Army Utility Privatization Program

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Army Utility Privatization Program

Future DPW Functions and Operations Richard
Dubicki OACSIM 25 April 2000


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Purpose

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Utilities Privatization
Military Departments should now revise their
plans to accommodate award of privatization
contracts for all utility systems electric,
water, waste water, and natural gas no later
than September 30, 2003 except those exempted
for unique security reasons or when privatization
is uneconomical. -- Defense Reform Initiative
Directive 49 (23 December 1998)
320 Systems
DRID 49 Milestones Sep 00 Complete studies
Make decisions Sep 01 Release
solicitations Sep 03 Award all contracts
PROCESS Oversight Asst Sec (Inst
Env) Proponent ACSIM Implement Major
Command Execute Installation Cdr Tech Assist
USACE/ DESC
Center for Army Analysis - Privatizing Utilities
Program Study (Jun 98) Conclusion Provides
modern reliable systems with attendant net cost
avoidance and reduced environmental compliance
burden.
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Utility Privatization Process
Re-evaluate in 5 years
Study
Yes

SECARMY Approves
No
Yes

HQDA Concurs
Exemption Justification
Exemption Request
Economical
Yes
No
No

Procurement
No
No
Economical
HQDA Concurs
Notification Letters To Senate House
Wait 21 days award contract

Yes
Congressional Notification
Yes
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Current Program Status (15 April 2000)







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Army Pilot Project
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Utility Partner RCI
Contract Boundaries

• Concept for Utility Partner
• provides all utility services to individual
  housing units
• maintains distribution system and meters
• specify type of end-use equipment in housing
  units and coordinate fuel switching
• fund manage equipment upgrades (includes
  meters)
• maintain service drops (including tree trimming)
• responsible for rapid recovery from weather
  related outages

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Enablers

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Issues

• Role of State laws and regulations
• 10 USC 2688 requires competition if more than
  one utility entity is
• interested
• States regulate utility ownership, operation,
  exclusive franchised
• territories
• Some public utilities claim Army (DOD) violates
  state regulations by
• using competitive procedures when privatizing
  utility infrastructure
• Lawsuit/protests in CO (Fort Carson) and MD VA
  (MDW)
• Reversionary clauses
• Bundling of utility systems

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Summary

• Utilities not a core competency
• Privatization is a challenge
• Army has achieved some successes
• (Forts Benning, Hamilton, Sam Houston)
• Learning lessons through implementation
• Privatizing when where it makes sense

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ESPC Progress to Date
OSD Jump-Start Funding (Feb 98)
OSD Funding (Apr 00)
of Contracts/M Invested