Pentagon Expands Privatization of Military On-Base Water and Gas Utilities

The Department of Defense awarded 10 new defense contracts Thursday, worth $1.094 billion in total. United Technologies won the day's biggest contract, a $550 million deal to supply the Navy with 37 helicopters. But the second biggest contract of the day went to American Water Works Company (NYSE: AWK  ) .

Specifically, it went to AWW's American Water Operations & Maintenance (AWOM) subsidiary, which won a fixed-price with economic-price-adjustment contract worth up to $288 million from the U.S. Air Force. Under this contract, AWOM will assume ownership of, and responsibility for, operating and maintaining the water distribution and wastewater collection systems at Hill Air Force Base in Utah through January 2064.

The Pentagon has been awarding multiple such contracts to private utility companies such as AWW in recent months. For example, in September, Middlesex Water  (NASDAQ: MSEX  ) 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. Separately, that same month, Piedmont Natural Gas  (NYSE: PNY  ) won a $108 million contract to assume ownership of, and take responsibility for, operating and maintaining a natural gas distribution system located at an "undisclosed location" in North Carolina through September 2066.

Today's award to American Water Work, however, is worth more than twice those two previous contracts combined.


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