By Steve Spratt
Water and wastewater management is not considered a primary mission for the U.S. military. So replacing it with management that has specific knowledge and experience can save taxpayers money.
It’s an idea that’s catching on. As of 2009, the federal government has sold a fifth of the 2,600 military installation utility systems to outside organizations, and 26 percent more were in the process of joining them. Among those remaining, 24 percent are considered exempt from the process, and 29 percent were already “owned by others” when the initiative began.
Buying MacDill
MacDill Air Force Base in Tampa, FL, is the home of U.S. Central Command, the coordination hub for the anti-terrorism command, as well as Special Operations Command, an Air Mobility Wing and other specialized units.
The base covers 5,630 acres of land and has 8,981 active duty and 2,798 civilian personnel. Its water utility distributes more than one million gallons per day (MGD) of potable water while the wastewater facilities treat 400,000 gallons of wastewater each day.
After a 29-month procurement process, a 50-year, $200 million contract with the Florida Governmental Utility Authority (FGUA) was signed June 10, 2010. In March 2011, FGUA formally took ownership of the facilities at MacDill.
Public-Public Partnership
FGUA was established in 1999 as a special-purpose unit of government authorized by Florida statutes. It was created through an interlocal agreement between four counties to help bring specific private water and wastewater facilities into public ownership. The goal was to improve as well as efficiently operate them.
A dozen years later, FGUA operates eight water and wastewater facilities in four counties with more than 80,000 customer connections using privately contracted resources. This includes contract operations, system management, financial administration, capital program and project management, inspections and customer services.
FGUA offered a very unique model to the federal government – a government entity with private sector expertise, flexible efficiency and cost. Because FGUA is a government entity, transparency and accountability were also distinguishing qualities.
With its established operations and support assets throughout Florida, FGUA was ideally positioned to serve MacDill.
MacDill’s utility system was the first FGUA acquisition of a utility owned by the federal government. In the past, FGUA’s system purchases came from private owners, with the support of the local, host government. Host governments are then offered a seat on the FGUA board.
Government Services Group Inc., a Tallahassee-based government consulting and service firm, manages FGUA, providing staff, contract management, procurement, data management and other critical services for day-to-day operation. GSG has provided specialized technical and innovative funding services to more than 170 local governments throughout Florida since 1996.
GSG was instrumental in establishing FGUA to help solve utility problems in multiple counties and has served as the system manager since its inception.
Most recently, GSG helped establish two governmental entities – the North Florida Broadband Authority and the Florida Rural Broadband Alliance – to deploy middle-mile broadband infrastructure for 40 percent of the state using $53 million in federal stimulus grants.
U.S. Water Services Corp. will handle contract operations for MacDill. Headquartered in New Port Richey, FL – just north of Tampa – it is the largest privately held operations and maintenance company in Florida. It provides service to 550 facilities in 61 counties.
The use of private contractors reduced generalized overhead costs. In short, this model allows FGUA to pay for the services it needs when it needs them, without having to pay for ongoing staff overhead.
Focusing on MacDill
With the current economic conditions, governments are facing financial pressures at all levels. Because of that, interest in government asset transactions is growing.
It’s been viewed as part of the trend for government to “monetize” the equity in public facilities, or leverage private investment in public assets which have stable revenue streams. While the FGUA is a public entity, it has the capability to explore these types of transactions with a higher degree of confidence from a local government partner. Because it is a government, risk is reduced.
In the case of MacDill, the FGUA became a win-win alternative for the federal government to divest of the system to an operator and system management team with an owner most familiar with governmental requirements.
Efforts to privatize military support services date back to the National Defense Authorization Act in 1998, with a goal of completing such transactions by 2000. However, the process became more difficult than previously anticipated, and now the goal is to privatize by 2017.
The federal privatization process requires that proposals include extensive outlines and explanations of the proposer’s qualifications, operations and maintenance plans. It also looks for emergency and contingency plans as well as capital improvement plans, along with detailed outlines of “fair and reasonable” government costs anticipated over the 50-year contract period.
If these proposals lack sufficient levels of cost savings for the government, then the entire process is terminated.
The 50-year contract term allows for a very orderly and long-range repair, replacement and capital assets improvement plan based on known useful life. The result is an ideal, well-researched and well-reasoned capital improvement program designed for optimal operational cost as well as predictive and preventive maintenance.
FGUA expects to complete more than $18 million in capital improvements at MacDill as well as renewal and replacement improvements in the first five years of the contract alone.
In looking for time and money efficiencies, the military has found that focusing on core competencies allows each party to do what they do best. In this case they can rely on others to provide essential base services while they focus on something essential to us all — our defense.
WW
About the Author: Steve Spratt is director of municipal services for Government Services Group Inc., a Tallahassee, Fla.-based company that manages the Florida Governmental Utility Authority. He is a former Pinellas County administrator in the Tampa Bay area once responsible for 2,700 employees and a budget of $2 billion.
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