VA awards $58.7M sole-source contract for long-term electric power distribution to Pacific Gas and Electric

Contract Overview

Contract Amount: $58,676,869 ($58.7M)

Contractor: Pacific GAS and Electric Company

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-09-30

End Date: 2045-05-01

Contract Duration: 7,518 days

Daily Burn Rate: $7.8K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: VISN 21 UESC FOR SAN FRANCISCO, VAMC

Place of Performance

Location: SAN FRANCISCO, SAN FRANCISCO County, CALIFORNIA, 94121

State: California Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $58.7 million to PACIFIC GAS AND ELECTRIC COMPANY for work described as: VISN 21 UESC FOR SAN FRANCISCO, VAMC Key points: 1. Contract awarded on a sole-source basis, limiting competitive opportunities and potentially impacting price discovery. 2. Long contract duration of over 15 years suggests a need for stable, long-term utility services. 3. The contract type is Firm Fixed Price, which shifts cost risk to the contractor. 4. Performance is located in California, a state with high energy costs and complex regulatory environments. 5. No small business set-aside was utilized, indicating potential missed opportunities for smaller firms. 6. The contract is a Delivery Order under an unspecified basic agreement, suggesting a pre-existing relationship or framework.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific utility service provided. Electric power distribution costs are highly dependent on location, infrastructure, and regulatory frameworks. Pacific Gas and Electric is a major utility provider in California, and their pricing is subject to state oversight. Without comparable sole-source utility contracts or detailed cost breakdowns, assessing value for money is difficult. However, the long duration implies a stable, predictable cost structure over time.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not openly competed. This typically occurs when a single provider is the only feasible option, often due to existing infrastructure, unique capabilities, or regulatory requirements. The lack of competition means there was no opportunity for multiple bidders to offer proposals, which can limit price negotiation and potentially lead to higher costs for the government compared to a competitive procurement.

Taxpayer Impact: Sole-source awards can result in taxpayers paying a premium as the government does not benefit from the downward pressure on prices that competition typically provides.

Public Impact

The primary beneficiary is the Department of Veterans Affairs (VA) San Francisco Medical Center, ensuring reliable electric power. Services delivered include the distribution of electric power, essential for the operation of the medical facility. The geographic impact is localized to San Francisco, California, where the VAMC is situated. Workforce implications are minimal for the contractor, as this is a utility service likely managed by existing personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and potential cost savings.
Long contract duration (over 15 years) may lock the government into potentially suboptimal pricing if market conditions change.
Lack of transparency in the 'Delivery Order' mechanism without knowing the underlying basic agreement.
No small business participation noted, potentially excluding smaller, specialized utility providers.

Positive Signals

Firm Fixed Price contract shifts cost overrun risk to the contractor.
Long-term award provides stability and predictability for essential utility services.
Award to a major, established utility provider suggests reliability and established infrastructure.

Sector Analysis

The energy sector, specifically electric power distribution, is a critical utility service for government facilities. This contract falls within the regulated utility market, where pricing is often determined by state public utility commissions. Pacific Gas and Electric is a dominant player in California's energy market. Comparable spending benchmarks for utility services are highly location-specific due to varying infrastructure costs, regulatory environments, and energy prices. The scale of this contract reflects the significant power demands of a large medical facility.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the nature of utility distribution services, which often require extensive infrastructure and regulatory compliance, it is plausible that larger, established utility companies are the primary providers. However, the absence of a set-aside means that opportunities for small businesses to participate, either as prime contractors or subcontractors in specialized roles, may have been missed.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Veterans Affairs' contracting and program management offices. As a sole-source award for a utility service, oversight would focus on ensuring service delivery meets the terms of the contract and regulatory requirements. Transparency is limited due to the sole-source nature and the fact it's a delivery order. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Utility Services Contracts
Electric Power Distribution Contracts
Department of Veterans Affairs Facility Support Contracts
Long-Term Service Agreements

Risk Flags

Sole-source award
Long contract duration
Lack of competition
Potential for above-market pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $58.7 million to PACIFIC GAS AND ELECTRIC COMPANY. VISN 21 UESC FOR SAN FRANCISCO, VAMC

Who is the contractor on this award?

The obligated recipient is PACIFIC GAS AND ELECTRIC COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $58.7 million.

What is the period of performance?

Start: 2024-09-30. End: 2045-05-01.

What is the historical spending pattern for electric power distribution services at the San Francisco VAMC?

Historical spending data for electric power distribution at the San Francisco VAMC prior to this award is not readily available in the provided data. This contract, valued at $58.7 million over approximately 15 years, represents a significant, long-term commitment. To understand historical patterns, one would need to access VA's historical contract databases or budget allocations specifically for utility services at this facility. It's possible previous services were provided under shorter-term contracts, different delivery mechanisms, or by different entities before this sole-source award was deemed necessary. Analyzing past expenditures would provide context for the current contract's value and duration.

How does the per-unit cost of electricity under this contract compare to market rates in San Francisco?

Determining the precise per-unit cost of electricity under this contract is not possible with the given data, as it represents a total contract value over a long period for distribution services, not just energy consumption. Utility rates are typically set by state regulatory bodies (like the California Public Utilities Commission for Pacific Gas and Electric) and can vary based on usage tiers, time of use, and specific service agreements. While Pacific Gas and Electric is a regulated utility, their rates are subject to public review and approval. To compare, one would need to obtain the specific rate schedules applicable to large commercial/institutional customers like the VAMC and compare them against the approved tariffs for PG&E. The contract's Firm Fixed Price nature suggests the government has agreed to a set price structure, but the underlying unit costs are influenced by regulatory filings.

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

The primary risk of a sole-source award for essential utility services is the lack of competitive pressure, which can lead to higher costs for the government than might be achieved through open competition. Taxpayers may bear a premium because the government cannot leverage multiple bids to secure the best possible price. Additionally, sole-source contracts can reduce flexibility; if the contractor's performance falters or if better alternatives emerge, the government has limited recourse without renegotiating or potentially terminating the contract, which can be complex and costly. There's also a risk of complacency from the sole provider, assuming consistent business without the need for continuous innovation or cost efficiency.

What is the track record of Pacific Gas and Electric Company in providing utility services to federal agencies?

Pacific Gas and Electric Company (PG&E) is a major utility provider in California and has a long history of serving customers, including federal agencies within its service territory. While specific details of their track record with federal agencies are not provided here, large utilities like PG&E typically have established processes for managing government contracts, adhering to compliance requirements, and ensuring reliable service delivery. Their experience would likely encompass managing large-scale infrastructure, navigating regulatory landscapes, and meeting the demands of significant energy consumers. Federal agencies often rely on established utilities for essential services due to the complexity and critical nature of infrastructure management.

How does the 15-year duration of this contract impact the VA's ability to adapt to future energy technologies or needs?

The 15-year duration of this contract presents both stability and potential inflexibility for the VA. On one hand, it ensures a consistent and reliable supply of electricity for the San Francisco VAMC over a long period, which is crucial for healthcare operations. On the other hand, it could limit the VA's ability to adopt newer, potentially more cost-effective or sustainable energy technologies that may emerge during the contract term. If the contract is strictly for power distribution and not energy generation, the VA might still have flexibility in sourcing energy (e.g., through renewable energy credits or on-site generation), but the core distribution infrastructure is tied to PG&E. Renegotiating or modifying such a long-term, sole-source agreement to incorporate new technologies could be challenging and costly.

Industry Classification

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

Address: 300 LAKESIDE DR, OAKLAND, CA, 94612

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

Financial Breakdown

Contract Ceiling: $120,603,198

Exercised Options: $58,676,869

Current Obligation: $58,676,869

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00P14BSD1137

IDV Type: IDC

Timeline