IRS electric services contract awarded to Potomac Edison for $3.6M over two years

Contract Overview

Contract Amount: $3,617,642 ($3.6M)

Contractor: THE Potomac Edison CO

Awarding Agency: Department of the Treasury

Start Date: 2024-10-01

End Date: 2026-09-30

Contract Duration: 729 days

Daily Burn Rate: $5.0K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: ELECTRIC SERVICES FOR THE INTERNAL REVENUE SERVICE (IRS) MARTINSBURG ENTERPRISE COMPUTING CENTER (ECC) AND CHILDCARE CENTER IN KEARNEYSVILLE, WEST VIRGINIA (WV)

Place of Performance

Location: KEARNEYSVILLE, JEFFERSON County, WEST VIRGINIA, 25430

State: West Virginia Government Spending

Plain-Language Summary

Department of the Treasury obligated $3.6 million to THE POTOMAC EDISON CO for work described as: ELECTRIC SERVICES FOR THE INTERNAL REVENUE SERVICE (IRS) MARTINSBURG ENTERPRISE COMPUTING CENTER (ECC) AND CHILDCARE CENTER IN KEARNEYSVILLE, WEST VIRGINIA (WV) Key points: 1. Contract awarded to a single, established utility provider for essential services. 2. Pricing appears to be a standard utility rate, likely subject to regulatory oversight. 3. Limited competition suggests a reliance on existing infrastructure and service agreements. 4. Performance is critical for the IRS computing center, indicating low tolerance for disruption. 5. This contract falls within the essential utilities category for federal facilities. 6. The duration of the contract aligns with typical utility service agreements.

Value Assessment

Rating: good

The contract value of approximately $3.6 million over two years for electric services to the IRS Martinsburg ECC and Childcare Center appears reasonable given the essential nature of the service and the provider. As a utility service, pricing is likely regulated and benchmarked against standard commercial rates within the region. The fixed-price nature of the contract provides cost certainty for the government, assuming consumption levels remain within expected parameters. Without specific consumption data or alternative provider quotes, a precise value-for-money assessment is challenging, but reliance on an established utility provider for such a critical facility suggests a generally fair arrangement.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that The Potomac Edison Co. is the only viable provider of electric services to the specified IRS facilities. This is typical for utility services where infrastructure is geographically specific and monopolistic. The lack of competition means that price discovery through bidding was not a factor, and the government relies on the regulated rate structure of the utility provider to ensure fair pricing.

Taxpayer Impact: The sole-source nature means taxpayers do not benefit from competitive bidding, but rather from the regulated pricing mechanisms designed to protect consumers from utility monopolies.

Public Impact

The Internal Revenue Service (IRS) Martinsburg Enterprise Computing Center (ECC) will receive reliable electric power, ensuring the continuous operation of critical IT infrastructure. The IRS Childcare Center will also have consistent access to electricity, supporting its daily operations. The primary geographic impact is localized to Kearneysville, West Virginia, where the facilities are located. The contract ensures the stability of essential services for federal employees working at these IRS locations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits opportunities for competitive pricing and potential cost savings.
Dependence on a single utility provider creates a risk of service disruption if the provider experiences issues.
Lack of competition may reduce incentives for the provider to offer enhanced service levels beyond basic requirements.

Positive Signals

Award to an established utility provider ensures access to essential services for critical federal operations.
The fixed-price contract offers budget predictability for the IRS.
The contract duration aligns with typical utility service agreements, providing stability.

Sector Analysis

This contract falls within the Utilities sector, specifically focusing on electric power provision. The market for utility services is often characterized by natural monopolies due to the extensive infrastructure required for distribution. Federal agencies, like the IRS, rely on these established providers to ensure continuous and reliable power to their facilities. Comparable spending benchmarks for electric services at federal facilities vary widely based on size, location, and energy consumption, but this contract's value appears consistent with the operational needs of a significant computing center.

Small Business Impact

This contract does not appear to involve small business set-asides, as it is a sole-source award to a large utility company. There is no indication of subcontracting opportunities for small businesses within this specific contract. The impact on the small business ecosystem is therefore minimal, as the primary provider is a major utility.

Oversight & Accountability

Oversight for this contract would primarily fall under the contracting officer and the relevant departments within the IRS responsible for facility management and IT infrastructure. As a regulated utility service, the pricing and service standards are also subject to oversight by state public utility commissions. Transparency is generally maintained through the Federal Procurement Data System (FPDS), where contract awards are reported. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Federal Building Energy Management
IRS IT Infrastructure Support
Utility Services for Federal Facilities
Electric Power Contracts

Risk Flags

Sole-source award
Essential service dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $3.6 million to THE POTOMAC EDISON CO. ELECTRIC SERVICES FOR THE INTERNAL REVENUE SERVICE (IRS) MARTINSBURG ENTERPRISE COMPUTING CENTER (ECC) AND CHILDCARE CENTER IN KEARNEYSVILLE, WEST VIRGINIA (WV)

Who is the contractor on this award?

The obligated recipient is THE POTOMAC EDISON CO.

Which agency awarded this contract?

Awarding agency: Department of the Treasury (Internal Revenue Service).

What is the total obligated amount?

The obligated amount is $3.6 million.

What is the period of performance?

Start: 2024-10-01. End: 2026-09-30.

What is the historical spending pattern for electric services at the IRS Martinsburg ECC?

Historical spending data for electric services at the IRS Martinsburg ECC prior to this award is not directly available in the provided data. However, the contract's duration of two years (October 1, 2024, to September 30, 2026) and its value of approximately $3.6 million suggest an average annual expenditure of around $1.8 million. This figure can serve as a baseline for future comparisons. To understand historical patterns, one would need to access previous contract awards or utility bills for the facility over several preceding years. Factors such as energy efficiency upgrades, changes in facility usage, or fluctuations in energy prices would influence historical spending.

How does the cost per kilowatt-hour (kWh) for this contract compare to market rates?

The provided data does not include specific details on the kilowatt-hour (kWh) consumption or the exact rate structure, making a direct comparison to market rates difficult. However, as this is a sole-source award to a regulated utility provider, The Potomac Edison Co., the pricing is likely based on established tariffs approved by the relevant state public utility commission. These tariffs are designed to cover the utility's costs and provide a reasonable rate of return, often benchmarked against similar commercial or industrial rates within their service territory. To perform a precise comparison, one would need to obtain the specific tariff rate applied under this contract and compare it to current commercial rates offered by Potomac Edison or other utilities in West Virginia for comparable usage levels.

What are the key performance indicators (KPIs) for this electric services contract?

Key performance indicators (KPIs) for this electric services contract are not explicitly detailed in the provided data. However, for essential utility services like electricity, critical KPIs typically revolve around reliability, availability, and power quality. These would likely include metrics such as the number and duration of power outages (measured by System Average Interruption Duration Index - SAIDI, and System Average Interruption Frequency Index - SAIFI), voltage stability, and frequency consistency. The contract's success would be measured by the uninterrupted delivery of power necessary for the IRS Martinsburg ECC and Childcare Center to function without disruption, meeting the operational demands of the computing center.

What is the track record of The Potomac Edison Co. in serving federal facilities?

The Potomac Edison Co. is a well-established utility provider serving parts of Maryland and West Virginia. While specific details of their track record with federal facilities are not provided in this data, utility companies of this nature typically have extensive experience in providing reliable service to a diverse range of customers, including commercial, industrial, and potentially governmental entities within their service territory. Their operations are subject to regulatory oversight, which generally ensures a baseline level of service quality and reliability. Federal agencies often contract with local utilities for essential services due to the nature of infrastructure monopolies.

What are the potential risks associated with a sole-source award for essential utility services?

The primary risk associated with a sole-source award for essential utility services is the lack of competitive pressure, which could potentially lead to less favorable pricing than might be achieved through a competitive bidding process. Additionally, the government becomes entirely dependent on a single provider, increasing vulnerability to service disruptions caused by the provider's operational issues, infrastructure failures, or labor disputes. While regulated utilities operate under oversight, the absence of direct competition means the government cannot leverage market dynamics to drive innovation or secure additional service enhancements. However, for geographically bound services like electricity, sole-source is often unavoidable.

How does this contract align with the IRS's overall IT infrastructure strategy?

This contract directly supports the IRS's overall IT infrastructure strategy by ensuring the reliable and continuous power supply to the Martinsburg Enterprise Computing Center (ECC). The ECC is a critical facility for processing tax data and maintaining IRS operations. Uninterrupted power is fundamental to the availability and performance of the IT systems housed there. Therefore, securing stable and dependable electric services through this contract is a foundational element of maintaining the operational integrity and resilience of the IRS's technological backbone.

Industry Classification

NAICS: Utilities › Electric Power Generation, Transmission and Distribution › Other Electric Power Generation

Product/Service Code: UTILITIES AND HOUSEKEEPING › UTILITIES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: NOT APPLICABLE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Firstenergy Corp.

Address: 10802 BOWER AVENUE, WILLIAMSPORT, MD, 21795

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

Financial Breakdown

Contract Ceiling: $8,883,323

Exercised Options: $5,040,744

Current Obligation: $3,617,642

Actual Outlays: $3,394,292

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 47PA0418D0035

IDV Type: IDC

Timeline