OXFORD — Selectmen on Thursday took a major step toward awarding a $3.67 million contract to a Bangor-based company for the first installment of sewer pipes in its sewer system project.

In a unanimous decision, selectmen agreed to Sargent Corp.’s bid to lay sewer pipes over a three-mile stretch of Route 26 from the Mechanic Falls town line to King Street.

The contract is pending Town Manager Michael Chammings’ final approval of the bid, after an initial bid of $3.2 million was submitted by Sargent Corp. in April.

Chammings is seeking an explanation for the project’s price tag increasing 11 percent in a month.

Oxford received one other bid from Turner-based K&K Excavation for $5.79 million.

The plan includes $230,000 for pump stations on Pigeon Hill and the Welchville Dam, $333,000 for manholes, and $1.57 million for piping.

Specializing in earthwork projects, Sargent employs nearly 400 people in seven states along the eastern seaboard.

The construction process will involve the removal of trees, rocks and other landscaping, which will be replaced after completion.

Oxford is the in the midst of building a state-of-the-art wastewater treatment facility fed by miles of sewer pipes installed along Route 26 and into rural sections of town.

The project is blocked into two phases. The first calls for sewer lines to be installed along Route 26 near the Mechanic Falls town line to King Street, which is through the town’s business-advantageous Tax Increment Financing district.

Last December, selectmen chose Ovivo USA to build a custom, $1.2 million state-of-the-art wastewater treatment facility near the Welchville Dam at the junction of routes 26 and 121.

Wastewater, pumped to the station from a series of collection points, passes through a series of membranes that slough off solids. The water is sterilized with ultraviolet light before being discharged into the Little Androscoggin River.

That first phase of the project secured funding in April 2013 when selectmen took out a $13.7 million loan from the Maine Department of Environmental Protection and the Maine Municipal Bond Bank. In December 2012, voters agreed to borrow more than $20.2 million to fund the project.

About a month ago, the town received $23.7 million in federal funding from the Department of Agriculture’s Rural Development office to complete the second phase of the project, which will include the installation of sewer lines on King Street and rural parts of the town.

The town intends to use the funding to pay down the DEP loan, while revenue generated from the TIF zone and user fees will pay down construction costs.

Hotel developers building a 90-room Hampton Inn and restaurant are timing construction to coincide with the sewer system.

Oxford Casino, which uses a 45,000-gallon septic tank, has not decided if it will tap into the system.

Residents will have the option of connecting to the system up until the time when their home septic tanks fail, when they will be required to connect, Chammings said. The town is seeking grant funding to help home and business owners pay for the connection costs.

Groundbreaking is scheduled to begin in June.