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DoD Looks to Contractors to Revamp Installation Utilities

By Gerry J. Gilmore
American Forces Press Service

WASHINGTON, July 19, 2002 – The Defense Department wants private contractors or utility companies to assume ownership of 1,500 aged water, gas and electric systems at hundreds of military installations across the country.

"We've determined that utilities privatization is the best way and is the preferred way to achieve the infrastructure modernization to meet DoD needs," said Get W. Moy, Director for Utilities and Energy Use in the Office of the Deputy Undersecretary of Defense for Installations and Environment.

Contractors, he noted, can provide "innovations, their best practices, economies of scale and access to private funding" to rejuvenate dilapidated "pipes and wires" that carry the electricity, natural gas, water and waste water on military posts.

Moy noted that installation commanders in recent years have had to choose between spending scarce budget dollars on mission-related priorities or maintaining their post's utilities infrastructure. More often than not, mission got the money, he noted.

"The first priority is to go to the weapons platform, to the service members, to the troops who fight," Moy said. "After so many years of that type of competition, we've found that the utility systems have just traditionally been under funded."

"This has created a situation in which installations now have dilapidated utility systems." Moy pointed out.

Moy said private-sector ownership and management of base utilities would provide efficient, effective and reliable utility systems, while assisting DoD in achieving energy savings and avoiding costs related to waste.

"This is to make our systems as energy-efficient as possible … so as we have to buy natural gas or electricity, we don't have leakages (and other faults) in the system," he explained.

The privatization of post utilities, Moy noted, also offers the injection of new technology to generate energy.

"We want to have alternative energy sources, alternative fuels. That's why we put a lot of emphasis in going after solar, geo-thermal … (and) wind energy, so we're not so dependent on the traditional forms of energy sources like oil and coal," he said.

The utilities privatization program has been around since 1998, Moy said. He noted that current unofficial estimates call for privatization of a total of 1500 utilities systems at Department of Defense installations within three years.

He related one instance where contractors privatizing a base's natural gas operation found the infrastructure in such poor shape that they scrapped refurbishment in favor of total replacement.

"That gives you an idea of the shape the utility systems are in at many installations," Moy pointed out, adding that DoD can't afford to replace or repair its installations' utilities systems.

Private utility companies also can bring installation utilities infrastructures up to current codes and standards, he said. "And it may not cost us any more than we're paying now," he said.

Some installations will probably need complete teardowns and reinstallations of utilities infrastructure, Moy acknowledged. Such instances will cost contractors -- and DoD -- more money up front now because of previous years' under funding, he said.

"That's the price that we're going to need to pay in order to bring these systems up to speed," he said. Moy noted installation utilities privatizations aren't cinches.

Current rules require privatization to be more economical than for the government to re-capitalize the systems and continue to operate and maintain them, he explained. Evaluations must be run through security and economics checks, he said. Further complicating matters, the states have different utilities privatization processes, rules and regulations, he added.

"The privatization effort is focused on bases located on United States territory, because most other utilities systems are already owned by the host country." he said.

Moy called utilities privatization his personal No. 1 priority since taking office last November. He said he's used the past several months "to get everything squared away." That included touching base with the military services to see what programs they may have in effect.

Policy guidance for installation utilities privatization is working its way up through channels for signature, Moy said. Such information is important to the service industry because, he explained, "They want to see the rules of engagement."

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