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INFRASTRUCTURE OUTSOURCING

B. Local Governments

Information on municipal infrastructure outsourcing is harder to come by than information on state agencies, but service-specific information also indicates growth in outsourcing.

1. Water and Wastewater

While many cities own and operate their water and wastewater facilities, most outsource design, engineering, and construction of new facilities, and they increasingly contract for operation and maintenance as well. A 1997 service-delivery survey by the International City/County Management Association (ICMA) showed that 1 in 15 cities outsources operation of water or sewer systems.22 Revenue projections for firms that design, build, and/or operate municipal water and sewer systems indicate expectation of increased outsourcing.23 Typically, cities and counties “have a small dedicated engineering group to handle day-to-day environmental problems and monitoring. . . . [A]ll significant designs are outsourced.” 24

A 1998 survey by R. W. Beck found that the greatest operational concern of water and sewer utility officials is meeting environmental regulations.25 The survey paints a more complex picture of capital-investment concerns. Public officials were asked what were the most important drivers of water and sewer capital improvements. For 40 percent it was growth in demand, for 30 percent the age of existing capital, for 27 percent it was environmental regulations, and three percent indicated other reasons.

Keeping up with economic growth and coping with aging facilities are currently the greatest concerns.

Keeping up with economic growth and coping with aging facilities are currently the greatest concerns. But that may change. Over the last two decades, through the Clean Water Act, the Safe Drinking Water Act, and their subsequent amendments, standards governing the quality of drinking water and cleanliness of effluent discharged into waterways have become ever more stringent. To meet these increasing standards, many local water and wastewater systems require improved technologies and upgraded infrastructure. The Environmental Protection Agency, the Association of Metropolitan Sewerage Agencies, the Water Environment Foundation, and others proffer varying estimates of the capital investments needed to bring all U.S. water and sewer systems into compliance, but the total is likely between $500 billion and $1 trillion. Planned federal and state funding will likely amount to less than one-quarter of the need; the rest will have to come from local taxpayers or from private investors.

22

Lawrence Martin, Contracting for Service Delivery: Local Government Options (Washington, D.C.: International City/County Management Association, 1999), pp. 40–41.

23

24

25

Public Works Financing, March 1999. Jim Walsh, senior vice president, SCS Engineers, interview with author, March 2000. R. W. Beck, 1998 Water Resources National Competitiveness Survey (Seattle: R. W. Beck, 1998).

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