Okaloosa County's lease payments are funding Eglin Air Force Base's infrastructure improvements with the help of procurement.
Okaloosa County, Fla., leases about 15 acres from neighboring Eglin Air Force Base and pays about $348,000 a year. The county also operates a newand sewer treatment plant on Eglin property, which is another 20 acres for which they pay about $345,000 a year. Money from those lease payments goes into an escrow account, which is used to pay for local infrastructure improvement projects on the base.
The Air Force cannot access the lease payment escrow directly; only Okaloosa County can spend the money. Okaloosa County'sdepartment handles those on-base projects and receives a fee from the escrow account that is 2 to 3 percent of the project, based on the complexity of the job. To date, some $39,979.37 has been paid back to the county based on more than $2 million in projects with which the county has helped.
"A check comes in for our percentage and we put it into a general fund," said Richard Brannon, Okaloosa County's procurement director. "It has been a positive thing to the department. Along with some other things we are doing, it has helped us avoid layoffs." The county's procurement operation also gets good internal "publicity" from the arrangement and recognition for cooperating with another government entity.
Okaloosa County and Eglin are involved in an Enhanced Use Lease (EUL), which is a new approach the Department of Defense (DoD) uses to construct and upgrade, in effect by leveraging the value of existing assets to make the improvements. EULs provide a mechanism for the DoD to receive lease payments at no less than Fair Market Value (FMV), as cash or in-kind services, for any assets that are currently available but not excess to the military's needs. Previously, the available land might have been leased for less than market value, such as a penny a year. Eglin also has an EUL agreement with the Mid-Bay Bridge Authority, which operates a bridge across Choctawhachee Bay connecting Niceville with the beaches of Destin and South Walton in Okaloosa County.
The advantage to Eglin is the ability to pay for base infrastructure upgrades from money coming in from property being leased by the base. The local area benefits economically because 99 percent of the contractors are local. "We are able to use the resources locally, which is a good thing," said Greg Parry, director of operational contracting for Eglin Air Force Base. "Using resources in the local area benefits everyone."
Procuring base improvements
Okaloosa County stretches from the Gulf of Mexico to the Alabama line in the panhandle of Florida. The county gets the largest share of its income from tourism, including beach areas such as Destin and Fort Walton Beach, and from the military. Oklaloosa County manages three airports, including a main, commercial airport located on the edge of Eglin's main taxiway.
Eglin Air Force Base is the largest land-based military base in the world (based on acreage). The military base takes up parts of three counties, with the headquarter's main air base south of the county, adjacent to Fort Walton Beach. Eglin includes a number of large test ranges and a climate hangar that controls temperature and weather conditions (including rain) for testing aircraft and track vehicles. When the planned move of the 7th Special Forces Group (Airborne) from Fort Bragg, N.C., to Eglin is complete, an additional 12,000 to 13,000 army troops will be based there in a huge new complex with barracks and support facilities.
Projects financed by the EUL agreement started small: for example, a submersible pump was purchased in 2008 for $4,993, the first project. Eglin works up the specifications for each purchase and turns them over to the Okaloosa County procurement department, which reviews them and advertises them for bid. Using the county's documentation, procurement establishes pricing and meets with Eglin officials to provide them with the quotes and let them confirm that the quotes meet requirements.
Projects have also included an upgrade to a fire station (addition of a drive-in area for large fire trucks), a bike path construction, work on the gun range and installation of 16 miles of pipes to a wastewater site. The larger pipes will help accommodate the needs of the additional Special Forces Group. Other than some work on the information technology (IT) infrastructure, all the projects have been construction-related, including air conditioner chillers, asphalt and energy projects such as installation of solar panels for the base pool.
Eglin provides the county a "site-work agreement," which is a document stating what work needs to be done, listing the requirements and specifying the purchasing fee. A multi-functional team at the base decides projects based on the base's requirements and how much money is in the EUL escrow account. The multi-functional team includes representatives of the requirements (civil engineers/end-users), technical, programming and procurement functions. The air base commander makes the final decision on what projects get the go-ahead.
In addition to the vendors and contractors typically used by the county, Eglin also provides other potential vendors and contractors they could use, which has expanded the county's contractor source base, thus enhancing competition. Eglin provides clearance for contractors to work on the base.
"Initially, it took a while to get the process down," said Parry. "We sat down with [the county] at the first bid opening to make sure they were comfortable with the process." He adds that Okaloosa County is "very transparent" and advertises widely to get as much competition as possible.
Parry said the "great" cooperative relationship Eglin has with grantees (the county and the bridge authority) has been acknowledged by the Air Force Real Property Agency, which has adapted best practices from Eglin, such as the site-work agreement, for use at other bases.
While the work is being done at Eglin, the base inspects the process and the contractors. "We have a pre-award conference and a pre-construction conference to be sure everyone understands the requirements and there are no outstanding questions," said Parry. He added that there have been no problems with the process, which has been "mutually interesting" for both parties. "We get to see how they do things, and they get to see how we do things."
The Okaloosa County procurement department has also looked for other ways to save money and boost revenue. The department negotiated about a year ago to reduce fees by 5 to 10 percent for any contractor — from asphalt to concrete to general consulting — that has annual contracts with the county. The move saved $758,000 compared to previous years. The county is also testing an e-payable system using a Bank of America charge card that will yield a rebate. "We hope things like that mean something," said Brannon, whose department's annual budget is $422,000, of which $339,000 is personnel. In 2001, there were 13 procurement employees, but going paperless and other efficiencies have decreased the number to six. "Our budget for the past year was lower than it was 15 years ago," said Brannon.
"Our county has been stressing cooperative agreements between the cities within the county, and they felt like this [arrangement with Eglin] is on the leading edge of what we hope to do," Brannon said. Other efforts to reduce costs include establishing cooperative contracts to keep local cities from having to bid something the county has already bid. Local cities are Ft. Walton Beach, Destin, Niceville, Mary Esther and Crestview.
"We have in this county an extremely good relationship with the military, and this has come to everybody's attention right up to the commander," said Brannon. "For the first time, we have been dealing with procurement people on Eglin. We have an annual trade show, and now military people are attending and sharing information with us, which is a plus. They deal in a completely different level of purchasing than we do, but it's always useful to share information."
"There are opportunities out there to develop relationships with other procurement professionals, and this is the way to do it," said Brannon. He urges patience when dealing with the military: "They have come to respect us. They learned we are on the same [professional] level as they are. They were looking over our shoulder for a couple of projects, and then they realized we are just as tight as they are."
Brannon offers advice to other jurisdictions that border military bases about pursuing a similar arrangement: "It does take time to handle the projects. If someone decides to do this, they should make sure they have the time to devote to the additional projects."
About the author
Larry Anderson is editor of GoPro.