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11 <br /> Executive Summary <br /> Introduction <br /> In early 2004,representatives of Naval Station Everett(NSE) approached Everett with an <br /> offer to negotiate the City's ownership and operation and maintenance of NSE's water <br /> and sewer systems,and oily water treatment plant(OWTP).Previous attempts by the <br /> Navy to privatize these systems under 10 USC 2688 had shown no market interest.As a <br /> result,the Navy was legally able to open sole source negotiations with Everett as the <br /> local utility providing water and sewer services to NSE.For over a year NSE and Everett <br /> representatives have had on-going negotiations. <br /> Everett currently provides NSE with bulk water supply through two, 10-inch meters <br /> that deliver water to NSE at its property line.Similarly,Everett provides NSE with <br /> sewer service by accepting and treating sewage delivered to Everett's conveyance <br /> system at the NSE property line.The City's proposal is to maintain the provisions of the <br /> existing contract to provide basic water delivery(to the meters) and sewage <br /> transmission and treatment (from the NSE discharge point)and also to assume the <br /> ownership and operations and maintenance of the water and sewer facilities on base.1. <br /> Under the proposal NSE will convey ownership of its on-base water distribution system, <br /> sewer collection system,and oily water treatment plant to Everett that will then provide <br /> on-base water and wastewater service within the NSE base in a manner similar to utility <br /> service Everett provides to its other customers. <br /> The proposed contract is for a 20-year term.Prices are proposed to be fixed with <br /> prospective price re-determination.NSE and Everett have negotiated in good faith. <br /> Everett has provided it's expected costs that it is likely to incur in providing on-base <br /> utility services with the quality needed to meet or exceed NSE's requirements.However, <br /> cost uncertainties still exist.As a result,a number of assumptions were required in order - <br /> for Everett to prepare the price proposal.Assumptions are documented in this proposal <br /> and they serve as a basis for the future negotiated price adjustments as conditions <br /> become more defined as operations occur. <br /> Cost evaluations will be better defined once Everett has had time to operate the system. <br /> As Everett becomes more familiar with the systems by operating them,the scope of <br /> work identified in this proposal may need to be revised.Contract modifications are <br /> expected and result in an increase or decrease in prices.Consistent with this approach, <br /> price re-determinations will occur 2 years after Everett's assumption of ownership and <br /> operation of the NSE systems.Once the initial price re-determination is complete, <br /> Everett will consider its due diligence complete;thereafter prices will be re-determined <br /> every 5 years. <br /> 1 Everett's proposal is to terminate the existing agreement between the City and the Navy and supercede it with-the 6 I <br /> contract submitted with this proposal. <br /> S:\MSadler\WORDWavy\final docs\cwmcil Executive Summary dor 1 5/2/2005 <br />