Department of Defense awards $177M for electric power distribution in Washington state

Contract Overview

Contract Amount: $177,196,963 ($177.2M)

Contractor: City of Tacoma

Awarding Agency: Department of Defense

Start Date: 2000-04-06

End Date: 2019-09-30

Contract Duration: 7,116 days

Daily Burn Rate: $24.9K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Place of Performance

Location: TACOMA, PIERCE County, WASHINGTON, 98433

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $177.2 million to CITY OF TACOMA for work described as: Key points: 1. Contract awarded on a non-competitive basis, raising questions about price discovery and potential value. 2. Long contract duration of over 19 years suggests a need for ongoing services, but also potential for cost overruns. 3. The firm fixed-price contract type shifts risk to the contractor, which can be beneficial for the government if priced appropriately. 4. Electric power distribution is a critical infrastructure service, essential for military operations. 5. The contract's value is substantial, warranting close scrutiny of performance and cost-effectiveness over its lifespan. 6. Lack of competition may limit opportunities for innovative solutions or cost savings from market forces.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of publicly available comparable contracts for electric power distribution services of this scale and duration. The firm fixed-price nature suggests the government has locked in a price, but without competitive bids, it's difficult to ascertain if this price represents fair market value. The extended period of performance (over 19 years) also introduces uncertainty regarding long-term cost efficiency compared to potentially shorter-term, competitively bid contracts that could be re-evaluated more frequently.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a 'NOT AVAILABLE FOR COMPETITION' basis, indicating that a full and open competition was not conducted. This typically occurs when only one responsible source can provide the required services or when there's a compelling justification for a sole-source award. The lack of multiple bidders means that market forces were not leveraged to drive down prices or encourage innovative solutions, potentially leading to a higher cost for the government.

Taxpayer Impact: Taxpayers may have paid a premium for these services due to the absence of competitive pressure. Without a competitive process, there is less assurance that the selected contractor offered the best possible price and value.

Public Impact

Military installations in Washington state benefit from reliable electric power distribution services. The contract ensures the continuity of essential utility services required for national defense operations. The geographic impact is localized to Washington state, supporting federal infrastructure within that region. While not directly creating new jobs, the contract sustains existing roles within the contractor's organization responsible for maintaining and operating the power distribution system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Non-competitive award limits price discovery and potential savings.
Extended contract duration of over 19 years increases risk of cost escalation or performance degradation.
Lack of transparency in the sole-source justification process.
Potential for vendor lock-in due to the long-term nature of the service.

Positive Signals

Firm fixed-price contract shifts cost risk to the contractor.
Ensures continuity of essential electric power services for defense operations.
Awarded to a specific entity (CITY OF TACOMA) which may indicate a pre-existing relationship or specialized capability.

Sector Analysis

The electric power distribution sector is a critical component of national infrastructure, encompassing the generation, transmission, and distribution of electricity. Federal spending in this area often supports military bases, government facilities, and research institutions. While specific contract values for electric power distribution can vary widely, large, long-term contracts like this one are not uncommon for essential services supporting federal operations. Benchmarking against other utility contracts for government facilities can provide some context, but the unique nature of sole-source awards makes direct comparisons difficult.

Small Business Impact

There is no indication from the provided data that this contract included small business set-asides or subcontracting requirements. As a sole-source award to the City of Tacoma, it is unlikely that small business participation was a primary consideration in the contract's structure. This means that opportunities for small businesses to participate in delivering these specific electric power distribution services were likely limited.

Oversight & Accountability

Oversight mechanisms for this contract would typically be managed by the contracting officer and the relevant program office within the Department of the Army. Given the sole-source nature, transparency might be less than in a competitively bid scenario. Accountability would be enforced through contract performance monitoring and adherence to the firm fixed-price terms. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Utility Services Contracts
Base Operations Support
Federal Infrastructure Maintenance
Department of Defense Energy Procurement

Risk Flags

Sole-source award raises concerns about price reasonableness.
Long contract duration increases risk of cost escalation and performance issues.
Lack of competition limits potential for innovation and cost savings.
Extended period of performance requires robust oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $177.2 million to CITY OF TACOMA. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is CITY OF TACOMA.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $177.2 million.

What is the period of performance?

Start: 2000-04-06. End: 2019-09-30.

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

The provided data indicates the contract was awarded as 'NOT AVAILABLE FOR COMPETITION,' which is a category for sole-source procurements. The specific justification would typically be documented in a Justification and Approval (J&A) document, required by federal acquisition regulations when full and open competition is not feasible. Common reasons include the existence of only one responsible source, urgent and compelling needs, or specific capabilities possessed by a single entity. Without access to the J&A, the precise rationale remains unknown, but it implies that the Department of the Army determined that only the City of Tacoma could adequately fulfill the requirement for electric power distribution services in the specified area for the duration of the contract.

How does the firm fixed-price contract type impact the government's financial risk compared to other contract types for this service?

A firm fixed-price (FFP) contract is generally advantageous for the government when the scope of work is well-defined and risks can be reasonably estimated. Under an FFP contract, the contractor assumes the primary risk for cost overruns. This means the government pays the agreed-upon price regardless of the contractor's actual costs. For electric power distribution, where operational costs can fluctuate (e.g., fuel prices, maintenance needs), the FFP structure provides budget certainty for the government. However, if the initial price was not set competitively or accurately reflects future costs, the government might end up overpaying. Conversely, if the contractor manages costs efficiently, they retain the profit, incentivizing performance.

What are the potential risks associated with the long duration (over 19 years) of this contract?

The extended duration of this contract presents several potential risks. Firstly, the government locks in a price for nearly two decades, which may become uncompetitive if market rates for electric power distribution decrease over time. Secondly, the long performance period increases the likelihood of unforeseen technological changes, regulatory shifts, or evolving operational requirements that the current contract may not adequately address, potentially leading to costly modifications or disputes. Thirdly, maintaining consistent service quality and contractor performance over such an extended period can be challenging, requiring robust oversight to prevent degradation. Finally, the contractor might experience financial instability or changes in ownership over 19 years, impacting their ability to fulfill the contract obligations.

Can the value of this $177 million contract be benchmarked against similar federal or private sector electric power distribution agreements?

Benchmarking this $177 million contract is difficult due to several factors. The data specifies a sole-source award, meaning there was no competitive bidding process to establish a market-driven price. Furthermore, the contract covers electric power distribution, a critical infrastructure service, for the Department of Defense over a very long period (over 19 years). Publicly available data on comparable long-term, sole-source utility contracts for federal installations is scarce. While general utility rates or costs for smaller, competitively bid projects might be available, they may not accurately reflect the scale, duration, specific requirements, and non-competitive nature of this particular agreement. Therefore, a precise value-for-money assessment through direct benchmarking is challenging without more specific comparative data.

What is the historical spending pattern for electric power distribution by the Department of Defense in Washington state?

The provided data only includes details for this single contract awarded in 2000. To assess historical spending patterns for electric power distribution by the Department of Defense in Washington state, a broader analysis of federal procurement databases would be necessary. This would involve searching for all contracts related to 'Electric Power Distribution' (PSC code likely related to utilities or electrical equipment/services) awarded by the DoD within Washington state over multiple fiscal years. Such an analysis would reveal trends in contract values, types of services procured, competition levels, and the number and types of contractors involved, providing context for the significance and typical scale of such spending in the region.

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

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: City of Tacoma Washington (UEI: 073135535)

Address: 3628 SOUTH 35TH STREET, TACOMA, WA, 98409

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

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline