July 13, 2020

Volume X, Number 195

July 13, 2020

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July 10, 2020

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DLA Energy Plans to Make Utility Privatizations More Effective and Streamlined

Last week the Defense Logistics Agency (DLA) Energy issued a statement on DLA’s website about its plan to “increase the productivity, efficiency and effectiveness of [the] Air Force’s utility services contracts” – a plan that dovetails with the Department of Defense’s (DOD) Better Buying Power 3.0 initiative (BBP 3.0).  This should be good news for utility service providers seeking opportunities in and currently performing under the Air Force’s (and the Army’s) utility privatization program.  Pursuant to 10 U.S.C. § 2688, the Air Force and the Army may (a) convey a utility system (water, wastewater, electric and/or natural gas) through a bill of sale to a utility service provider (i.e., the contractor) and (b) enter into a long term agreement (between 10 and 50 years) with the contractor for utility services on the conveyed system, which generally includes the operation, maintenance, repair and modernization of the system.  DLA Energy is the contracting agent for the Air Force and Army utility privatization programs.

Over the last 10 years or so, some of the issues we have seen with utility privatization contracts – both with respect to competitions and contract administration – have been ameliorated.  This is due, in part, to the evolution of the standard utility privatization RFP.  Nonetheless, there is still room to grow, and it now appears that DLA Energy is proactively taking the next step.  In the DLA statement, Martha Gray (DLA-E Utility Services Director) notes that DLA Energy recently has examined pre- and post-award issues for the purpose of “revamp[ing] the time-to-award strategy to more accurately reflect utility privatization timelines and gain efficiencies.”  Ms. Gray explained that “[o]ne of the chief inputs from the Air Force was that our solicitation process took too long, and that the milestone schedule in place at the time was unrealistic.”  As a result, DLA Energy has adjusted its internal milestones and “built a realistic milestone schedule that identifies not only the major procurement milestones, but the necessary tasks to accomplish each one.”  On the post-award side, DLA Energy considered a variety of concerns raised by the Air Force – e.g., records management, the conveyance of assets, the development of performance metrics and the development of a process to identify execution year funds.  Ms. Gray indicated that DLA Energy’s review of these matters have “led to more streamlined contract management and a clearer path forward on critical issues.”

Only time will tell if DLA Energy’s recent efforts will increase the productivity, efficiency and effectiveness of the Air Force’s and the Army’s utility privatization contracts.  We plan to closely monitor and report on these developments.

© 2020 Covington & Burling LLPNational Law Review, Volume V, Number 125

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About this Author

Justin Ganderson, government contracts lawyer, Covington
Special Counsel

Justin Ganderson is Special Counsel in the firm’s Washington, DC office and a member of the Government Contracts Practice Group. Mr. Ganderson focuses his practice in the areas of claims and disputes resolution, internal investigations, public and private partnerships, utility privatizations, and general federal government contract counseling.

Mr. Ganderson has extensive experience in preparing and crafting requests for equitable adjustments and Contract Disputes Act (CDA) claims, and resolving disputes with government agencies prior to the commencement of...

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