A giant new defense contract went to the water industry this month when American Water Works Company secured its tenth deal with the military.
The move is part of an overall effort by the Pentagon to privatize certain on-base services, according to reports.
The major award went to American Water's American Water Operations & Maintenance subsidiary, "which won a fixed-price with economic-price-adjustment contract worth up to $288 million from the U.S. Air Force," the Motley Fool reported.
Under the new contract, AWOM will be responsible for the long term task of providing wastewater services to Hill Air Force Base in Utah through January 2064.
"In a similar 50-year, $330 million contract penned in September 2008, the company gained control of about 341 miles of water lines and 271 miles of sewer lines that spans from North to West Fort Hood to Belton Lake Outdoor Recreation Area," according to the Killeen Daily Herald. "The lines range from ¾ inches to 42 inches in diameter."
American Water appears to have a solid relationship with the Pentagon.
The company's "expertise and long-standing working relationship with the defense department helped to win [the most recent] long-term contract. Prior to this, American Water Works has rendered services at nine other military installations across the U.S.," Zacks Investment Research reported in an analysis piece.
"This deal marks a sunny start for this water utility and speaks of the quality of services offered by American Water Works," Zacks stated.
Contracting with American Water Works Company "is part of the Defense Department and Department of the Army’s initiative to privatize services, said Brian Dosa, Fort Hood’s Department of Public Works directorate," according to the Killeen Daily Herald. Fort Hood has used the company since 2008.
“American Water is helping us do a good job and to be honest are doing a better job,” Dosa said, referring to improving the infrastructure. “One of the things privatization does is it allow us to focus on improvements. It allows us to focus on what the shortcomings are and get dollars for those projects.”
"Some such projects have prevented water leakage, installed more efficient water pumps, and created a better flowing system, said Adam Alexander, a department of public works supervising engineer. All of which improve water quality and conservation," the report said.
The latest deal could mean more are coming for American Water Works. "We expect the company to win more contracts in 2014," Zack's said.
"American Water Works is consistently working on a strategy to increase its presence in the U.S. through organic as well as inorganic ways. In 2013, the company completed 15 acquisitions and invested close to $1 billion to upgrade and improve its infrastructure," the investment research firm said.
The Defense Department has shelled out another contract to the water industry recently.
"In September, Middlesex Water subsidiary Tidewater Utilities was awarded a $32 million contract to assume ownership of, and take responsibility for, operating and maintaining the water distribution system at Dover Air Force Base in Delaware for the next 50 years," the Motley Fool said.
Image credit: "Pentagon," © 2009 gregwest98, used under a Attribution 2.0 Generic license: http://creativecommons.org/licenses/by/2.0/
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