S -- PRIVATIZATION UNDER USC 2688, "UTILITY SYSTEMS CONVEYANCE AUTHORITY", AT THE NAVAL BASE VENTURA COUNTY LOCATED IN PORT HUENEME AND POINT MUGU, CA

Notice Date

February 20, 2001

Contracting Office

SOUTHWESTNAVFACENGCOM, 1220 Pacific Highway, San Diego, CA 92132-5187

ZIP Code

92132-5187

Solicitation Number

N68711-01-R-5301

Response Due

March 26, 2001

Point of Contact

H. Douglas Powell at 619-532-3838

E-Mail Address

Click here to contact the Contracting Officer via (powellhd@efdsw.navfac.navy.mil.)

Description

Notice of intent to privatize the water distribution systems at Naval Base Ventura County (Port Hueneme and Point Mugu sites) as a sole source procurement with the City of Port Hueneme, Port Hueneme, CA. The Navy's intent is to divest the potable water system distribution assets using the 10 U.S.C. 2688 authority and award a firm fixed price redeterminable contract, and the authority of 10 U.S.C. 2304(c), which states only one responsible source and no other supplies or services will satisfy agency requirements. This notice of intent is not a request for competitive proposals. The following facts warrant the need to pursue this action on a sole source basis. Ventura County has several water supply problems. Historically, deficient water quantities in the area have been compensated for by overdrafts of the Oxnard Plain and East and West Las Posas Basins. Overdrafts have resulted in seawater intrusion into these basins. Because of the need to reduce groundwater extraction, the Navy and other Oxnard Plain water users have entered into a series of complex and interrelated agreements. Entities involved in these agreements include, the Navy, the City of Port Hueneme (City), the Port Hueneme Water Agency (PHWA), United Water Conservation District (United), Channel Islands Beach Community Services District (Channel Islands), Metropolitan Water District of Southern California (MWD), Calleguas Municipal Water District (Calleguas) and Fox Canyon Groundwater Management Agency (Fox Canyon). There are numerous agreements that have resulted from a coordinated effort between these various entities to achieve a solution to the water quantity and water quality problems facing the Oxnard Plain area. The Navy privatizing to a party other than the City could adversely impact these agreements. These include: Joint Powers Agreement, executed 20 July 1994, between the City and Channel Islands. Establishes water system purveyor relationship between the PHWA and the Navy, and designates the City as the operator of PHWA. An exhibit to this agreement, the Agency Operating Agreement, establishes the Operating Committee that reports to the PHWA Board. The Navy is an active participant of the Operating Committee. Through this Committee, the Navy operates and maintains the water systems, and utilizes water in accordance to a manner that does not adversely affect other users. O&M of the systems, and water usage not in accordance to these methods will adversely affect the water supply and quality of the region, and will increase the cost of water supply to the Navy. Water Supply Agreement between PHWA and Navy, executed in 11 April 1996. This agreement is an integral part of the overall regional solution to the water supply and quality problems. Under the agreement, PHWA agrees to sell and deliver water to the Navy bases, as the primary source of water. Also, the parties agree to participate in the Water Quality Improvement Program, a major component of which is the construction of a water treatment plant and related facilities. The costs for constructing and operating the water treatment plant and related facilities are shared among the Navy, City, and Channel Islands, and are specified in the contract. Also, the PHWA agrees to manage the Navy's rights to extraction and historical allocations of groundwater from the aquifers administered by Fox Canyon. Monitoring extraction and allocations are important because unused allocations are convertible to conservation credits. The Agreement provides that the Navy may not transfer any right to receive water to a third party without the express written consent of PHWA, which shall be determined based on the assignee's "compatibility with the Project, need for the water, and financial capability." The Navy has no intent of relinquishing any rights to receiving any water or transferring allocations, however, the risk associated with a third party owning, operating and maintaining the system in a manner that adversely affects those rights and allocations is a higher cost of water supply to the Navy. The cost to the Navy of a third party owning, operating and maintaining the system in a manner that preserves those rights and allocations plus the risk of increase in cost of water commodity, plus the cost of potential litigation to the Navy, must be less than the cost to keep the systems for the Navy if privatization is to be considered. Annexation Agreement No. 32, executed 27 Nov 1995, sets forth the terms and conditions of the concurrent annexation by MWD and Calleguas, of the City, Channel Islands and the Navy bases. In order for MWD and Calleguas to provide imported state water to the three entities, it was necessary to annex these areas into their respective service areas. To complete the annexation, an annexation fee was assessed based on the assessed value of real property of the territory. In lieu of a cash payment for the annexation fee, the parties agreed that PHWA would transfer state water allocations to the MWD. The Navy bases were not assessed an annexation fee. However, Section 5(a) of Resolution 8487, adopted by the MWD, which approved the annexation of the Navy bases, states that: The Port Hueneme and the Point Mugu land areas have not been assessed an annexation fee at this time. However, upon any part or all of any Navy property leaving Federal ownership, the then current annexation charge attributable to that property will be paid forthwith, and all aspects relating to annexation contained in Metropolitan's Administrative Code at that time must be complied with and adhered to. The Navy acknowledges the fact that any privatization action may, or may not trigger these annexation fees, however, privatization to the City poses the least amount of risk to the Navy for several reasons; Port Hueneme site is within City limits, the City is already annexed into these service areas, and the City shares the same responsibility of adhering to regional water concerns. In addition to these agreements, other agreements exist that are part of an integrated regional solution to the water quantity and quality problems. The Navy is not a party within these agreements; however, they affect the Navy. Adverse impacts to these agreements could result in higher water supply costs to the Navy. Summaries of these agreements are as follows: Water Treatment Plant Site Facilities and Land Lease Agreement, 1995, the City of Oxnard and PHWA entered into agreement that sets forth the parties' respective obligations related to the delivery of water by United through the Oxnard-Hueneme pipeline, PHWA's construction of a water treatment plant and lease of land by the City of Oxnard to PHWA. Water Supply Agreement for Delivery of Water through Oxnard-Hueneme Pipeline, 1996, between United and PHWA. Establishes arrangements for PHWA to receive United water. The agreement specifies the division of pipeline capacity, water delivery charges, division of Fox Canyon extraction allocations and storage credits. Lease of Capacity in the Mugu Lateral Pipeline, 1996, PHWA and United entered into a lease for capacity in the Mugu lateral water pipeline. United agrees to allow PHWA to lease capacity in the Mugu lateral pipeline to deliver water to Navy at NAS (formerly NAWS). Lease Agreement, 1996, United leased to PHWA state project water rights. The imported state water is necessary to improve the quantity and quality of water provided by PHWA to its customers. Sublease Agreement, 1996, under a lease agreement entered into between United Water and PHWA, United leased to PHWA its entitlement to state water rights. PHWA subleased these state entitlement water rights to MWD. Offsets to annexation fees are involved. Imported Water Service Agreement, 1996, entered into between PHWA and Calleguas Municipal Water District. Establishes state water allocations for PHWA customers. PHWA is required to transfer groundwater credits from its member agencies to Calleguas as a condition of receiving imported state water. In addition, the agreement between PHWA and Calleguas provides that the "United States Navy or any successor in interest" must pay the current annexation fee upon transfer of ownership of the Navy bases to any non-Federal entity. Water Wheeling and Facilities Agreement, 1996 between Calleguas, the City of Oxnard and PHWA. In consideration for Calleguas approving the annexation of PHWA and continuing to provide water to PHWA, PHWA agreed to dedicate a new pipeline to Calleguas and transfer to Calleguas conservation credits, or the cash equivalent of the conservation credits, as provided under a Fox Canyon ordinance. Groundwater Storage Agreement, 1996, entered into between PHWA and Calleguas. Cooperative Agreement for Brackish Water Reclamation Demonstration Facility, 1996. PHWA and the United States Bureau of Reclamation entered into a cooperative agreement to design and construct a Brackish Water Reclamation Demonstration Facility that will provide a full-scale comparative demonstration of viable brackish water membrane desalting technologies on brackish groundwater that has salinity of certain amounts. The Navy and the PHWA have cooperatively expended a large amount of money, time, and effort to attempt to provide an adequate amount of water, and to preserve the quality of water supply to the Navy bases and surrounding areas. Although the Navy has not completed its determination of the exact economic impact of privatizing the water distribution systems to a third party, potential negative economic impacts have been identified. These negative impacts, stemming from the interrelated agreements described, could potentially cost the Navy millions of dollars in direct cash outlays and/or increased cost of water supply resulting from mismanagement, or management of operations that adversely impact the current water supply. For any privatization proposal that pose negative impacts to these agreements, those increased costs will be considered in evaluating those proposals. Based upon the above situation regarding the water distribution systems at the Port Hueneme and Point Mugu sites of NBVC, if there are any parties interested in entering into privatization with the Navy for those systems, you are required to submit a statement demonstrating commitment to protect the Navy's interests, as well as the integrity of all existing agreements, and commitment to day-to-day operations and maintenance that will adhere to the current agreements which protect the quality of water and limit the quantity of water used, and statement demonstrating awareness and commitment of the time and resources which will be necessary towards an effort to research the potential impacts to existing agreements, and to cooperate with the local water authority and districts. All responses to this notice must be received on or before 26 March 2001. As stated above, this is a notice of intent and is not a request for competitive proposals. Oral Communications are not acceptable. All information shall be furnished at no cost or obligation to the Government. No contract will be awarded on the basis of offers received in response to this notice, but will be used to determine if a comparable source is available and more advantageous to the Navy in future procurements. If no acceptable interest is received, the Navy shall conclude that the only entity that can, as a practical matter, enter into a privatization agreement with the Navy regarding the water distribution systems at Port Hueneme and Point Mugu sites of NBVC is the City of Port Hueneme. Responses to this notice as well as any questions should be directed to: Southwest Division, Naval Facilities Engineering Command, Attention: H. Douglas Powell, 1220 Pacific Highway, San Diego CA 92132.

Web Link

This notice of intent is also posted on the Navy's (http://www.esol.navfac.navy.mil)

Record

Loren Data Corp. 20010222/SSOL004.HTM (W-048 SN50D9R7)