Department of the Air Force spent $14.2M on electricity costs in FY08, a non-competed contract

Contract Overview

Contract Amount: $14,210,753 ($14.2M)

Contractor: Tohoku Electric Power Company Incorporated

Awarding Agency: Department of Defense

Start Date: 2007-10-01

End Date: 2008-09-30

Contract Duration: 365 days

Daily Burn Rate: $38.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: WLECTRICITY COST FOR FY08.

Plain-Language Summary

Department of Defense obligated $14.2 million to TOHOKU ELECTRIC POWER COMPANY INCORPORATED for work described as: WLECTRICITY COST FOR FY08. Key points: 1. The contract value of $14.2 million for electricity costs in FY08 represents a significant expenditure for the Department of the Air Force. 2. The 'NOT COMPETED' award type raises questions about potential missed opportunities for cost savings through competitive bidding. 3. The firm fixed-price contract type suggests a defined cost structure, but the lack of competition limits benchmarking. 4. The duration of 365 days for this electricity supply contract is standard for such services. 5. The absence of small business set-aside flags indicates this contract was not specifically targeted to support small businesses. 6. The NAICS code 335311 points to the manufacturing of power, distribution, and specialty transformers, which seems incongruent with electricity costs.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive data and the unusual pairing of electricity costs with transformer manufacturing. Without comparable contracts for electricity supply to military installations or a clear understanding of the specific services rendered under the NAICS code 335311, it's difficult to assess if $14.2 million was a fair price. The non-competed nature further complicates value assessment, as there's no market-driven price discovery.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as 'NOT COMPETED,' indicating that it was not subjected to a full and open bidding process. The specific reasons for this sole-source award are not provided in the data. Without multiple bidders, it is impossible to determine the level of competition or how it might have influenced pricing and service offerings.

Taxpayer Impact: The lack of competition means taxpayers may not have received the most cost-effective solution, as there was no pressure from competing vendors to offer lower prices or better terms.

Public Impact

The primary beneficiary of this contract is the Department of the Air Force, ensuring electricity supply for its operations. The services delivered are essential for maintaining the operational readiness of Air Force facilities. The geographic impact is localized to the Air Force installations served by TOHOKU ELECTRIC POWER COMPANY INCORPORATED. There are no direct workforce implications mentioned for this specific contract, as it pertains to utility services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition limits price discovery and potential cost savings for taxpayers.
The stated NAICS code (335311 - Power, Distribution, and Specialty Transformer Manufacturing) appears mismatched with the description of 'ELECTRICITY COST', raising concerns about the accuracy of the data or the contract's scope.
The contract was awarded in FY08, and its current relevance or renewal status is unknown without further information.

Positive Signals

The contract was awarded as a Firm Fixed Price, providing cost certainty for the government.
The contract duration of 365 days is a standard period for utility services.

Sector Analysis

The energy sector, particularly utility services, is a critical component of government operations. While this contract is for electricity costs, the associated NAICS code points to transformer manufacturing. This discrepancy makes it difficult to place within a standard industry context. Comparable spending benchmarks for electricity supply to large federal installations would typically be sought, but the non-competed nature and data anomaly hinder such comparisons.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from this particular award.

Oversight & Accountability

Oversight mechanisms for this contract would typically fall under the Department of the Air Force's contracting and financial management oversight. However, without details on the specific contracting office or any associated Inspector General reports, a thorough assessment of accountability and transparency is not possible. The non-competed nature might warrant closer scrutiny.

Related Government Programs

Department of Defense Utility Contracts
Federal Energy Procurement
Air Force Operational Support Contracts

Risk Flags

Potential data misclassification (NAICS code vs. service description)
Lack of competitive bidding raises cost-efficiency concerns
Limited transparency into sole-source justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.2 million to TOHOKU ELECTRIC POWER COMPANY INCORPORATED. WLECTRICITY COST FOR FY08.

Who is the contractor on this award?

The obligated recipient is TOHOKU ELECTRIC POWER COMPANY INCORPORATED.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $14.2 million.

What is the period of performance?

Start: 2007-10-01. End: 2008-09-30.

What is the specific justification for awarding this electricity cost contract on a sole-source basis?

The provided data states the contract was 'NOT COMPETED' (ct: NOT COMPETED), indicating a sole-source or limited competition award. However, the specific justification for this approach is not detailed. Typically, sole-source awards require a documented justification, such as the unavailability of a competitive source, urgent and compelling needs, or specific national security requirements. Without this justification, it is impossible to assess the validity of the sole-source award and whether it was in the best interest of the government.

How does the reported electricity cost of $14.2 million in FY08 compare to similar contracts for the Department of the Air Force?

Direct comparison of the $14.2 million electricity cost is difficult without more specific contract details and competitive data. The contract was not competed, limiting the ability to benchmark against market rates derived from bidding. Furthermore, the associated NAICS code (335311) for transformer manufacturing seems incongruent with 'ELECTRICITY COST,' making it hard to find truly comparable utility service contracts. To perform a meaningful comparison, one would need to identify similar electricity supply contracts for large federal facilities, ideally those awarded competitively, and analyze their per-unit costs or total expenditures relative to facility size and energy consumption.

What are the potential risks associated with a non-competed contract for essential services like electricity?

The primary risk of a non-competed contract for essential services like electricity is the potential for inflated costs and reduced value for taxpayers. Without competition, the vendor faces less pressure to offer competitive pricing, potentially leading to overpayment. There's also a risk of complacency in service delivery, as the vendor is not incentivized by the threat of losing business to competitors. Furthermore, it raises concerns about whether the government secured the most appropriate or innovative solutions available in the market. Transparency can also be a concern, as the rationale for not competing the award may not always be fully disclosed.

Is the NAICS code 335311 (Power, Distribution, and Specialty Transformer Manufacturing) accurately associated with the description 'ELECTRICITY COST'?

The association between NAICS code 335311 ('Power, Distribution, and Specialty Transformer Manufacturing') and the description 'ELECTRICITY COST' appears to be a significant data anomaly. NAICS 335311 relates to the manufacturing of electrical equipment, not the provision of electricity as a utility service. Electricity costs are typically associated with utility providers and might fall under different NAICS codes related to electric power generation, transmission, or distribution. This discrepancy suggests a potential error in data entry, classification, or a misunderstanding of the contract's actual scope. It complicates analysis, as it's unclear if the contract was for purchasing electricity or for services/products related to electrical infrastructure.

What does the 'AW' (Award) value of 'DO' signify in this contract data?

The 'AW' field with the value 'DO' likely signifies 'Delivery Order' or a similar designation indicating that this contract represents a specific order placed under a larger, potentially pre-existing contract or agreement. In the context of federal procurement, 'DO' often refers to a Delivery Order issued against a Basic Ordering Agreement (BOA) or a similar indefinite-delivery type contract. This implies that the underlying agreement might have been established through a competitive process, but this specific order was placed without further competition, or the BOA itself was established through competition. The exact meaning can vary, and consulting agency-specific procurement regulations would be necessary for definitive interpretation.

Industry Classification

NAICS: Manufacturing › Electrical Equipment Manufacturing › Power, Distribution, and Specialty Transformer Manufacturing

Product/Service Code: UTILITIES AND HOUSEKEEPING › UTILITIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1-7-1, HONCHO, AOBA-KU, SENDAI

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $14,210,753

Exercised Options: $14,210,753

Current Obligation: $14,210,753

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA520907G0007

IDV Type: IDC

Timeline