Assessment of the Potential for Privatizing Fuel Infrastructure at Military Installations.

Abstract : Since FY93, the responsibility for managing the Department of Defense fuel-related infrastructure (storage tanks, pipelines, dispensing facilities, hydrants) has been divided between the military services and the Defense Logistics Agency. The military services are responsible for the maintenance and repair of the fuel infrastructure on their installations, and DLA is responsible for the infrastructures' renovation or major construction. In 1997, DLA projected a funding shortfall of about $1 billion for 120 renovation and major construction projects slated for FY99 through FY03. This report conveys the results of a High-level analysis of the potential for privatizing DoD fuel infrastructure as part of an effort to reduce that shortfall. The study concluded that privatization can be financially feasible, but only at certain locations-those with favorable market conditions and significant infrastructure improvement needs. The report recommends that DoD pursue privatization opportunities at sites where financially feasible. By doing so, it can realize modest reductions in its overall capital improvement costs. The report also recommends that DoD propose legislation for enhanced leasing authority so that it can take full advantage of any opportunities for privatization that it identifies.