conditions sparked by the collapse of energy markets in the 1983 timeframe. At the end of 1995, OMI’s gross annual revenues had grown to $14 million; and the cash position had grown to $8 million.
In early 1986, OMI’s President, Mike Stump, was hired away to become president of Professional Services Group, another O&M services company owned by the French. At this point, Harlan Moyer appointed Don Evans, then San Francisco Regional Manager for CH2M HILL, Inc., as the third president of OMI. Don’s very successful tenure as OMI president has continued for 16 years, during which time OMI has grown to a staff of 1,300 and annual revenues of $160 million, operating more than 100 water and wastewater treatment facilities. Today, OMI holds a substantial share of the North American water and wastewater O&M market. All of its major competitors are French-owned firms.
Expansion Into Public Works
Partnering with communities to provide public works such as road maintenance, mowing, and more actually began in 1992. This was when CH2M HILL OMI added public works to its traditional services menu of operations and maintenance for water and wastewater treatment systems. Today, public works include many services such as fleet maintenance, street and signage maintenance, parks and grounds maintenance, mosquito control, solid-waste collection, traffic engineering and operations, permit processing, inspections, administrative services, and street and roadside maintenance, including snow removal.
This successful public works practice includes:
- 15+ years of delivering public works services
- 525+ employees involved in public works projects
- 150+ contract years of experience
- 6 states and 17 communities where associates manage public works; Colorado, Florida, Georgia, Louisiana, New Mexico, and Oregon
- 944 vehicles maintained at the three largest public works projects in Georgia—Hinesville, Effingham County, and Richmond Hill—including:
- 218 police vehicles
- 70 fire and emergency response vehicles
- 11 mass transit vehicles
- 645 other vehicles such as pickup trucks, city fleet automobiles, and miscellaneous motorized equipment
July 1, 2018, is a milestone for the city of Centennial, Colorado, and CH2M HILL OMI. For Centennial, it is the first day the city will have its own public works department. The contract with the 100,000-person city, which was incorporated in 2001, was the only practical approach. Until this year of 2008 when the city developed its own public works department, it relied on county services. Without a private company like OMI, it would have been difficult and costly to start new departments from scratch. Read More