Interior's $60.6M Natural Gas Services Contract Awarded to New Mexico Gas Company

Contract Overview

Contract Amount: $60,632 ($60.6K)

Contractor: NEW Mexico GAS Company, Inc

Awarding Agency: Department of the Interior

Start Date: 2022-05-17

End Date: 2027-05-31

Contract Duration: 1,840 days

Daily Burn Rate: $33/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: NATURAL GAS SERVICES

Place of Performance

Location: ISLETA, BERNALILLO County, NEW MEXICO, 87022

State: New Mexico Government Spending

Plain-Language Summary

Department of the Interior obligated $60,631.74 to NEW MEXICO GAS COMPANY, INC for work described as: NATURAL GAS SERVICES Key points: 1. Contract focuses on essential natural gas distribution services for Bureau of Indian Affairs and Bureau of Indian Education. 2. Awarded as a sole-source contract, raising questions about potential cost efficiencies and market alternatives. 3. Long contract duration (over 5 years) suggests a need for stable, long-term service provision. 4. Firm Fixed Price contract type offers cost predictability for the government. 5. Geographic focus on New Mexico indicates localized service delivery. 6. Absence of small business set-aside suggests limited opportunities for smaller enterprises in this specific award.

Value Assessment

Rating: fair

The contract's value is substantial at $60.6 million over five years. Without comparable contract data or detailed cost breakdowns, it's difficult to definitively assess value for money. The sole-source nature of the award means there was no direct price competition to benchmark against market rates. However, the firm fixed-price structure provides some cost certainty. Further analysis would require understanding the specific service requirements and the prevailing market prices for natural gas distribution in New Mexico.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, or in specific circumstances like urgent needs or when only one responsible source exists. The lack of competition limits the government's ability to explore alternative pricing and service models that might be offered by other qualified providers.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers compared to competitively bid contracts, as there is no direct pressure from competing offers to drive down prices.

Public Impact

Provides essential heating and energy services to facilities managed by the Bureau of Indian Affairs and Bureau of Indian Education in New Mexico. Ensures reliable natural gas supply for educational institutions and tribal operations, supporting daily functions and student well-being. Supports the local economy in New Mexico through the provision of natural gas distribution services. Impacts the operational continuity of federal agencies serving Native American communities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Lack of transparency in the justification for sole-source award.
Long-term contract duration may not adapt well to fluctuating energy market prices.
No explicit small business subcontracting goals mentioned, potentially limiting opportunities for smaller firms.

Positive Signals

Firm Fixed Price contract provides budget certainty for the government.
Award to an established local provider ensures continuity of essential services.
Contract duration aligns with the long-term need for natural gas infrastructure.

Sector Analysis

The energy sector, particularly natural gas distribution, is a critical infrastructure component for government operations. This contract falls within the broader utilities and energy services category. While specific market size data for federal natural gas distribution contracts is not readily available, the overall U.S. natural gas utility market is valued in the hundreds of billions of dollars. This award represents a significant, albeit localized, federal investment in ensuring energy security for its facilities.

Small Business Impact

This contract does not appear to have a small business set-aside. The award to New Mexico Gas Company, a larger utility provider, suggests that subcontracting opportunities for small businesses might be limited unless specifically mandated or pursued by the prime contractor. Further investigation into subcontracting plans would be necessary to determine the extent of small business involvement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Interior's Bureau of Indian Affairs and Bureau of Indian Education. Standard contract administration processes, performance reviews, and financial audits would be in place. The specific mechanisms for ensuring accountability and transparency, especially given the sole-source nature, would depend on internal agency policies and any specific clauses within the contract. Inspector General oversight would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Federal Energy Management Program
Bureau of Indian Affairs Operations
Bureau of Indian Education Facilities Management
Department of Energy Utility Contracts

Risk Flags

Sole-source award raises concerns about competition and potential cost overruns.
Lack of transparency regarding the justification for sole-source procurement.
Long contract duration may limit flexibility and cost-saving opportunities.
Potential for vendor lock-in due to single-provider award.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Interior awarded $60,631.74 to NEW MEXICO GAS COMPANY, INC. NATURAL GAS SERVICES

Who is the contractor on this award?

The obligated recipient is NEW MEXICO GAS COMPANY, INC.

Which agency awarded this contract?

Awarding agency: Department of the Interior (Bureau of Indian Affairs and Bureau of Indian Education).

What is the total obligated amount?

The obligated amount is $60,631.74.

What is the period of performance?

Start: 2022-05-17. End: 2027-05-31.

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

The provided data indicates the contract was awarded as 'NOT AVAILABLE FOR COMPETITION,' which is synonymous with a sole-source award. The specific justification for this determination is not detailed in the provided data. Typically, sole-source awards are made when only one responsible source is available to provide the required services, or in cases of urgent and compelling need. Without further documentation from the awarding agency (Department of the Interior, Bureau of Indian Affairs and Bureau of Indian Education), it is impossible to ascertain the precise rationale. This lack of competition means that taxpayers did not benefit from potential price reductions that could arise from a competitive bidding process.

How does the contract's price compare to market rates for natural gas distribution in New Mexico?

Direct comparison of the contract's price to market rates is challenging without access to detailed pricing breakdowns and specific service level agreements. The data indicates a total award amount of $60.6 million over approximately five years. New Mexico Gas Company is a known utility provider in the state. However, the absence of competitive bidding means there's no benchmark from alternative suppliers. To assess value, one would need to analyze the per-unit cost of gas, delivery charges, and associated services against publicly available tariffs or rates offered by the utility to other large commercial or industrial customers in similar service areas within New Mexico.

What are the potential risks associated with a sole-source contract of this magnitude and duration?

The primary risk associated with a sole-source contract of this magnitude ($60.6 million) and duration (over five years) is the potential for inflated costs due to a lack of price competition. The government may be paying more than it would if multiple vendors had vied for the contract. Another risk is vendor lock-in, where the agency becomes heavily reliant on a single provider, potentially reducing flexibility and leverage in future negotiations. Furthermore, without competitive pressure, there might be less incentive for the contractor to innovate or improve service quality beyond the contract's minimum requirements. Ensuring robust oversight and performance management is crucial to mitigate these risks.

What is the historical spending pattern for natural gas services by the Department of the Interior in New Mexico?

The provided data does not include historical spending patterns for natural gas services by the Department of the Interior in New Mexico. To analyze historical trends, one would need to access previous contract awards for similar services within the agency and geographic region. This would involve searching federal procurement databases for contracts awarded to New Mexico Gas Company or other providers for natural gas distribution. Understanding past spending levels, contract durations, and pricing structures would provide context for the current $60.6 million award and help identify any significant deviations or escalations in cost over time.

What is the track record of New Mexico Gas Company in fulfilling government contracts?

The provided data does not include specific details on New Mexico Gas Company's track record in fulfilling government contracts. As a utility provider, it likely has extensive experience serving residential, commercial, and industrial customers. However, its performance history specifically with federal agencies, particularly concerning contract compliance, delivery timeliness, and adherence to terms, would need to be assessed through sources like the Federal Awardee Performance and Integrity Information System (FAPIIS) or by reviewing past performance evaluations if available. Without this information, it's difficult to gauge their reliability as a government contractor beyond their general utility operations.

Industry Classification

NAICS: Utilities › Natural Gas Distribution › Natural Gas Distribution

Product/Service Code: UTILITIES AND HOUSEKEEPING › UTILITIES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Emera Incorporated

Address: 7120 WYOMING NE, SUITE 20, ALBUQUERQUE, NM, 87109

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $60,632

Exercised Options: $60,632

Current Obligation: $60,632

Actual Outlays: $32,940

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00P15BSD1140

IDV Type: IDC

Timeline