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Outsourced Operations Services and Public-Private Partnerships
Publication: Operation of Municipal Wastewater Treatment Plants
Manual of Practice-MOP 11 Sixth Edition
Medium: Download Chapter
Pages 22
Publisher: Water Environment Federation (WEF)
Year: 2007
Order No: MOP1115
DOI: 10.2175/1-57278-232-3-15


Table of Contents
Index
Cover Art
Front Matter
Order Additional Chapters of MOP 11
Order a Hard Copy of MOP 11

Abstract:
The option to outsource operations of a public (or private) wastewater or water treatment facility to an entity other than the owner has been in existence for over 30 years. In its original form, it was simply identified as contract operations, and generally referred to any situation where an outside company was contracted to perform, in whole or part, the operations of a facility. These contracts were typically three to five years in duration, with the contractor accepting only limited risk for facility operations in terms of labor, consumables, and routine repair or replacement of the operating equipment. With the revision of the federal tax law in 1997, often referred to as 97-13 (IRS Revenue Procedure 97-13), which removed the time duration limit on a private for-profit entity operating a publicly funded facility for more than five years, the private outsourcing companies were now able to assume a much longer term role and have the ability to assume more risks in the full cost of the facility operation. These contract arrangements are considered public/private partnerships (P3) and can include many options in terms of contract services, full permit compliance, capital repair or replacement, capital upgrades, facility expansion, asset management, project financing, the design/build/operate (DBO) approach, and full turnkey services. In general, there is a much higher transfer of risk across many issues from the public sector to the private contractor in a P3. Each project presents its own requirements and challenges with the accompanying benefit opportunity available for the owner.

This update of the chapter has been crafted to review the current state of the outsourcing industry and present the options that have evolved over the past decade. It is not intended to be complete in every detail, because every outsourcing opportunity presents unique requirements and goals. Rather, it is intended as a guide document providing a broad overview of the various options available, critical issues that should be considered, key considerations, and strategies to make an outsourcing effort successful. The outsourcing market is a dynamic one, affected by many considerations, and it is continually evolving. Entities, whether municipal or private, considering outsourcing their treatment facility or utility operations are encouraged to openly explore what options exist with the various service providers and consultants in the industry to define what the best solution set is for each individual case.
 
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