GSA's $22.7M natural gas contract with Hess Corporation awarded under full and open competition

Contract Overview

Contract Amount: $22,739,617 ($22.7M)

Contractor: Hess Corporation

Awarding Agency: General Services Administration

Start Date: 2012-08-03

End Date: 2013-09-30

Contract Duration: 423 days

Daily Burn Rate: $53.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: NATURAL GAS SUPPLY

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20407

State: District of Columbia Government Spending

Plain-Language Summary

General Services Administration obligated $22.7 million to HESS CORPORATION for work described as: NATURAL GAS SUPPLY Key points: 1. Contract value represents a significant investment in energy infrastructure for the specified period. 2. Full and open competition suggests a robust market for natural gas supply services. 3. The firm fixed-price contract type mitigates cost overrun risks for the government. 4. Awarded to Hess Corporation, a major player in the energy sector. 5. Contract duration of approximately 1.3 years indicates a short-to-medium term need. 6. Geographic focus on the District of Columbia highlights localized service delivery.

Value Assessment

Rating: good

The contract value of $22.7 million for natural gas supply over roughly 13 months appears reasonable given the scale of government operations in the District of Columbia. Benchmarking against similar large-scale utility contracts is challenging without specific consumption data, but the price was determined through a competitive process. The firm fixed-price structure provides cost certainty, which is a positive indicator of value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of multiple bidders (4 indicated) suggests a healthy competitive environment, which typically leads to better price discovery and more favorable terms for the government. The GSA's process likely involved a thorough evaluation of technical and price proposals.

Taxpayer Impact: The extensive competition for this natural gas supply contract likely resulted in a more cost-effective outcome for taxpayers compared to a sole-source or limited competition award. It ensures that the government is obtaining services at or near market rates.

Public Impact

Federal agencies and facilities within the District of Columbia benefit from a reliable supply of natural gas. Ensures operational continuity for government buildings requiring heating, cooling, and other energy services. Supports the energy needs of a significant portion of the federal government's physical footprint in the capital. Indirectly supports the local energy infrastructure and workforce within the District of Columbia.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price volatility in the natural gas market impacting long-term budget predictability beyond the contract period.
Dependence on a single supplier, even if competitively selected, carries inherent supply chain risks.
Geographic concentration in DC could be a vulnerability if local distribution issues arise.

Positive Signals

Firm fixed-price contract provides budget certainty for the duration of the award.
Award to a well-established energy provider like Hess Corporation suggests reliability.
Full and open competition process generally leads to better pricing and service quality.

Sector Analysis

The natural gas distribution sector is a critical component of the energy industry, providing essential fuel for heating, electricity generation, and industrial processes. Federal agencies are significant consumers of energy, and contracts like this represent substantial spending within this sector. The market is characterized by regional supply dynamics, infrastructure investments, and regulatory oversight. Benchmarking this $22.7 million contract requires considering the specific volume and duration, but it falls within the range of significant utility service procurements for large metropolitan areas.

Small Business Impact

This contract does not appear to have a specific small business set-aside component, as indicated by 'sb: false'. While Hess Corporation is a large entity, the subcontracting opportunities for small businesses are not explicitly detailed in the provided data. Further analysis would be needed to determine if small businesses are involved in the supply chain or service delivery under this prime contract.

Oversight & Accountability

The General Services Administration (GSA) is responsible for overseeing this contract through its Public Buildings Service. Oversight mechanisms likely include performance monitoring, invoice verification, and adherence to contract terms. Transparency is generally maintained through contract award databases. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Federal Energy Management Program (FGFP)
Utility Services Contracts
Energy Supply Contracts
General Services Administration Procurement Data

Risk Flags

Potential for price volatility in energy markets
Supply chain reliability concerns
Contract performance monitoring needs

Frequently Asked Questions

What is this federal contract paying for?

General Services Administration awarded $22.7 million to HESS CORPORATION. NATURAL GAS SUPPLY

Who is the contractor on this award?

The obligated recipient is HESS CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $22.7 million.

What is the period of performance?

Start: 2012-08-03. End: 2013-09-30.

What is Hess Corporation's track record with federal contracts, particularly with the GSA?

Hess Corporation has a history of engaging with the federal government, though specific details on the volume and nature of all their federal contracts require a deeper dive into federal procurement databases. For this particular contract with the GSA's Public Buildings Service, the award was made under full and open competition for natural gas supply. The 'AW: DO' designation likely indicates an award action. Assessing their overall track record would involve examining past performance reviews, any disputes or terminations, and the breadth of services they have provided to federal agencies. Without more granular data on their federal portfolio, it's difficult to provide a comprehensive assessment beyond this specific award.

How does the $22.7 million contract value compare to similar natural gas supply contracts for federal facilities in the DC area?

Directly comparing the $22.7 million value requires detailed knowledge of the specific natural gas volumes, delivery points, and contract terms (e.g., fixed vs. variable pricing, duration) for other federal facilities in the DC area. However, given that this contract covers a period of approximately 13 months (from August 2012 to September 2013) and was awarded by the GSA's Public Buildings Service, it suggests a substantial requirement, likely encompassing multiple buildings or a significant portion of the federal presence in the District. The fact that it was competitively procured implies the price was deemed fair and reasonable against market conditions at the time of award. Broader benchmarking would necessitate analyzing average per-unit costs (e.g., per therm or MMBtu) across comparable government utility contracts.

What are the primary risks associated with this natural gas supply contract?

The primary risks associated with this natural gas supply contract include market price volatility, as natural gas prices can fluctuate significantly due to supply, demand, weather, and geopolitical factors. Although the contract is firm fixed-price, which mitigates direct cost increases for the government during the contract term, unexpected market shifts could impact the contractor's profitability and potentially influence future bidding. Supply chain disruptions, though less common for natural gas in established distribution networks, remain a potential risk. Additionally, performance risks related to delivery reliability and adherence to quality standards exist, although these are typically managed through contract oversight and performance metrics. The geographic concentration in the District of Columbia could also pose a localized risk if distribution infrastructure is compromised.

How effective was the full and open competition process in securing value for this contract?

The full and open competition process is generally considered the most effective method for securing value in federal contracting, as it maximizes the pool of potential bidders and fosters price competition. With four bidders participating in this natural gas supply contract, it indicates a reasonably competitive market for these services in the DC area. This level of competition likely drove down the price Hess Corporation offered compared to what might have been achieved through limited or sole-source procurement. The firm fixed-price structure further enhances value by providing cost certainty. While the ultimate value is realized over the contract's performance period, the procurement method itself is a strong indicator of a favorable outcome for the government and taxpayers.

What is the historical spending pattern for natural gas supply by the GSA or other agencies in the DC area?

Analyzing historical spending patterns for natural gas supply by the GSA or other agencies in the DC area would require accessing and aggregating data over multiple fiscal years. This specific contract, valued at approximately $22.7 million over 13 months (2012-2013), provides a snapshot. Federal agencies, particularly those with large building portfolios like those managed by GSA, are consistent consumers of natural gas. Spending levels can fluctuate based on energy prices, building occupancy, energy efficiency initiatives, and the number of facilities under management. To establish a pattern, one would need to examine prior GSA contracts for similar services in the region, noting award values, durations, and competition levels, as well as compare spending across different agencies operating within the District of Columbia.

Industry Classification

NAICS: Utilities › Natural Gas Distribution › Natural Gas Distribution

Product/Service Code: UTILITIES AND HOUSEKEEPING › UTILITIES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: TWO STEP

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1 HESS PLZ, WOODBRIDGE, NJ, 06

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $22,739,617

Exercised Options: $22,739,617

Current Obligation: $22,739,617

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00P11BSC0823

IDV Type: IDC

Timeline