OMAHA — One of Nebraska’s best-known construction companies has challenged the City of Omaha’s handling of one of the priciest city infrastructure investments ever. 

Hawkins Construction Company, whose local roots harken back to the 1920s and building Lincoln’s Memorial Stadium, is fiercely critical of potentially excessive costs in the deal that they say are not because of “nefarious” city motives.

CEO Chris Hawkins sees it as a case of people who “likely fell asleep at the wheel.”

The construction project in question, while not as sexy as a football stadium, is a must-do: The second phase expansion of the Papillion Creek Water Resource Recovery Facility is designed to meet the growing metro area’s wastewater treatment needs through 2050. 

Building it doesn’t come cheap, carrying a projected price tag of about $547 million overall. The bulk of that — the part Hawkins objects to — is contained in a proposed $411 million agreement with McCarthy Building Companies.

Though Hawkins says it is looking out for taxpayers and contends it can do the job for about $78 million less than the McCarthy pact, Omaha administrators dispute much of Hawkins’ criticism. They argue the complaints come too late in a 17-month process backed by city advisors and after Hawkins was not selected as the lead contractor for the initial design agreement.

Hawkins says it couldn’t assess flaws and snubbing of subcontracting opportunities until the more substantive “guaranteed maximum price” proposal became public in February. On Tuesday, during a scheduled public hearing on that document before the Omaha City Council, Hawkins says it will push for a brand new and competitive bidding process.

Omaha Managers Defend Process

Omaha Mayor John Ewing Jr.’s administration heads into the hearing convinced that the wastewater initiative is on the right path — and has the right lead contractor. Missouri-based McCarthy opened a full-service office in Omaha in 2017, but its founding goes back to 1864.  

Jim Theiler, City Public Works assistant director overseeing the effort, said a team including the City Law Department, HDR engineering and the Jacobs independent advisor firm “carefully scrutinized” key decisions in the deal. He describes the $411 million McCarthy agreement as in the best interests of city sewer ratepayers.

“Not approving … would likely result in significant delays, additional costs and a lack of transparency that is included in the contract with McCarthy,” Theiler wrote in a memo to the council.

The construction project is funded, Theiler said, over a six-year period via sewer use fees. The city sets those rates for residents and customers and is responsible for the sewer system. The Metropolitan Utilities District acts as the billing agent that collects the fees, but it returns them to the city.

Theiler acknowledged Hawkins’ scope of work and expertise in wastewater projects, noting that the Omaha-based Midwest business in its fourth generation of family leadership is currently at the city’s Papio Creek wastewater site working on an earlier phase. But he said McCarthy was deemed as “most qualified” for this next segment.

“I just don’t understand why it was approached by Hawkins in this manner,” he said.

Chris Hawkins can’t remember another time he similarly spoke out or was as adamant. He said his beef is not necessarily with competitor McCarthy, but with “the process” he contends has not been transparent, has not been open enough to community subcontractors — and, he claims, is on track to cost Omahans tens of millions of dollars more than necessary. 

“The nicest thing I can say is they got snookered,” he said of city officials. 

McCarthy deferred comment to Omaha managers. 

To hammer his point that the project could be done for less, Hawkins turned to the “unsolicited” alternative bid his team developed in December prior to seeing the McCarthy agreement. Hawkins called it a “binding offer for the full scope of work,” and said it was about $78 million less than McCarthy’s “guaranteed maximum price.”

The City Law Department, however, advised city managers not to open the Hawkins package, saying it could not be legally considered under the procedural path previously laid out. 

A vote on the McCarthy proposal by the seven-member council is set for March 10.

Relatively New Contract Process

Theiler pointed out that the city has been working on the Papio Creek wastewater expansion project with McCarthy since September 2024. That’s when McCarthy won the initial contract for design and pre-construction work over both Hawkins and Kiewit Construction.

At that point, a seven-member committee selected McCarthy as the winner in a relatively new-to-Omaha project delivery method called Construction Manager at Risk (CMAR). Under that method, a construction manager (in this case McCarthy) acts as a consultant to the city during the design phase and then serves as the general contractor during construction.

The “at-risk” refers to the fact McCarthy takes on financial risk of completing the project within a “guaranteed maximum price.” 

Now before the City Council is the next step: Approving the more detailed roughly 180-page proposed agreement with McCarthy that lays out $411 million in costs.

Overall expenses not included in that figure include $88.5 million for special aerobic granular sludge equipment from the Illinois-based Aqua-Aerobic Systems, as well as construction of a new OPPD substation and engineering costs. Theiler said the city’s Capital Improvement Plan authorizes a multi-year total of $565 million.

Theiler said that for complex and time-sensitive projects, the so-called CMAR method generally is preferred over a traditional sealed-bid process, partly because it eliminates the risk of a contractor trying to recoup budget overruns from the city.

“The way we like to say it, ‘We agree to a fair profit but not the ability to profit off of the city,’” Theiler said.

The Jacobs consulting firm, which is serving as the city’s third-party construction manager and technical advisor, called the Papio Creek wastewater expansion one of the largest aerobic granular sludge projects in the U.S. 

Omaha officials describe the area’s two-facility regional collection and treatment system as serving some 800,000 residents. Such facilities play a crucial role in protecting public health and the environment by treating and cleansing wastewater from residential toilets and industrial sites before releasing it into the Missouri River.

The newer Papio site handles parts of the city built after about 1970, and is expected to help process waste from newer Sarpy County areas, whereas the older Missouri River plant near the L Street bridge handles older, combined sewer areas of Omaha.

McCarthy Building Companies said it was “construction manager at risk” for the $215 million expansion of the Sioux Falls Regional Water Reclamation plant. (Courtesy of McCarthy)

Theiler lauded Hawkins’ record of infrastructure projects but said the company had not been privy to months of relevant discussions and information about the work since the pre-construction contract was awarded to McCarthy. He called Hawkins’ alternative bid something created “in a vacuum.”

McCarthy projects in the Omaha area include the Veterans Affairs Ambulatory Care Center and the University of Nebraska Medical Center’s CORE building. The company’s national ventures include a $335 million Tomahawk Creek Wastewater Treatment Facility expansion in Kansas and the $215 million Sioux Falls Regional Water Reclamation Plant expansion.

Alleged Problem Areas

Hawkins submitted a letter to the City Council objecting to the McCarthy proposal. Among problems his team alleged during an interview with the Nebraska Examiner:

“Grossly excessive management costs.” Hawkins contends McCarthy would have 42 on-site staffers making an average of $300,000 a year, whereas Hawkins says it can do the job with about 10 people. Theiler said he could not evaluate Hawkins’ claim on its staffing, but said all parts of the McCarthy proposal were deemed acceptable and lawful by the city team and its advisor.

“Deceptive fee calculation.” Hawkins said the proposed agreement includes a McCarthy fee derived by “calculating a fee on the total (guaranteed maximum price) that already includes the fee.” Hawkins said that equates to an “unjust” and “completely illogical” additional $2.25 million fee. Theiler, in response, reiterated that city lawyers and the advisor have reviewed the proposed agreement.

Too few opportunities for local subcontractors. Hawkins contends that about 67% of available work he says was supposed to be competitively bid is now to be “self-performed” by McCarthy, guaranteeing McCarthy more profit. Hawkins says that is contradictory to what was decided earlier in the construction manager at risk agreement. Theiler disputes any wrongdoing and puts the figure closer to 33%, which he said reflects labor and not materials costs.  

Theiler said Hawkins was “contacted to gauge their interest” but that the company did not bid on subcontracting work. He pointed to Commonwealth Electric as just one example of local subcontractor participation.

“I am convinced it’s the right way to go,” Theiler said of agreement approval.

Chris Hawkins said his company did want a subcontractor role, had reached out to both McCarthy and the city and was stonewalled. Hawkins said his team did not realize the extent of missed subcontracting opportunities or potentially excessive project costs until the contract’s public airing.

“There is a check and balance in our system for a reason,” Hawkins said, referring to the City Council vote. “It’s not too late to stop and pivot to a more cost-effective approach.”

This story was published by Nebraska Examiner, an editorially independent newsroom providing a hard-hitting, daily flow of news. Read the original article: https://nebraskaexaminer.com/2026/03/02/is-omaha-getting-snookered-in-roughly-half-billion-dollar-infrastructure-project/