DOT awards $6.2M for electricity supply, raising questions about competition and value

Contract Overview

Contract Amount: $6,208,781 ($6.2M)

Contractor: Long Island Power Authority

Awarding Agency: Department of Transportation

Start Date: 2023-04-01

End Date: 2026-04-18

Contract Duration: 1,113 days

Daily Burn Rate: $5.6K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: THIS CONTRACT IS FOR SUPPLY AND DELIVERY OF ELECTRICITY FROM LONG ISLAND POWER AUTHORITY

Place of Performance

Location: GREAT NECK, NASSAU County, NEW YORK, 11024

State: New York Government Spending

Plain-Language Summary

Department of Transportation obligated $6.2 million to LONG ISLAND POWER AUTHORITY for work described as: THIS CONTRACT IS FOR SUPPLY AND DELIVERY OF ELECTRICITY FROM LONG ISLAND POWER AUTHORITY Key points: 1. Contract awarded on a non-competitive basis, limiting price discovery. 2. Fixed-price contract structure may offer some cost certainty. 3. Duration of over three years suggests a long-term need for electricity. 4. Geographic concentration in New York for service delivery. 5. Lack of detailed performance metrics makes outcome assessment difficult. 6. Potential for higher costs due to lack of competitive bidding.

Value Assessment

Rating: questionable

The contract's value is difficult to assess without competitive benchmarks. Given the non-competitive award, it's possible the government is not achieving the best possible price for electricity. Comparing this to similar utility contracts awarded competitively would be necessary for a thorough value assessment. The fixed-price nature provides some predictability but doesn't guarantee cost-effectiveness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. The specific justification for this approach is not detailed in the provided data. A lack of competition typically leads to less favorable pricing for the government and limits opportunities for innovative solutions from a wider range of vendors.

Taxpayer Impact: Taxpayers may be paying a premium for electricity due to the absence of competitive pressure to drive down costs.

Public Impact

The Department of Transportation's Maritime Administration benefits from a secured electricity supply. Essential services for maritime operations in New York are supported. The contract ensures operational continuity for facilities managed by the agency. Workforce implications are minimal, primarily related to utility provision rather than direct agency employment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices.
Limited transparency on the justification for sole-source award.
Potential for vendor lock-in without competitive alternatives.
Absence of performance metrics hinders accountability.

Positive Signals

Fixed-price contract offers some budget predictability.
Ensures a continuous supply of a critical utility.
Awarded to a known entity (Long Island Power Authority) potentially reducing onboarding risks.

Sector Analysis

The energy sector, particularly utility provision, is a critical infrastructure component. This contract falls under the category of essential services, specifically electricity generation and supply. While the dollar amount is relatively modest for a federal contract, it represents a necessary expenditure for agency operations. Benchmarking would involve comparing rates with other utility providers or similar government contracts for electricity in the region.

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 provider. There is no indication of subcontracting opportunities for small businesses within this specific award. The impact on the small business ecosystem is therefore negligible.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Transportation's Office of the Inspector General. However, the lack of detailed performance metrics and the sole-source nature limit the scope for robust performance oversight. Transparency is reduced due to the non-competitive award process.

Related Government Programs

Federal Energy Management Program
Utility Services Contracts
Department of Transportation Procurement

Risk Flags

Non-competitive award
Lack of performance metrics
Potential for above-market pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $6.2 million to LONG ISLAND POWER AUTHORITY. THIS CONTRACT IS FOR SUPPLY AND DELIVERY OF ELECTRICITY FROM LONG ISLAND POWER AUTHORITY

Who is the contractor on this award?

The obligated recipient is LONG ISLAND POWER AUTHORITY.

Which agency awarded this contract?

Awarding agency: Department of Transportation (Maritime Administration).

What is the total obligated amount?

The obligated amount is $6.2 million.

What is the period of performance?

Start: 2023-04-01. End: 2026-04-18.

What is the historical spending pattern for electricity by the Maritime Administration?

Historical spending data for electricity by the Maritime Administration is not provided in the current data extract. To assess this contract's significance, a review of past expenditures on utility services would be necessary. This would involve analyzing previous contracts for electricity supply, their duration, cost, and whether they were competitively procured. Understanding historical spending can reveal trends, identify potential cost savings opportunities, and contextualize the current $6.2 million award within a broader financial picture. Without this context, it's difficult to determine if this award represents an increase, decrease, or stable level of spending for this essential service.

What specific services are included in the 'supply and delivery of electricity'?

The 'supply and delivery of electricity' typically encompasses the generation of electrical power and its transmission to the end-user's facilities. This includes the costs associated with power generation, grid maintenance, and the physical delivery of electricity through transmission and distribution lines. For the Maritime Administration, this likely means ensuring a consistent and reliable power source for its operational sites, ports, or administrative buildings within the Long Island Power Authority's service territory. The contract may also implicitly cover associated services like metering, billing, and potentially emergency power restoration, though specific details would be outlined in the full contract.

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

The provided data indicates the contract was awarded on a 'NOT AVAILABLE FOR COMPETITION' basis, which is synonymous with a sole-source award. The specific justification for this non-competitive procurement is not detailed in the extract. Typically, sole-source awards are justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source can provide the required supply or service, or in cases of urgent and compelling need where competition is not feasible. Without further information, it is impossible to ascertain the precise rationale behind this decision, which is crucial for evaluating the necessity and potential cost implications of foregoing a competitive process.

How does the fixed-price contract type impact risk for both the government and the contractor?

A Firm Fixed Price (FFP) contract, as indicated for this electricity supply agreement, shifts the majority of the cost risk to the contractor (Long Island Power Authority). The government agrees to pay a set price regardless of the contractor's actual costs incurred. This provides budget certainty for the Maritime Administration, as the total cost is known upfront. For the contractor, the risk lies in managing their costs effectively to ensure profitability. If their expenses exceed the fixed price, their profit margin shrinks or they may incur a loss. Conversely, if they can deliver the service below the fixed price, their profit increases. This structure incentivizes the contractor to control costs efficiently.

What are the potential risks associated with a long-term contract (over 3 years) for utility services?

Long-term contracts for utility services, like this over three-year agreement, carry several potential risks. Firstly, market prices for electricity can fluctuate significantly over time. A fixed price might become disadvantageous if market rates decrease substantially, leading to the government overpaying. Conversely, if market rates increase dramatically, the government benefits from the locked-in price. Secondly, technology and energy sources evolve; a long-term commitment might preclude the adoption of more efficient or sustainable energy solutions that become available later. Thirdly, the contractor's financial stability or operational capacity could change over the contract's duration, posing a risk to service continuity. Finally, the government's own needs or operational footprint might change, making the contracted service less relevant or excessive.

Industry Classification

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

Product/Service Code: UTILITIES AND HOUSEKEEPING › UTILITIES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 333 EARLE OVINGTON BLVD, UNIONDALE, NY, 11553

Business Categories: Category Business, Government, U.S. Local Government, U.S. National Government, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $6,208,781

Exercised Options: $6,208,781

Current Obligation: $6,208,781

Actual Outlays: $5,862,367

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline