Okaloosa County BOCC — December 18, 2012 — Action Item Printout — reading text

BOARD OF COUNTY COMMISSIONERS AGENDA REQUEST DATE: February 5, 2013 TO: Honorable Chairman and Members of the Board FROM: Jeff Littrell SUBJECT: Eglin AFB Utilities Privatization (UP) Proposal DEPARTMENT: Water and Sewer BCC DISTRICT: All STATEMENT OF ISSUE: OCWS is requesting BCC approval to submit a proposal for Eglin AFB Utilities Privatization (UP) and authorize the Chairman to sign the proposal/contract offer documents on behalf of Okaloosa County Water & Sewer. Eglin UP is for the potable water distribution system and the wastewater collection system. Please note that Eglin UP does not include wastewater treatment & disposal - OCWS has a separate, independent contract for the treatment & disposal of wastewater from Duke Field, Eglin Main Base, and Camp Rudder. A PowerPoint file is attached which gives a broad overview of Eglin AFB Utilities Privatization. BACKGROUND: In accordance with 10 U.S.C. §2688 - Utility Systems: Conveyance Authority, The Defense Energy Support Center (DESC) and/or Defense Logistics Agency (DLA) seek to identify and obtain information from responsible sources in connection with the privatization of the water distribution and wastewater collection systems at Eglin Air Force Base (AFB), Florida. Privatization is defined as the conveyance of a utility system to a municipal, private, regional, district, or cooperative utility company or other entity. The conveyance may consist of all right, title, and interest of the United States in the utility system. The expected term of a contract is 50-years. On June 7, 2011, the BCC gave direction to OCWS to pursue the above-mentioned Eglin AFB Utilities Privatization (UP), where OCWS would serve as the system owner (SO) and we would assemble a team, composed of a contract operations company and a program manager/engineering firm. On September 6, 2011, the BCC approved the selection of Environmental Services Group (ESG) for contract operations and The Constantine Group (TCG) for program management/engineering. This approval was based on a recommendation from a selection committee. Since then, OCWS has entered into Master Services Agreements (MSAs) with ESG and TCG. The purpose of these MSAs is to setup a contract that allows these two companies to work with OCWS to prepare the Eglin UP proposals after DLA issues the Request for Proposal (RFP). The proposals are very voluminous and complex - it is a tremendous amount of work to be done in a relatively short period of time. Four (4) volumes will be required for the water distribution system, and four (4) volumes will be required for the wastewater collection system. In addition, two (2) more volumes are required to make a joint proposal for both water and wastewater. All in all, the total proposal is about 12” thick. The MSAs for ESG and TCG stipulate that they will prepare the proposals for the County, at no cost to the County. If the County is successful and is selected for Eglin UP, ESG and TCG will enter into a 5-year contract with OCWS. There is a great amount of time and risk incurred by ESG and TCG, because there is the possibility that UP will not be awarded at all, due to the federal budget situation. It is also possible that the UP may be awarded to some other proposer. If/when the Eglin UP was to be awarded to the County, then ESG and TCG would still not be compensated for their work in putting together the proposal. At that time, the County would negotiate rates with ESG and TCG for a 5-year contract. If the County desires to utilize ESG and/or TCG beyond the 5-year period, the County has the option of nine 5-year renewals. Again, per the MSAs, under no scenario will ESG and/or TCG be compensated by the County for their work preparing the proposals. On Sept 28, 2012, DLA issued the RFP for privatization of the water distribution system and wastewater collection system of Eglin AFB. Since then, OCWS, ESG, TCG, and their sub- consultants - CDM-Smith, HDR, Veterans Consulting & Contracting, and Gustin, Cothern, & Tucker - have been working diligently on a proposal, which is due to DLA on or before February 19. Of the 10 volumes being submitted, Volume 3 of the water and Volume 3 of the wastewater serve as the contract documentation. This contract documentation (Volume 3) is attached for your review. All the other volumes are specific to water and sewer. The infrastructure-related topics include information such as, but not limited to the following: information about OCWS, past performance documentation, references, transition plan, emergency response plan, service interruption plan, catastrophic loss plan, O&M/Quality Management Plan, Initial Systems Deficiency Corrections (ISDCs) plan, Initial Repair and Replacement (R&R) plan, 50-year CIP for R&R, and financial information. Volume 3 was prepared by HDR, who has been successfully awarded prior UP contracts at other Air Force bases, and input was provided by OCWS, TCG, and other County staff. Volume 3 has since been through the County Contract Review process and has been revised further with input from Purchasing, Risk Management, Legal, and Contracts & Grants. Because the legal documentation was so voluminous, Ms. Heather Encinosa (Nabors, Giblin & Nickerson) assisted Mr. Dowd with the legal review/input. Like HDR, Ms. Encinosa has prior UP experience at other Air Force bases. The County Contract Review coordination sheet is also attached for your review. The OCWS UP Team is now in the process of reviewing and printing the 10 volumes. OCWS is requesting that the BCC authorize the Chairman to sign the pertinent sections of the proposal/contract offer, on behalf of OCWS, at the appropriate time before Feb 19. Currently, there is still a lot of printing, binding, and collating to be done. Should the BCC approve this agenda item and authorize the Chairman to sign, OCWS would get the final documentation to the Chairman for signatures during the week of February 11. After the February 19 submittal, the future timeline is somewhat uncertain. It is possible that the Federal Government will further delay UP or place it on hold. If DLA does intend to move forward awarding a contract to OCWS, there would be negotiations and then OCWS would enter into a contract for a transition period, which is expected to be 6-9 months. During this period, the infrastructure would transition from being operated and maintained by Eglin to being operated and maintained by OCWS. During this transition period, OCWS would be taking a full inventory of the system and doing an investigation/analysis on the infrastructure, mostly underground. OCWS would be able to opt out of the contract or we would be able to renegotiate the contract and enter into the final 50-year contract. At the conclusion of the transition period, OCWS would be given a Bill of Sale, and we would be responsible for owning, operating, maintaining, and replacing the water distribution system and wastewater collection system for a period of 50 years. At the end of the 50-year contract, the infrastructure reverts back to Eglin AFB or there is the possibility to re-negotiate. If OCWS were to be awarded the contract for Eglin UP, this transaction would yield great benefits to OCWS rate payers and to Okaloosa County as a whole. As the owner, we would enhance our existing relationship with Eglin AFB by establishing a 50-year relationship. We would maintain control of decision making and how to most effectively utilize our resources. The ownership role provides for a greater opportunity to create new sources of positive cash flow, which assists in stabilizing operations, and potentially in mitigating future rates increases. Our expanded operations could also serve to facilitate investigating other consolidation of services opportunities in the local and regional area. OPTIONS: Approve or Deny. RECOMMENDATIONS: Staff recommends BCC approval to submit a proposal for Eglin UP and to authorize the Chairman to sign the proposal/contract offer documents on behalf of Okaloosa County Water & Sewer. RECOMMENDED BY: APPROVED BY: James D. Curry, County Administrator