Utilities Privatization

What is it? Owning and operating utility systems is not a core function of the Department of Defense (DoD). The Army has historically under funded our utilities infrastructure. The Utilities Privatization program seeks to leverage financing and economies of scale by turning over our systems to industry experts who will bring our utilities to industry standards. The intent is to obtain safe, reliable and efficient utility services for Army installations. Privatization also allows installation commanders to focus on core defense missions and functions by relieving them of activities that can be done more efficiently and effectively by others. DoD directed Defense Components to privatize all Service-owned electric, natural gas, water and wastewater utility systems unless security concerns required Federal ownership or privatization was uneconomical. The Army expects to complete the evaluation of our 351 Continental United States systems by September 2011.

What has the Army done? As of September 30, 2006, 118 systems in the United States have been privatized, 158 are uneconomical to privatize, and 75 are under evaluation. Overseas utility systems are generally owned by the host nation and are evaluated using host nation laws and international agreements, and are not included in the DoD Utilities Privatization initiative. Europe has privatized the operations and maintenance of 320 of its 589 utility systems.

What efforts does the Army plan to continue in the future? The Army will continue to evaluate and privatize all utility systems where this is economical. Utility systems that cannot be privatized will be re-capitalized using traditional funding sources such as the Operations & Maintenance and Military Construction appropriations.

Why is this important to the Army? Privatization of such utility systems is important because it results in safe, reliable and efficient utility services for Army installations and relieves installation commanders of activities that can be performed more efficiently and effectively by others and allows them to focus resources on their core missions.


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