TVA's $56.7M electricity contract with DCA awarded without competition by the Air Force

Contract Overview

Contract Amount: $56,734,688 ($56.7M)

Contractor: Tennessee Valley Authority

Awarding Agency: Department of Defense

Start Date: 2009-10-01

End Date: 2012-09-30

Contract Duration: 1,095 days

Daily Burn Rate: $51.8K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: ELECTRICITY

Place of Performance

Location: ARNOLD AFB, COFFEE County, TENNESSEE, 37389

State: Tennessee Government Spending

Plain-Language Summary

Department of Defense obligated $56.7 million to TENNESSEE VALLEY AUTHORITY for work described as: ELECTRICITY Key points: 1. The contract's value of $56.7 million over three years represents a significant expenditure for electricity distribution. 2. Awarded on a 'not available for competition' basis, this raises questions about potential missed savings from competitive bidding. 3. The firm-fixed-price structure provides cost certainty but may limit flexibility if energy needs change significantly. 4. The duration of 1095 days (3 years) suggests a stable, long-term need for these services. 5. The contract was awarded by the Department of the Air Force, indicating a critical infrastructure need within the military. 6. The Tennessee Valley Authority's involvement suggests a regional focus for this electricity distribution.

Value Assessment

Rating: fair

Benchmarking the value of this electricity contract is challenging without specific service details or comparable market rates for similar distribution services. The $56.7 million price tag over three years averages approximately $18.9 million annually. While this may be reasonable for a large-scale distribution network, the lack of competition prevents a direct comparison to assess if this price represents optimal value for the government. The firm-fixed-price nature offers predictability but doesn't inherently guarantee the lowest possible cost.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'not available for competition' justification, meaning a competitive bidding process was not utilized. This typically occurs when only one source is capable of meeting the requirement, or in specific circumstances like follow-on work to a previous sole-source award. The absence of multiple bidders means there was no direct price negotiation or comparison against alternative providers, potentially leading to a higher price than might be achieved through open competition.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competitive pressure to drive down costs. Without a bidding process, it's difficult to ascertain if the government secured the best possible price for these essential electricity services.

Public Impact

The primary beneficiary is the Department of the Air Force, ensuring a reliable supply of electricity for its operations. The services delivered are electric power distribution, crucial for maintaining military readiness and infrastructure. The geographic impact is likely concentrated in Tennessee, where the Tennessee Valley Authority operates. Workforce implications are tied to the operational needs of the Air Force facilities and the service provision by TVA.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have resulted in a higher price than a competitive award.
The 'not available for competition' justification requires scrutiny to ensure it was appropriate.
Limited transparency into the specific services and pricing structure due to sole-source award.

Positive Signals

Firm-fixed-price contract provides budget certainty for the Air Force.
Award to a known entity (TVA) suggests a potentially reliable service provider.
Ensures critical electricity supply for military operations.

Sector Analysis

The energy sector, specifically electric power distribution, is a critical component of national infrastructure. Contracts for electricity supply and distribution are common across government agencies, particularly those with large physical footprints like the Department of Defense. The Tennessee Valley Authority is a major regional provider, and its contracts with federal entities are significant. Benchmarking this $56.7 million contract would involve comparing it to other large-scale electricity distribution agreements, considering factors like geographic service area, load requirements, and regulatory environments.

Small Business Impact

There is no indication that this contract involved small business set-asides or subcontracting opportunities. As a sole-source award to the Tennessee Valley Authority, a large utility provider, the focus is likely on direct service delivery rather than engaging the small business ecosystem through subcontracting.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and financial management divisions. Accountability measures are inherent in the firm-fixed-price structure, which obligates the contractor to deliver services at the agreed-upon price. Transparency is limited due to the sole-source nature of the award, but contract details and performance should be available through federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Electricity Contracts
Tennessee Valley Authority Contracts
Federal Utility Services Contracts
Air Force Infrastructure Support

Risk Flags

Sole-source award may indicate higher costs.
Lack of competition limits price discovery.
Essential service requires robust performance monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $56.7 million to TENNESSEE VALLEY AUTHORITY. ELECTRICITY

Who is the contractor on this award?

The obligated recipient is TENNESSEE VALLEY AUTHORITY.

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 $56.7 million.

What is the period of performance?

Start: 2009-10-01. End: 2012-09-30.

What specific justification was provided for awarding this contract on a 'not available for competition' basis?

The provided data indicates the contract was awarded under 'NOT AVAILABLE FOR COMPETITION'. This classification typically implies that only one responsible source exists to meet the agency's needs. Common reasons include unique capabilities, proprietary technology, or urgent requirements where competition is not feasible. For this specific contract, the Department of the Air Force would have documented the rationale, potentially citing the Tennessee Valley Authority's sole ability to provide the required electric power distribution services within a specific geographic area or to meet unique operational demands. Without access to the full contract file, the precise justification remains unconfirmed, but it suggests a determination that competitive bidding was not practicable or in the government's best interest at the time of award.

How does the $56.7 million cost compare to similar electricity distribution contracts awarded by the Department of Defense?

Comparing the $56.7 million cost requires access to a broader dataset of similar contracts. However, as a three-year firm-fixed-price contract, the annual average of approximately $18.9 million is substantial. Large military installations and bases often require significant power, making such expenditures necessary. To benchmark effectively, one would need to analyze contracts for comparable services (e.g., distribution, not just generation) in similar geographic regions or for facilities of comparable size and operational tempo. The lack of competition for this specific award makes direct value-for-money comparisons with competitively bid contracts difficult, as the latter typically yield lower prices due to market pressures.

What are the potential risks associated with a sole-source award for essential services like electricity distribution?

The primary risk of a sole-source award for essential services like electricity distribution is the potential for inflated costs due to the absence of competitive pressure. Without competing bids, the government may not secure the most economical price. Another risk is a lack of innovation or service improvement, as the sole provider faces less incentive to enhance offerings. Furthermore, reliance on a single source can create vulnerability if that provider experiences operational issues, financial instability, or changes its business strategy. Ensuring the sole-source justification is robust and periodically re-evaluated is crucial to mitigate these risks.

What is the historical spending pattern for electricity distribution by the Department of the Air Force, and how does this contract fit in?

Historical spending data for electricity distribution by the Department of the Air Force would reveal trends in procurement volume, average contract values, and common award mechanisms. This $56.7 million contract, awarded in late 2009 for a three-year period, represents a significant, albeit specific, expenditure. Analyzing past spending would help determine if this contract's value is typical for the services rendered or if it represents an outlier. Understanding the frequency of sole-source awards versus competitive bids for similar services over time would also provide context on the Air Force's procurement strategies and potential opportunities for cost savings through increased competition.

What performance metrics or service level agreements (SLAs) are typically included in such electricity distribution contracts?

Electricity distribution contracts, especially those for critical infrastructure like military bases, usually include stringent performance metrics and Service Level Agreements (SLAs). These often cover reliability (e.g., uptime percentages, maximum allowable outage durations), response times for outages or service requests, power quality standards (voltage, frequency stability), and adherence to safety protocols. For a firm-fixed-price contract, the focus is often on ensuring consistent delivery and availability. While specific SLAs for this DCA contract are not detailed in the provided data, the Air Force would expect reliable and continuous power delivery to maintain operational readiness, with potential penalties or remedies for failures to meet agreed-upon standards.

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: Government of the United States (UEI: 161906193)

Address: 400 W SUMMIT HILL DR, KNOXVILLE, TN, 02

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

Financial Breakdown

Contract Ceiling: $150,000,000

Exercised Options: $150,000,000

Current Obligation: $56,734,688

Contract Characteristics

Cost or Pricing Data: NO

Timeline