McClellan Air Force Base near Sacramento appears likely to make a strong transition to private industrial use. Sacramento County has decided to purchase some 2,400 acres - about two-thirds of the base - for $90 million, or almost $40,000 per acre. At the same time, Lockheed Martin Corporation has submitted a bid for a giant Air Force contract that would employ thousands of people on the industrial part of the property that the county plans to buy. McClellan is scheduled to close in 2001. The county will purchase the airfield and the base's industrial area, which are considered its prime assets. Under the conveyance agreement, the county would make no payment for the first 10 years, and would subsequently pay $3 million for 30 years. The arrangement has been hailed as a bargain by local base reuse officials, who had negotiated for the $90 million amount for several years, according to base reuse spokeswoman Jill Estroff. (Last year, in fact, President Clinton promised that the federal government would sell McClellan to the county "at a significantly reduced price.") In December 1997, however, the Pentagon complicated negotiations by demanding an additional $25 million. The government later backed down on that demand, however. Sacramento lawyer Randall Yim led the negotiating team for the county, which is the designated local reuse agency. Yim was recently named Principal Deputy Assistant to the Secretary of the Army. McClellan is one of a handful of bases nationally that are undergoing a process known as "privatization." In this process, the Pentagon transfers the industrial functions or "workloads" at the base to private companies. Making a play for what is likely the largest single workload at the base, Lockheed Martin and AAI Engineering Support Incorporated submitted a bid for a variety of aircraft-maintenance tasks that are currently performed by 2,300 non-military workers at the base; the work is valued at $220 million a year. Hill Army Depot in Ogden, Utah, is competing for the same workload; Boeing is bidding on behalf of that base. A decision was originally expected in late September, but has been delayed, while the Pentagon evaluates a challenge from Precision Standard Inc. (Pemco), a Colorado-based aircraft-maintenance firm, which has questioned the legality of creating a giant workload that goes to a giant defense contractor in a winner-take-all contest. The Pentagon is currently in the midst of a 100-day adjudication process, scheduled to end September 25, on the Pemco matter. If Pemco prevails, it is conceivable that the giant workloads would be "unbundled" into smaller workloads, which would be the subject of competition for a larger number of companies. The decision is crucial to the future of McClellan: Lockheed and a second company, Euro United Corporation, a Canadian plastic company, would occupy much of the portion of McClellan that the county plans to buy. If Lockheed wins the bid, the two companies together are expected to employ between 5,000 and 6,000 people, according to county officials. Notwithstanding the uncertainties of the Lockheed bid, McClellan has a promising future as commercial real estate in a region that is running low on industrial land, according to Neil Smyth, managing director of CB Richard Ellis' Sacramento office. The base is "very well located on the I-80 corridor, and that whole corridor is a very good location" for warehousing and distribution. The local industrial market, which includes Sacramento County and portions of Placer, El Dorado and Yolo counties, currently has a very low vacancy rate of 4.8% out of a base of 130 million square feet, according to CB Richard Ellis.