Utilities Privatization-Is the US Army on the Right Circuit?

Abstract

Abstract : This paper discusses the Department of Defense (DoD) utilities privatization program with a focus on the United States (US) Army's utilities privatization progress including its history, current status, effectiveness, management, and issues. In the National Defense Authorization Act for Fiscal Year 1998, Congress approved legislation authorizing DoD to privatize its 2,600 utility systems valued at $50 billion. This legislation was followed by the Department of Defense Reform Initiative Directive (DRID) #9 on December 10, 1997, directing the Military Departments to develop a plan for privatizing all their utility systems (electrical, water, wastewater, and natural gas systems). The road to privatizing all DoD utility systems has seen its share of setbacks. DRID #9 initially established a January 1, 2000, goal to complete the privatization of all systems (except those where security or uneconomical reasons occur). The goal has been revised many times; the most recent estimate is as late as 2017. The utilities privatization process has been more difficult and challenging than expected, especially in the areas of contract solicitation, evaluation, and administration. A number of Government Accountability Office (GAO) reports were critical of the DoD utilities privatization program and its execution. This resulted in DoD issuing new guidance and clarifications. This paper analyzes the DoD utilities privatization program by first reviewing its early policies and directives, then tracking DoD's progress over the last twelve years trying to reach its 100 percent utilities privatization decision goal. A review of the current policies and guidance then leads to a discussion of the issues surrounding utilities privatization today. An analysis of these issues culminates with a number of recommendations to improve the DoD utilities privatization process and execution.