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FORT BELVOIR, Va. - At a time when the armed forces are asked to do more with less, Defense Logistics Agency Energy offers military installations and the military services an alternative to operating and maintaining power, water, waste and natural gas infrastructure.
DLA Energy’s Utility Services business unit awards utility services contracts to companies that manage utility infrastructure conveyed to them by the military services. The primary-level field activity is the executive contracting agent for the Air Force and Army’s utility privatization programs.
Under these contracts, the companies that take over utility systems are required to provide safe and reliable utility services and must upgrade, maintain and operate the systems in accordance with commercial standards, said DLA Energy Utility Services Director Jacob Moser. This allows the services to concentrate on their core missions.
“By conveying ownership of the system to another entity, utility privatization [takes advantage of] the expertise and capital of the commercial sector,” Moser said. “The installation's role transitions from being the system owner to a customer purchasing utility services. By privatizing the infrastructure, the services are able to obtain safe and reliable utility services across modernized utility systems.”
Utility privatization, commonly referred to as UP, greatly increases the reliability of utility services, which is critical to supporting missions and providing essential services to personnel, Moser said.
Utility system deficiencies can degrade system reliability, threaten mission readiness and potentially compromise energy security, he said.
Moser said under UP, the responsibility for utility systems is conveyed to utility companies that bring the systems up to industry and regulatory standards.
“We contract with the new system owner for 50 years to provide utility services at a cost. While [it’s] higher than that expended prior to privatization, it’s lower than if the government retained and maintained the systems to the same standard,” Moser said.
Congress approved legislation authorizing the Defense Department to privatize its utility systems in the National Defense Authorization Act for fiscal 1998, that was followed by DoD Reform Initiative Directive No. 9, which directed the military departments to develop plans for privatizing their utility systems.
DoD owns about 2,600 utility systems valued at $50 billion, Moser said.
“The decision to privatize a system is based on the results of an economic analysis, which compares the offeror’s 50-year proposal price to an estimate of what it would cost if the government upgraded, maintained and operated the system in accordance with industry and regulatory standards,” he said. “A utility system is only privatized when the government cost estimate … is greater than the costs of privatization.”
UP has more benefits that cost savings, said Carla Biver, Utility Services branch chief and contracting officer. Some installations have exceeded their goals for water conservation and energy savings because of the program.
“One Army post reduced its intensity of water usage by 50 percent, two others have met their fiscal 2015 goals for water conservation, and a third has met its fiscal 2025 goal for water conservation,” she said. “Six installations with privatized electrical utility infrastructure have greatly exceeded their energy reduction goals by 20 percent.”
Dominion Virginia Power’s recent efforts to restore power to Fort Belvoir, Va., after severe storms swept through the post June 29 are an example of the benefits of UP, Biver said. The company was awarded a contract in September 2006 to that, in addition to other responsibilities, requires it to deal with emergency situations.
“We were happy to have the UP contract in place,” Biver said. “The contractor knew what they were responsible for and they took care of it.”
Under the contract, Dominion Virginia Power is responsible for providing operation, maintenance, renewals, replacements and capital upgrades for Fort Belvoir’s electrical distribution system that allow it to meet federal, state and local laws and regulations for 50 years, she said. The contract expires in August 2057 and has an estimated contract value of $260,293,000.
The bulk of the power outages occurred in Fort Belvoir’s residential areas, said project and compliance coordinator Rich Gillen from Dominion Virginia Power in a July 6 article posted on the Army's website.
“Approximately 14 spans of overhead primary wire were down, 10 to 12 additional spans of overhead lines were affected by trees, two overhead transformer banks [were] on the ground and two overhead switches were damaged. Multiple other locations sustained smaller scale damage," Gillen said.
Biver said there are a number of other benefits associated with privatized utility systems.
“They are more reliable, efficient and safer; and as a result, they are more secure,” she said. “DLA Energy has 131 systems planned for award through fiscal 2015, and more systems are anticipated.”
The procurement lead time to award a UP contract is two years. Once a system is awarded, DLA Energy administers a system’s contract.
| Date Taken: | 07.24.2012 |
| Date Posted: | 08.13.2012 12:21 |
| Story ID: | 93111 |
| Location: | FORT BELVOIR, VIRGINIA, US |
| Web Views: | 460 |
| Downloads: | 1 |
This work, Utility privatization contracts provide reliability, efficiency, security, by Joan Williams, identified by DVIDS, must comply with the restrictions shown on https://www.dvidshub.net/about/copyright.
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