VA awards $34.2M for utility connection charges to Vicinity Energy Inc. over 10 years

Contract Overview

Contract Amount: $34,200,000 ($34.2M)

Contractor: Vicinity Energy Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2025-09-12

End Date: 2035-09-11

Contract Duration: 3,651 days

Daily Burn Rate: $9.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: TULSA VAMC UTILITY CONNECTION CHARGES

Place of Performance

Location: TULSA, TULSA County, OKLAHOMA, 74137

State: Oklahoma Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $34.2 million to VICINITY ENERGY INC. for work described as: TULSA VAMC UTILITY CONNECTION CHARGES Key points: 1. Contract value represents a significant long-term commitment for essential utility services. 2. The sole-source nature of the award warrants scrutiny regarding potential cost efficiencies. 3. Long contract duration may expose the VA to price fluctuations or evolving technology. 4. Performance is rated 'OK', suggesting satisfactory but not exceptional service delivery. 5. The contract is for electric power distribution, a critical infrastructure component for the VAMC. 6. This award is a delivery order against an unspecified basic contract.

Value Assessment

Rating: fair

The contract value of $34.2 million over approximately 10 years for utility connection charges appears substantial. Without comparable contracts for similar services at other VAMC facilities or benchmarks for utility connection costs, it is difficult to definitively assess value for money. The firm-fixed-price structure provides cost certainty but may not capture potential savings if actual usage is lower than anticipated. The 'OK' performance rating suggests the contractor is meeting basic requirements, but doesn't indicate exceptional value.

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. This approach is typically used when only one vendor can provide the required goods or services, often due to unique capabilities, existing infrastructure, or specific regulatory requirements. The lack of competition means the VA did not benefit from a bidding process that could drive down prices through market forces. The rationale for the sole-source award, particularly for utility connection charges, needs further clarification to ensure it was fully justified.

Taxpayer Impact: For taxpayers, a sole-source award means there is a higher risk of paying a premium price, as there was no competitive pressure to ensure the most cost-effective solution was selected.

Public Impact

The primary beneficiary is the Tulsa VAMC, ensuring continuous and reliable utility services. The contract directly supports the operational infrastructure necessary for patient care and facility management. Geographic impact is localized to the Tulsa, Oklahoma area where the VAMC is situated. Workforce implications are likely minimal, as this contract primarily covers utility provision rather than direct service labor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Long contract duration (10 years) may lead to overpayment if utility costs decrease or technology changes.
Lack of detailed justification for sole-source award raises concerns about procurement process transparency.
The 'OK' performance rating suggests a lack of proactive performance improvement or exceptional service.
The contract is a delivery order, implying it's part of a larger, unspecified agreement, which reduces transparency.

Positive Signals

Secures essential utility services for a critical VA facility over a long period.
Firm-fixed-price contract provides budget certainty for the VA.
Performance rating of 'OK' indicates the contractor is meeting basic service level agreements.
The contract supports the operational continuity of the Tulsa VAMC.

Sector Analysis

The energy sector, specifically electric power distribution, is a critical component of infrastructure for government facilities. Utility connection charges can represent a significant operational cost. While the exact market size for such specific connection services is difficult to isolate, the broader electric utility market is vast and highly regulated. This contract fits within the VA's broader strategy of maintaining and operating its healthcare facilities, ensuring reliable power supply is paramount.

Small Business Impact

This contract does not appear to involve a small business set-aside, as indicated by 'ss: false'. There is no information provided regarding subcontracting plans or implications for the small business ecosystem. Given the nature of utility provision, it is likely that the prime contractor is a large entity, and subcontracting opportunities for small businesses may be limited unless specific provisions are made.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Veterans Affairs' contracting and program management offices. Accountability measures are embedded in the firm-fixed-price contract terms and the 'OK' performance rating. Transparency is somewhat limited due to the sole-source nature and the fact that it is a delivery order against an unspecified basic contract. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

VA Facility Operations and Maintenance
Utility Services Contracts
Electric Power Distribution Contracts
Long-Term Infrastructure Agreements

Risk Flags

Sole-source award lacks competitive justification.
Long contract duration may lead to unfavorable pricing.
Performance rating is only satisfactory ('OK').
Delivery order against an unspecified basic contract reduces transparency.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $34.2 million to VICINITY ENERGY INC.. TULSA VAMC UTILITY CONNECTION CHARGES

Who is the contractor on this award?

The obligated recipient is VICINITY ENERGY INC..

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 $34.2 million.

What is the period of performance?

Start: 2025-09-12. End: 2035-09-11.

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

The provided data indicates the contract was awarded on a sole-source basis ('ct': 'NOT AVAILABLE FOR COMPETITION'). Typically, sole-source awards are justified when only one responsible source is available to satisfy the agency's needs. This could be due to unique capabilities, proprietary technology, or specific infrastructure requirements. For utility connection charges, it might relate to the existing infrastructure of Vicinity Energy Inc. that directly serves the Tulsa VAMC, making it the only practical or cost-effective provider. A full justification would typically be documented in the contract file, detailing why competition was not feasible or would not be advantageous.

How does the $34.2 million contract value compare to similar utility connection charges at other VA medical centers?

Benchmarking this $34.2 million contract value against similar utility connection charges at other VA medical centers is challenging without access to comparable contract data. Utility costs, including connection charges, are highly dependent on geographic location, local utility rates, the specific infrastructure of the facility, and the duration of the contract. The 'OK' performance rating suggests the contractor is meeting basic requirements, but doesn't provide insight into whether the price is competitive. A detailed analysis would require comparing specific service components, usage volumes, and local market rates across different VAMC locations.

What are the potential risks associated with a 10-year firm-fixed-price contract for utility services?

A 10-year firm-fixed-price contract for utility services presents several potential risks. Firstly, the fixed price may become disadvantageous if market utility rates decrease significantly over the contract period, leading to the VA overpaying. Conversely, if rates increase substantially beyond what was anticipated, the contractor might face financial strain, potentially impacting service quality, though the fixed price is intended to protect against this. Secondly, technology in utility provision can evolve, and a long-term contract might lock the VA into older methods or infrastructure. Finally, the long duration reduces flexibility to adapt to changing VA needs or to seek more competitive pricing through re-competition.

What does the 'OK' performance rating signify in the context of this contract?

The 'OK' performance rating indicates that Vicinity Energy Inc. is meeting the minimum requirements and standards outlined in the contract. It suggests satisfactory performance in terms of delivering the contracted utility connection services without significant issues or deficiencies. However, 'OK' does not imply exceptional performance, exceeding expectations, or proactive problem-solving. For a critical service like utility provision, while 'OK' meets the baseline, it may not represent the best possible value or the highest level of service reliability that could potentially be achieved through a more competitive process or a contractor incentivized for superior performance.

What is the historical spending pattern for utility connection charges at the Tulsa VAMC or similar facilities?

The provided data does not include historical spending patterns for utility connection charges at the Tulsa VAMC or similar facilities. This specific contract, valued at $34.2 million over approximately 10 years, represents a significant commitment. To understand historical patterns, one would need to analyze past contracts for utility services at this specific VAMC, or comparable facilities, looking at annual expenditures, the nature of charges (connection vs. ongoing usage), and any trends in pricing over time. Without this historical context, it's difficult to assess if this award represents an increase, decrease, or stable level of spending.

What are the implications of this contract being a delivery order?

This contract is a 'DELIVERY ORDER' ('aw': 'DELIVERY ORDER'), which means it is a task order issued under a previously awarded basic ordering agreement or indefinite-delivery/indefinite-quantity (IDIQ) contract. The data provided does not specify the underlying basic contract. This implies that the terms, conditions, and potentially the overall scope or ceiling value of the larger contract were established earlier. As a delivery order, it represents a specific call for services or supplies against that master agreement. The implications include reduced transparency regarding the initial competition for the master contract and potentially less flexibility in negotiating terms specific to this particular need, as they may be constrained by the parent contract.

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: 100 FRANKLIN ST LBBY 2, BOSTON, MA, 02110

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

Financial Breakdown

Contract Ceiling: $37,546,667

Exercised Options: $37,546,667

Current Obligation: $34,200,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 47PA0419D0016

IDV Type: IDC

Timeline