Department of Defense awarded $11.5M contract for natural gas distribution services to YESCO CO., LTD

Contract Overview

Contract Amount: $11,509,368 ($11.5M)

Contractor: Yesco CO.,Ltd

Awarding Agency: Department of Defense

Start Date: 1999-11-15

End Date: 2012-11-30

Contract Duration: 4,764 days

Daily Burn Rate: $2.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE REDETERMINATION

Sector: Other

Official Description: 200012!2100!000095!JB03 !HQ, EUSA, ASST COFS ACQ. MGT. !DAJB0396C0035 !A!*!P00018 !19991115!19971031!687834929!687834929!687834929!N!04690!KUKDONG CITY GAS CO.,LTD !249 !SEOUL !KS!* !* !* !KS!* !* !KOREA, REP!0001!+000000082631!N!N!000000000000!S111!GAS SERVICES !S1 !SERVICES !1000!NOT DISCERNABLE OR CLASSIFIED !4924!3!*!*!C!B!N!Z!B !U!J!1!001!N!1E!Z!Y!Z!B !KS!N!L!*!*!*!A!A!A!A!* !*!N!A!B!N!*!*!*!*!*!

Plain-Language Summary

Department of Defense obligated $11.5 million to YESCO CO.,LTD for work described as: 200012!2100!000095!JB03 !HQ, EUSA, ASST COFS ACQ. MGT. !DAJB0396C0035 !A!*!P00018 !19991115!19971031!687834929!687834929!687834929!N!04690!KUKDONG CITY GAS CO.,LTD !249 !SEOUL !KS!* !* !* !KS!* !* !KOREA, REP!0001!+000000082631!N!N!000000000000!S111!GAS SERVICES !S1 !SERVICES !10… Key points: 1. Contract awarded for natural gas distribution, a critical utility service. 2. The contract duration was over 13 years, indicating a long-term need. 3. Awarded to YESCO CO., LTD., a company with a significant presence in the energy sector. 4. The contract type, FIXED PRICE REDETERMINATION, suggests potential for price adjustments. 5. The procurement was not available for competition, raising questions about market fairness. 6. The total value of the contract was approximately $11.5 million.

Value Assessment

Rating: fair

The contract value of $11.5 million over more than 13 years for natural gas distribution appears reasonable for a large-scale utility service. However, without specific details on the volume of gas, delivery points, and service level agreements, a precise value-for-money assessment is challenging. Benchmarking against similar long-term utility contracts for military installations would provide better context. The fixed price redetermination structure implies that costs were estimated and subject to adjustment, which can introduce risk but also allows for flexibility in fluctuating markets.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not available for competition, indicating a sole-source award. The data explicitly states 'NOT AVAILABLE FOR COMPETITION'. This suggests that either only one vendor could provide the required service, or there were specific circumstances that precluded a competitive bidding process. The lack of competition limits price discovery and may result in higher costs for the government compared to a fully competed contract.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This necessitates robust oversight to ensure fair pricing.

Public Impact

The primary beneficiaries are military personnel and their families residing at the installation served by this natural gas distribution contract. The contract ensures a reliable supply of natural gas for heating, cooking, and other essential services within the military facility. The geographic impact is localized to the specific military installation in South Korea where the services were rendered. The contract supports the operational readiness and quality of life at the military base by providing essential utilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have led to suboptimal pricing.
Long contract duration increases exposure to market volatility.
Fixed price redetermination can be complex to manage and audit.
Limited transparency due to sole-source nature.

Positive Signals

Ensured continuous supply of a critical utility.
Long-term contract provided stability for service provider and government.
Awarded to a known entity in the energy sector.

Sector Analysis

Natural gas distribution is a vital component of the energy sector, particularly for large consumers like military installations. The market for such services is often characterized by regional monopolies or oligopolies due to the extensive infrastructure required. This contract fits within the broader category of utility services procurement, which is a recurring need for government facilities. Comparable spending benchmarks would typically involve analyzing per-unit costs of natural gas and associated distribution fees for similar-sized facilities in the same geographic region.

Small Business Impact

There is no indication from the provided data that this contract involved small business set-asides or subcontracting opportunities. The award was made to YESCO CO., LTD., a large entity, and the procurement was sole-source, making it unlikely that small business participation was a primary consideration in the award process.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and financial management divisions. Given the sole-source nature and the long duration, rigorous auditing of the redetermined prices would be crucial. Transparency is limited due to the lack of competition, making it harder for external parties to assess value. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Military Base Utilities Procurement
Energy Services Contracts
Natural Gas Supply Contracts
Long-Term Service Agreements

Risk Flags

Sole-source award lacks competitive pricing.
Long contract duration increases market risk.
Fixed price redetermination requires careful cost auditing.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.5 million to YESCO CO.,LTD. 200012!2100!000095!JB03 !HQ, EUSA, ASST COFS ACQ. MGT. !DAJB0396C0035 !A!*!P00018 !19991115!19971031!687834929!687834929!687834929!N!04690!KUKDONG CITY GAS CO.,LTD !249 !SEOUL !KS!* !* !* !KS!* !* !KOREA, REP!0001!+000000082631!N!N!000000000000!S111!GAS SERVICES !S1 !SERVICES !1000!NOT DISCERNABLE OR CLASSIFIED !4924!3!*!*!C!B!N!Z!B !U!J!1!001!N!1E!Z!Y!Z!B !KS!N!L!*!*!*!A!A!A!A!* !*!N!A!B!N!*!*!*!*!*!

Who is the contractor on this award?

The obligated recipient is YESCO CO.,LTD.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $11.5 million.

What is the period of performance?

Start: 1999-11-15. End: 2012-11-30.

What was the specific rationale for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT AVAILABLE FOR COMPETITION,' which is synonymous with a sole-source award. The specific rationale for this determination is not detailed in the extract. Typically, sole-source justifications are based on factors such as the urgency of the requirement, the unavailability of other sources, or the existence of a unique capability held by a single contractor. For utility services like natural gas distribution to a specific military installation, it's possible that existing infrastructure or geographic limitations made competition impractical or prohibitively expensive. A formal justification document would normally be required by procurement regulations to support such a decision.

How does the fixed price redetermination contract type impact cost certainty for the government?

A Fixed Price Redetermination (FPR) contract establishes an initial price based on estimates, which is then subject to revision (redetermination) once actual costs are known or at specified intervals. This provides some initial cost certainty but less than a firm fixed price contract. For the government, it means the final price could be higher or lower than the initial estimate. The benefit is that it allows for contracting when cost estimates are uncertain, as was potentially the case with long-term utility services. However, it requires careful monitoring and auditing of the contractor's actual costs to ensure the redetermined price is fair and reasonable, preventing potential overpayment.

What is the historical spending pattern for natural gas distribution at this specific military installation?

The provided data pertains to a single contract awarded in 1999 with an end date in 2012, totaling approximately $11.5 million. This represents a significant portion of spending for natural gas distribution over that period. To assess historical spending patterns, one would need to examine prior contracts for the same service at this installation, as well as any subsequent contracts awarded after 2012. Analyzing the annual expenditure within this contract and comparing it to inflation rates and potential changes in gas prices would also be necessary to understand the spending trajectory over its duration.

What are the potential risks associated with a contract of over 13 years for utility services?

A contract duration exceeding 13 years for utility services like natural gas distribution carries several risks. Firstly, market prices for natural gas can be highly volatile over such a long period, potentially leading to significant cost fluctuations if not adequately managed through contract clauses. Secondly, technological advancements in energy distribution or alternative energy sources could emerge, making the contracted service less efficient or desirable over time. Thirdly, the long-term nature increases the risk of contractor performance degradation or changes in the contractor's financial stability. Finally, the government's needs or the installation's operational requirements might change, making the contracted service obsolete or insufficient.

Can YESCO CO., LTD. be considered a reliable contractor based on this award?

This award represents a substantial contract for natural gas distribution services valued at $11.5 million over more than 13 years, suggesting that YESCO CO., LTD. possesses the capacity and capability to handle large-scale utility contracts. The fact that the Department of Defense awarded them this sole-source contract implies a level of trust or a perceived necessity for their services. However, assessing reliability solely on one contract, especially a sole-source one, is limited. A comprehensive evaluation would require examining their performance history across multiple contracts, client feedback, financial health, and adherence to safety and regulatory standards.

Industry Classification

NAICS: Utilities › Natural Gas Distribution › Natural Gas Distribution

Product/Service Code: UTILITIES AND HOUSEKEEPING › UTILITIES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Offers Received: 1

Pricing Type: FIXED PRICE REDETERMINATION (A)

Contractor Details

Address: 249-8 YONGDAP-DONG, SONGDONG-GU, SEOUL

Business Categories: Category Business, Foreign Owned, Not Designated a Small Business, Special Designations

Contract Characteristics

Cost or Pricing Data: YES

Timeline