HHS awards $82.6M for electric power services to PEPCO, raising value-for-money questions

Contract Overview

Contract Amount: $82,576,362 ($82.6M)

Contractor: Potomac Electric Power CO

Awarding Agency: Department of Health and Human Services

Start Date: 2022-01-27

End Date: 2027-01-26

Contract Duration: 1,825 days

Daily Burn Rate: $45.2K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: PEPCO CAMPUS & NON CAMPUS CONSOLIDATED BILLING METERS 1 & 2 CONTRACT# 75N99022F00026

Place of Performance

Location: BETHESDA, MONTGOMERY County, MARYLAND, 20892

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $82.6 million to POTOMAC ELECTRIC POWER CO for work described as: PEPCO CAMPUS & NON CAMPUS CONSOLIDATED BILLING METERS 1 & 2 CONTRACT# 75N99022F00026 Key points: 1. The contract's value-for-money is questionable given the lack of competition and the absence of a clear benchmark for the services provided. 2. Competition dynamics are limited, with the contract being awarded on a non-competitive basis. 3. Risk indicators include potential overpayment due to lack of competitive pricing and reliance on a single provider. 4. Performance context is limited as specific deliverables and performance metrics are not detailed in the provided data. 5. Sector positioning places this contract within the utility services sector, specifically electric power generation and distribution. 6. The contract duration of five years suggests a long-term commitment, necessitating careful monitoring of costs and service delivery.

Value Assessment

Rating: questionable

The total contract value of $82.6 million over five years for electric power services lacks sufficient detail for a robust value-for-money assessment. Without comparable contract data or a clear breakdown of services, it is difficult to benchmark the pricing against market rates or similar government contracts. The absence of competitive bidding further complicates the assessment, as it removes a key mechanism for ensuring fair pricing. The per-unit cost is not readily calculable from the provided data, making direct comparison challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not open to full and open competition. This typically occurs when only one responsible source is available or when a compelling justification for non-competitive award exists. The lack of multiple bidders means that the government did not benefit from the price discovery and innovation that typically arises from a competitive bidding process. This can potentially lead to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium for these services due to the absence of competitive pressure. The government's ability to negotiate the best possible price is diminished in a sole-source scenario.

Public Impact

The primary beneficiary of this contract is the Department of Health and Human Services (HHS), specifically the National Institutes of Health (NIH), which will receive reliable electric power services. The services delivered are essential for the operation of NIH facilities, ensuring continuity of research and administrative functions. The geographic impact is concentrated in Maryland, where the NIH campus and associated facilities are located. There are no direct workforce implications mentioned, as the contract is for utility services rather than direct labor provision.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices.
Sole-source award limits opportunities for innovative solutions from other providers.
Long contract duration without clear performance benchmarks poses a risk of complacency.
Absence of detailed service breakdown hinders precise value assessment.

Positive Signals

Ensures essential utility services for critical government operations.
Award to a known utility provider (PEPCO) may offer reliability.
Fixed-price contract type provides cost certainty for the government.

Sector Analysis

This contract falls within the utility services sector, specifically focusing on electric power generation and distribution. The market for utility services is often characterized by natural monopolies or heavily regulated environments, which can limit competition. For government contracts, the size of spending can vary significantly depending on the agency's footprint and energy needs. Comparable spending benchmarks are difficult to establish without more specific details on the exact services and consumption levels, but large federal facilities often have substantial energy budgets.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned. This means that opportunities for small businesses to participate in this contract are likely limited, unless they are direct suppliers or partners to the prime contractor. The absence of small business set-asides in a contract of this size could represent a missed opportunity to foster small business growth within the federal contracting ecosystem.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve contract officers and program managers within the NIH/HHS. Accountability measures would be tied to the terms and conditions of the firm-fixed-price contract, including adherence to delivery schedules and service level agreements, if specified. Transparency is moderate, as the award is publicly documented, but detailed performance data and cost breakdowns may not be readily available to the public. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Federal Utility Contracts
Electric Power Services
Government Facility Operations
Department of Health and Human Services Contracts
National Institutes of Health Procurement

Risk Flags

Sole-source award lacks competitive pricing.
Limited transparency on specific services and performance metrics.
Potential for overpayment due to lack of competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $82.6 million to POTOMAC ELECTRIC POWER CO. PEPCO CAMPUS & NON CAMPUS CONSOLIDATED BILLING METERS 1 & 2 CONTRACT# 75N99022F00026

Who is the contractor on this award?

The obligated recipient is POTOMAC ELECTRIC POWER CO.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (National Institutes of Health).

What is the total obligated amount?

The obligated amount is $82.6 million.

What is the period of performance?

Start: 2022-01-27. End: 2027-01-26.

What is the historical spending pattern for electric power services at the NIH?

Historical spending data for electric power services at the NIH is not provided in the current dataset. To assess historical patterns, one would need to examine previous contracts awarded for similar services to NIH facilities. This would involve looking at contract databases for awards made to PEPCO or other utility providers over the past several years. Analyzing this historical data would help determine if the current $82.6 million award represents an increase, decrease, or stable level of spending for these essential services. It would also reveal trends in contract duration, pricing structures, and competition levels over time, providing crucial context for evaluating the current contract's value and necessity.

How does the per-unit cost of electricity under this contract compare to other federal agencies or commercial rates in Maryland?

The provided data does not include a breakdown of the per-unit cost of electricity (e.g., cost per kilowatt-hour). Therefore, a direct comparison to other federal agencies or commercial rates in Maryland is not possible with the current information. To perform such a comparison, one would need to know the total kilowatt-hours consumed under the contract and the total amount paid, or obtain the contracted rate per kilowatt-hour. Benchmarking against publicly available commercial electricity rates in Maryland or against similar sole-source utility contracts awarded to other federal agencies would be necessary to assess if the pricing is competitive or represents a premium.

What specific services are included in the 'Consolidated Billing Meters 1 & 2' contract?

The contract title 'PEPCO CAMPUS & NON CAMPUS CONSOLIDATED BILLING METERS 1 & 2' suggests that the services primarily relate to the provision and billing of electricity for specific meters and potentially consolidated billing arrangements for NIH facilities. However, the exact scope of services beyond basic electricity provision is not detailed. This could include meter reading, maintenance, energy management services, or specific billing reconciliation processes. A more granular understanding of the service deliverables is needed to fully assess the contract's value and ensure it aligns with NIH's operational requirements and industry best practices.

What is PEPCO's track record as a federal contractor, particularly with HHS or NIH?

PEPCO's track record as a federal contractor, especially with HHS and NIH, is not detailed in the provided data. Generally, PEPCO is a major utility provider in the Washington D.C. metropolitan area, and it is common for federal agencies located within its service territory to contract with it for electricity. To assess their track record, one would need to review past performance evaluations, any documented issues or disputes on previous federal contracts, and their history of meeting delivery and service requirements. A positive track record with reliable service delivery and fair pricing on prior contracts would lend confidence to this award, while any negative history would raise concerns.

Are there any specific performance metrics or service level agreements (SLAs) associated with this contract?

The provided data does not specify any performance metrics or service level agreements (SLAs) for this contract. For a firm-fixed-price contract of this magnitude and duration, it is crucial to have clearly defined performance standards to ensure the government receives the expected level of service and reliability. Without explicit SLAs, it is difficult to objectively measure PEPCO's performance and hold them accountable for any deficiencies. The absence of such metrics makes it challenging to assess the contract's effectiveness beyond the basic provision of electricity.

What is the justification for the sole-source award, and why was full and open competition not pursued?

The justification for the sole-source award is not provided in the dataset. Typically, sole-source awards are made under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source can satisfy the agency's needs, or in cases of urgent and compelling need where competition is not feasible. For a utility service like electricity, it might be argued that PEPCO is the sole provider within a specific geographic area. However, the government is generally required to justify why alternatives or competitive bidding were not possible. Understanding this justification is key to assessing whether the sole-source decision was appropriate and in the best interest of the government.

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

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 701 9TH ST NW, WASHINGTON, DC, 20068

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

Financial Breakdown

Contract Ceiling: $82,576,362

Exercised Options: $82,576,362

Current Obligation: $82,576,362

Actual Outlays: $78,490,144

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 47PA0420D0064

IDV Type: IDC

Timeline