Comprehensive Economic Analysis of Privatization

Earth Tech provided services in support of the US Air Force initiative to privatize the utility systems at Maxwell AFB and Gunter Annex, Alabama. The Maxwell/Gunter project is the first project in the Air Force to follow the formal Three-Phase Utility Privatization process.

Phase 1 included a feasibility report consisting of:

Engineering/condition assessment, and a review of regulatory issues related to privatization
A market research study to determine the level of interest in privatization among qualified bidders
An operational risk analysis to determine any risks that may impact the mission at Maxwell and/or Gunter and methods of mitigation
An economic analysis of the cost of service and lifecycle cost analysis

Phase 2 included:

Preparation of the draft RFP for privatization
Preparation of real estate documents
An environmental baseline survey
Transition plans
An environmental assessment under NEPA guidelines
A comprehensive analysis report summarizing the findings of all Phase 1 and Phase 2 activities

Phase 3 was the procurement phase and included:

Certified economic analysis
Full cost of service analysis and lifecycle cost analysis
Support to the Air Force in negotiations with bidders as well as selection of firm to acquire utility system(s) (with appropriate transfer documentation)

The privatization of the utility systems at Maxwell AFB and Gunter Annex includes performing comprehensive economic analysis of the costs of owning and operating the electric, natural gas, water, wastewater, chilled water, and central steam systems at the bases over the 25-year study period. Successful analysis of these utility systems has required investigative analysis techniques to determine costs and the application of many allocation methods. In addition, in-depth understanding of regulation as applied to these facilities has been an important aspect of the analysis. The task order includes responsibility for developing the optimal strategy for selling the systems and procuring utility systems.