DoD's $16M electric power contract to Progress Energy Carolinas, Inc. awarded in 2003 for North Carolina distribution

Contract Overview

Contract Amount: $15,967,861 ($16.0M)

Contractor: Progress Energy Carolinas, Inc

Awarding Agency: Department of Defense

Start Date: 2003-10-01

End Date: 2011-09-30

Contract Duration: 2,921 days

Daily Burn Rate: $5.5K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Place of Performance

Location: POPE AFB, CUMBERLAND County, NORTH CAROLINA, 28308

State: North Carolina Government Spending

Plain-Language Summary

Department of Defense obligated $16.0 million to PROGRESS ENERGY CAROLINAS, INC for work described as: Key points: 1. Contract value appears reasonable given the long duration and essential service provided. 2. Limited competition suggests potential for higher pricing than a fully competed contract. 3. Long contract duration (8 years) may introduce risks related to evolving technology and pricing. 4. This contract supported critical infrastructure for the Department of the Air Force. 5. The contract falls within the broader category of utility services for federal installations.

Value Assessment

Rating: fair

The contract's total value of approximately $16 million over eight years averages to about $2 million annually. Benchmarking this against similar utility contracts is challenging without specific service details, but it appears to be within a reasonable range for providing essential electric power distribution services to a large federal installation. The fixed-price nature suggests the government aimed for cost certainty, though it might have foregone potential savings from a more dynamic pricing model.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicated as 'NOT AVAILABLE FOR COMPETITION'. This means that only one vendor, Progress Energy Carolinas, Inc., was considered for this award. The lack of competition limits the government's ability to solicit bids from multiple providers, which typically drives down prices and encourages innovation.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to ensure the most economical price is achieved.

Public Impact

Beneficiaries include Department of the Air Force personnel and operations at the North Carolina facility. Services delivered include reliable electric power distribution. Geographic impact is localized to the specific Air Force installation in North Carolina. Workforce implications are likely related to the maintenance and operation of the power distribution infrastructure.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have resulted in a higher price than a competed contract.
Long contract term could lead to outdated infrastructure or service agreements.
Sole-source award raises questions about the justification for not seeking competitive bids.

Positive Signals

Ensured continuous and reliable electric power supply to a critical military installation.
Provided a stable, long-term relationship for essential utility services.
Fixed-price contract offered budget predictability for the Department of Defense.

Sector Analysis

This contract falls within the Utilities and Energy sector, specifically focusing on electric power distribution. The market for utility services to federal installations is often dominated by regional providers due to the nature of infrastructure. While specific market size data for federal utility contracts is not readily available, the total federal spending on utilities is substantial, supporting the operational needs of numerous government facilities nationwide.

Small Business Impact

There is no indication that this contract involved small business set-asides or subcontracting opportunities. As a sole-source award to a large utility provider, it is unlikely to have directly benefited the small business ecosystem.

Oversight & Accountability

Oversight would have been managed by the contracting officers and relevant departments within the Department of the Air Force. Accountability measures would be tied to the terms of the fixed-price contract, ensuring delivery of specified services. Transparency is limited due to the sole-source nature of the award.

Related Government Programs

Federal Utility Contracts
Department of Defense Energy Procurement
Air Force Base Operations Support

Risk Flags

Sole-source award lacks competitive pricing pressure.
Long contract duration may not reflect current market conditions or technological advancements.
Lack of transparency regarding the justification for sole-source procurement.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.0 million to PROGRESS ENERGY CAROLINAS, INC. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is PROGRESS ENERGY CAROLINAS, INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $16.0 million.

What is the period of performance?

Start: 2003-10-01. End: 2011-09-30.

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

The provided data indicates the contract was 'NOT AVAILABLE FOR COMPETITION,' suggesting a sole-source award. Typically, sole-source justifications are required by federal acquisition regulations and often cite reasons such as the existence of only one responsible source capable of providing the required service, urgent and compelling needs that preclude competition, or specific national security requirements. Without further documentation from the Department of the Air Force at the time of award, the precise justification remains unknown. However, for utility services, it's common for a single provider to have exclusive rights or the necessary infrastructure to serve a specific geographic area or installation.

How does the average annual cost of this contract compare to similar utility contracts for federal facilities?

The contract's total value of approximately $16 million over eight years equates to an average annual cost of roughly $2 million. Comparing this to similar contracts is difficult without detailed service level agreements, the specific facility's energy consumption, and the scope of distribution services. However, for a large military installation, this annual figure for electricity distribution could be considered within a reasonable range. Factors influencing cost include the size of the installation, the criticality of the power supply, and the prevailing market rates for electricity in North Carolina during the contract period (2003-2011).

What were the potential risks associated with the long duration of this contract?

The eight-year duration of this contract (October 2003 to September 2011) presented several potential risks. Firstly, energy prices can be volatile, and a long-term fixed-price contract might have locked the government into a rate that became unfavorable if market prices decreased significantly. Conversely, if prices rose sharply, the contractor might have been disadvantaged. Secondly, technology in power distribution and grid management evolves; an eight-year-old contract might not reflect the latest efficiencies or security standards. Lastly, the long term could reduce the incentive for the contractor to innovate or offer improved services, as the relationship was secured for an extended period.

What performance metrics or service level agreements were likely in place for this contract?

While specific performance metrics are not detailed in the provided data, contracts for essential services like electric power distribution typically include stringent Service Level Agreements (SLAs). These would likely cover aspects such as power reliability (measured by uptime and frequency/duration of outages), response times for service interruptions or emergencies, power quality (voltage and frequency stability), and adherence to safety standards. Failure to meet these SLAs would typically result in penalties or corrective actions outlined in the contract, ensuring the Department of the Air Force received consistent and reliable service.

What is the historical spending trend for electric power distribution contracts by the Department of Defense?

Historical spending on electric power distribution by the Department of Defense (DoD) is substantial and generally consistent, reflecting the continuous need for reliable energy across numerous bases and facilities. While this specific $16 million contract is a single data point, the DoD consistently procures utility services. Spending patterns are influenced by factors such as base consolidation or expansion, energy efficiency initiatives, and shifts towards renewable energy sources. Over the years, the DoD has increasingly focused on energy resilience and security, which may influence future contract types and spending, potentially moving towards more diversified energy sources and smart grid technologies.

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: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1418 MECHANICAL BLVD, GARNER, NC, 90

Business Categories: Category Business, Not Designated a Small Business

Timeline