The Application of Value Focused Thinking to Utilities Privatization Source Selection

The Department of Defense's utility systems have suffered from under-funding and lack of technology investment, thereby creating a service gap between these DoD systems and systems operated by commercial providers. In order to overcome this gap and refurbish their systems, the DoD has focused its efforts on privatization of these systems. Although the Air Force has published source selection guidance to aid the privatization process, the utilities privatization decision is extremely vital and "permanent" and thus warrants backup source selection methodologies. Since awarding contracts in the utilities privatization arena requires a decision considering tradeoffs between multiple competing objectives such as economic feasibility, security, readiness, reliability, and cost, a value-focused thinking approach was used to create a structured, standardized value model taking into account the values of the United States Air Force with regard to utilities privatization. This model was then used to evaluate a set of randomly generated contractor proposals for leasing an Air Force owned electrical system and perform deterministic and sensitivity analysis on the recommended decision generated by the model. The results of this research provide a quantitative, objective, reliable, and defendable tool for a utilities privatization source selection decision. The value model is generic enough for evaluating the source selection decision of any utility system, but is able to accommodate changes in guidance, decision makers, and other factors.