Defense Department delays utilities privatization

The Defense Department is giving the military services and agencies more time-until 2010-to privatize utility systems at bases.

The Pentagon previously had told the services it wanted all 1,600 systems at installations across the country turned over to contractors by 2003, unless outsourcing would not save money or the systems needed to be maintained in-house for security reasons. But a myriad of problems, ranging from poorly written solicitations to the effects of nationwide electricity deregulation, has led to only a few dozen systems being privatized.

"To achieve innovative results, privatization must proceed in a deliberate manner that promotes industry interest and competition to the maximum extent possible," Paul Wolfowitz, deputy Defense secretary, wrote in an Oct. 9 memorandum announcing the new deadline.

The memo set several key program goals. For example, by September 2003, installations must have received requests for proposals on privatizing at least 80 percent of all utility systems, and have reached decisions on who will run at least 65 percent of the systems.

The Defense Department believes it can save millions of dollars and, more importantly, get better service and modernize aging utility systems through privatization.

The Defense Department's new guidance and additional information may be found at the department's utilities privatization Web site.

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