GSA's 10-year electric services contract for Detroit Federal Building cost over $19.4M

Contract Overview

Contract Amount: $19,481,504 ($19.5M)

Contractor: Detroit Edison Company, the (I

Awarding Agency: General Services Administration

Start Date: 2005-12-22

End Date: 2016-12-31

Contract Duration: 4,027 days

Daily Burn Rate: $4.8K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: DELIVERY ORDER TO PROCURE ELECTRIC SERVICES FOR A TEN YEAR PERIOD, 1/1/06 TO 12/31/2015, AT THE FEDERAL OFFICE BUILDING AT 985 MICHIGAN AVE., DETROIT, MI.

Place of Performance

Location: DETROIT, WAYNE County, MICHIGAN, 48201

State: Michigan Government Spending

Plain-Language Summary

General Services Administration obligated $19.5 million to DETROIT EDISON COMPANY, THE (I for work described as: DELIVERY ORDER TO PROCURE ELECTRIC SERVICES FOR A TEN YEAR PERIOD, 1/1/06 TO 12/31/2015, AT THE FEDERAL OFFICE BUILDING AT 985 MICHIGAN AVE., DETROIT, MI. Key points: 1. Contract value represents a significant long-term commitment for essential utility services. 2. Procurement method indicates potential limitations in competitive bidding for this service. 3. Contract duration of 10 years suggests a need for stable, predictable pricing. 4. Fixed-price contract type shifts risk to the contractor for cost fluctuations. 5. Geographic focus on Detroit highlights localized service delivery. 6. The contract's value is substantial for a single utility service over a decade.

Value Assessment

Rating: fair

The total contract value of approximately $19.5 million over ten years for electric services at a single federal building suggests a significant expenditure. Benchmarking this against similar long-term utility contracts for federal facilities of comparable size and location would be necessary for a precise value-for-money assessment. However, the extended duration implies a negotiated rate that may or may not reflect the most competitive market prices available over the entire period, especially considering potential fluctuations in energy markets.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, identified as 'NOT AVAILABLE FOR COMPETITION'. This suggests that Detroit Edison Company was the sole provider of electric services to the Federal Office Building at 985 Michigan Ave., Detroit, MI, likely due to the nature of utility infrastructure. Without a competitive bidding process, it is difficult to ascertain the extent of price discovery and whether taxpayers received the best possible pricing.

Taxpayer Impact: A sole-source award means taxpayers did not benefit from the cost savings typically achieved through competitive bidding, potentially leading to a higher overall cost for these essential services.

Public Impact

Federal employees and the public using the Federal Office Building at 985 Michigan Ave., Detroit, MI, benefit from uninterrupted electric service. The contract ensures the continuous operation of critical government functions housed within the facility. The local economy in Detroit benefits from the revenue generated by this contract for Detroit Edison Company. The contract supports the operational infrastructure of the General Services Administration's Public Buildings Service in Michigan.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpayment for electric services over the ten-year period.
The extended duration of the contract may have locked the government into unfavorable pricing if market rates decreased significantly.

Positive Signals

The firm fixed-price structure provides budget certainty for the government, protecting against unexpected price increases.
Securing a long-term contract for essential utilities ensures operational continuity for the federal building.
The contract was awarded to a known, established utility provider, likely ensuring reliable service delivery.

Sector Analysis

This contract falls within the Utilities sector, specifically focusing on the provision of electricity. The market for utility services is often characterized by natural monopolies or highly regulated environments, where competition is limited due to infrastructure requirements. Federal agencies, like the General Services Administration (GSA), are significant consumers of utility services, and their contracts can represent substantial portions of a utility provider's revenue. Benchmarking would typically involve comparing rates per kilowatt-hour or demand charges against other large commercial or government contracts in the region.

Small Business Impact

There is no indication that this contract involved small business set-asides or subcontracting opportunities. As a sole-source utility service contract, it is likely that the primary contractor, Detroit Edison Company, is a large utility provider. The nature of utility provision generally does not lend itself to subcontracting with small businesses for the core service delivery.

Oversight & Accountability

Oversight for this contract would primarily fall under the General Services Administration (GSA), specifically its Public Buildings Service. As a delivery order under a larger framework (though the original contract type is 'NOT AVAILABLE FOR COMPETITION'), GSA would monitor service delivery and payment. Transparency is limited due to the sole-source nature, but GSA's internal procurement and financial controls would apply. There is no specific mention of an Inspector General's direct involvement in this particular delivery order, but GSA's OIG has broad jurisdiction over GSA contracts.

Related Government Programs

Federal Building Utility Contracts
General Services Administration Energy Procurement
Public Buildings Service Operations
Long-Term Service Agreements

Risk Flags

Sole-source procurement
Long contract duration
Lack of explicit performance metrics in summary data

Frequently Asked Questions

What is this federal contract paying for?

General Services Administration awarded $19.5 million to DETROIT EDISON COMPANY, THE (I. DELIVERY ORDER TO PROCURE ELECTRIC SERVICES FOR A TEN YEAR PERIOD, 1/1/06 TO 12/31/2015, AT THE FEDERAL OFFICE BUILDING AT 985 MICHIGAN AVE., DETROIT, MI.

Who is the contractor on this award?

The obligated recipient is DETROIT EDISON COMPANY, THE (I.

Which agency awarded this contract?

Awarding agency: General Services Administration (Public Buildings Service).

What is the total obligated amount?

The obligated amount is $19.5 million.

What is the period of performance?

Start: 2005-12-22. End: 2016-12-31.

What was the original justification for awarding this contract as sole-source to Detroit Edison Company?

The data indicates the contract was 'NOT AVAILABLE FOR COMPETITION', strongly suggesting that Detroit Edison Company held a monopoly or exclusive franchise for providing electric services to the specific location of the Federal Office Building at 985 Michigan Ave., Detroit, MI. Utility services often fall under this category due to the extensive and costly infrastructure required (e.g., power lines, substations) that are typically owned and operated by a single entity within a defined service territory. Therefore, the justification would likely stem from regulatory frameworks and the physical impossibility of connecting to an alternative provider without significant, prohibitive new infrastructure investment.

How does the average annual cost of this contract compare to similar federal facilities in the region?

The contract averaged approximately $1.95 million per year ($19.4M / 10 years). To compare this effectively, one would need data on the average annual electricity costs for federal buildings of similar square footage and occupancy levels within the Detroit metropolitan area or the broader Michigan region. Factors such as the building's energy efficiency, the specific services procured (e.g., demand charges vs. pure energy consumption), and the prevailing utility rates during the contract period (2006-2015) would be crucial. Without access to a benchmark database of comparable federal facility utility spending, a direct comparison is difficult, but this figure represents a substantial annual utility expense.

What were the potential risks associated with a 10-year firm fixed-price contract for electric services?

A significant risk for the government under a 10-year firm fixed-price contract for electric services is the potential for paying above market rates if energy prices were to decrease significantly over the contract term. While the fixed price provides budget certainty, it eliminates the government's ability to benefit from favorable market shifts. Conversely, the contractor bore the risk of rising energy costs, which could have impacted their profitability or potentially led to service issues if they struggled to meet demand within the fixed price. For the government, the primary risk is locking in potentially suboptimal pricing for an extended period in a volatile market.

Were there any performance metrics or service level agreements (SLAs) associated with this delivery order?

The provided data does not specify any performance metrics or Service Level Agreements (SLAs) for this delivery order. Typically, utility service contracts, especially those awarded non-competitively, might rely on established utility regulations and standards for reliability and service quality rather than explicit contractual SLAs. However, for a contract of this duration and value, it would be prudent for the GSA to have had defined expectations regarding power quality, outage response times, and billing accuracy, even if not explicitly detailed in the summary data. Monitoring adherence to these would be part of GSA's contract management.

What is the historical spending trend for electric services at this specific federal building prior to this contract?

The provided data only covers the period from January 1, 2006, to December 31, 2015. To understand historical spending trends prior to this contract, one would need access to GSA's financial records or previous contract awards for electric services at the Federal Office Building, 985 Michigan Ave., Detroit, MI, for years preceding 2006. Without that historical data, it's impossible to determine if the $19.4 million over ten years represents an increase, decrease, or stable level of spending compared to earlier periods. Analyzing prior spending would provide context on the long-term cost trajectory for this facility's energy needs.

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Address: 26801 NORTHWESTERN HWY, SOUTHFIELD

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $19,481,504

Exercised Options: $19,481,504

Current Obligation: $19,481,504

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Timeline