DOD Utilities Privatization:

Improved Data Collection and Lessons Learned Archive Could Help Reduce Time to Award Contracts

GAO-20-104: Published: Apr 2, 2020. Publicly Released: Apr 2, 2020.

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Timothy J. DiNapoli
(202) 512-4841
dinapolit@gao.gov

 

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To address maintenance issues, DOD has transferred the ownership of more than 600 utility systems located on military installations to private and public entities since 1988. DOD and others are concerned about how long the contracting process takes.

We found that DOD took about 4 years to award 21 new utility services contracts between 2016 and 2018. DOD, however, did not track the total time to award these contracts or systematically collect lessons learned.

We recommended that DOD

collect better data on the time to award utility services contracts

create a lessons learned archive to help shorten the time to award future contracts

Types of Utility Systems Privatized on Military Installations

Illustration showing electric, water, wastewater, and natural gas utility systems

Illustration showing electric, water, wastewater, and natural gas utility systems

Additional Materials:

Contact:

Timothy J. DiNapoli
(202) 512-4841
dinapolit@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

What GAO Found

From fiscal years 2016 through 2018, Department of Defense (DOD) components awarded 21 new contracts for privatized utility services on military installations. The contracting process generally took an average of 4 years from solicitation to contract award. However, the entire pre-award contracting process could be longer, as GAO found that DOD does not maintain complete data on the time to conduct key steps in the acquisition planning phase (see table).

Average Time to Award Privatized Utility Services Contract by Contracting Agent

 

 

 

Average Time to Complete Contracting Pre-award
Phases (months)

Contracting agent

Number of
contracts

Acquisition
planning

Solicitation to
contract award

Total acquisition
time

Defense Logistics
Agency Energy

19

Data not available

44.9

Data not available

Naval Facilities
Engineering Command

1

7.5

92.4

99.9

Air National Guard

1

Data not available

5.6

Data not available

Source: GAO analysis of DOD data. | GAO-20-104

GAO found that DOD does not maintain data on when military departments begin to consider privatization and when a complete inventory of the associated infrastructure, such as pipes and valves, is available to use in the solicitation. While no DOD regulation or policy that GAO reviewed requires the collection of data on the time to complete all pre-award activities, in 2014, Defense Logistics Agency Energy officials established milestones to plan and monitor key pre-award activities. GAO found that the length of time from receipt of requirements to contract award was reduced from an average of 61 months pre-2014 to an average of 35 months post-2014.

The lessons learned efforts of DOD to shorten the time to award contracts have fully or partially demonstrated four of five leading practices. DOD's efforts include:

collecting information through working groups and conferences;

analyzing past privatization efforts to focus management oversight;

validating changes by demonstrating new processes;

storing lessons learned through revised guidance; and

sharing lessons learned through working groups and training.

However, as DOD does not collect consistent information on the total time to award utility services contracts, DOD is missing opportunities to use lessons learned to reduce the time. Further, DOD does not have a repository for archiving specific lessons learned from utilities privatization efforts. Rather, DOD officials note they consider lessons learned as they develop updated guidance, templates, and handbooks. Without a repository of specific lessons learned, such as conducting the privatization process, DOD is missing opportunities to collect and share lessons learned to assist stakeholders on the remaining 580 utility systems it considers available for privatization.

Why GAO Did This Study

Since 1988, military departments have privatized utility systems—such as electricity, water, natural gas, and wastewater—on military installations. DOD awards privatized utility services contracts to companies who upgrade, maintain, and operate the systems. Members of Congress and stakeholders have expressed concerns over the length of time it takes to award these contracts. DOD has a goal of reducing the time frames.

A House committee asked GAO to review DOD's utilities privatization. This report examines (1) the length of time to award contracts for privatized utility services, and (2) the extent to which DOD is demonstrating leading practices to collect and disseminate lessons learned.

GAO reviewed data on all 21 new utility services contracts awarded from fiscal years 2016 through 2018; compared DOD's lessons learned activities with GAO's leading practices; and interviewed DOD and utility company officials.

What GAO Recommends

GAO recommends that (1) DOD and the military departments collect information on the time to complete key steps when awarding these contracts, and (2) DOD develop a mechanism to store and archive lessons learned from across the department. DOD partially concurred with both recommendations, noting that it would be beneficial to expand the actions GAO had recommended. GAO agrees that such an expansion would be helpful in efforts to collect more data.

For more information, contact Timothy J. DiNapoli at (202) 512-4841 or dinapolit@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Defense should ensure that the Assistant Secretary of Defense for Sustainment collaborates with the military departments and the Defense Logistics Agency to collect consistent information on the time to complete key steps in the pre-award contracting process for privatizing utility services. (Recommendation 1)

    Agency Affected: Department of Defense: Deputy Secretary of Defense

  2. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Defense should ensure that the Assistant Secretary of Defense for Sustainment collaborates with the military departments and the Defense Logistics Agency to develop a mechanism to store and archive lessons learned regarding the pre-award contracting process for privatizing utility services. (Recommendation 2)

    Agency Affected: Department of Defense: Deputy Secretary of Defense

 

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