NASA's $156M Natural Gas Contract with Virginia Natural Gas: A 9-Year Deal
Contract Overview
Contract Amount: $15,623,395 ($15.6M)
Contractor: Virginia Natural GAS, Inc.
Awarding Agency: National Aeronautics and Space Administration
Start Date: 1999-10-19
End Date: 2008-09-30
Contract Duration: 3,269 days
Daily Burn Rate: $4.8K/day
Competition Type: NOT AVAILABLE FOR COMPETITION
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Energy
Official Description: NATURAL GAS SERVICE FOR LARC
Place of Performance
Location: HAMPTON, HAMPTON (CITY) County, VIRGINIA, 23681
State: Virginia Government Spending
Plain-Language Summary
National Aeronautics and Space Administration obligated $15.6 million to VIRGINIA NATURAL GAS, INC. for work described as: NATURAL GAS SERVICE FOR LARC Key points: 1. Significant long-term commitment of over 9 years for natural gas services. 2. Sole-source contract raises questions about price discovery and potential overpayment. 3. Lack of competition limits opportunities for cost savings and innovation. 4. Sector: Energy - Natural Gas Distribution.
Value Assessment
Rating: questionable
The contract value is substantial at $156 million over nearly a decade. Without competitive bids, it's difficult to assess if this pricing is optimal compared to market rates for similar long-term natural gas supply agreements.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not available for competition, indicating a sole-source award. This significantly limits price discovery and may lead to higher costs for taxpayers as there was no market pressure to achieve the best possible price.
Taxpayer Impact: The lack of competition in this sole-source contract potentially results in higher taxpayer costs due to the absence of market-driven price optimization.
Public Impact
Taxpayers may be overpaying for natural gas due to the absence of competitive bidding. Long-term commitment ties NASA to a single provider, limiting flexibility. Potential for price increases over the contract's extended duration without competitive checks.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Long contract duration
- Lack of competition
- Potential for price escalation
Positive Signals
- Ensured consistent natural gas supply
- Firm fixed price contract provides budget certainty
Sector Analysis
This contract falls within the Energy sector, specifically natural gas distribution. Long-term contracts for utilities like natural gas are common, but the sole-source nature here is a key concern for cost-effectiveness.
Small Business Impact
The data does not indicate whether small businesses were involved in this contract, either as prime contractors or subcontractors. Further investigation would be needed to determine small business participation.
Oversight & Accountability
The sole-source nature of this contract warrants scrutiny. Oversight should focus on ensuring the pricing remains fair and reasonable throughout the contract's long duration, potentially through periodic reviews or cost analyses.
Related Government Programs
- Natural Gas Distribution
- National Aeronautics and Space Administration Contracting
- National Aeronautics and Space Administration Programs
Risk Flags
- Sole-source award limits competition.
- Long contract duration (over 9 years) increases risk of price misalignment.
- Lack of transparency in price negotiation.
- Potential for contractor to exploit lack of competition over time.
Tags
natural-gas-distribution, national-aeronautics-and-space-administr, va, do, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
National Aeronautics and Space Administration awarded $15.6 million to VIRGINIA NATURAL GAS, INC.. NATURAL GAS SERVICE FOR LARC
Who is the contractor on this award?
The obligated recipient is VIRGINIA NATURAL GAS, INC..
Which agency awarded this contract?
Awarding agency: National Aeronautics and Space Administration (National Aeronautics and Space Administration).
What is the total obligated amount?
The obligated amount is $15.6 million.
What is the period of performance?
Start: 1999-10-19. End: 2008-09-30.
What was the justification for awarding this contract on a sole-source basis?
The justification for a sole-source award typically involves unique capabilities, urgent needs, or situations where only one responsible source can provide the required service. Without specific documentation, it's impossible to confirm the exact reason, but it's a critical factor in assessing the contract's necessity and fairness.
How were the prices determined and validated for this long-term sole-source contract?
For sole-source contracts, pricing is often determined through negotiation and comparison to historical data or industry benchmarks. However, without competition, the government bears a greater burden to ensure prices are fair and reasonable. Periodic price reviews or cost analyses would be crucial to mitigate risks of overpayment over the contract's extended term.
What is the potential financial risk to NASA if natural gas prices fluctuate significantly during this 9-year contract?
As this is a firm fixed-price contract, NASA is largely protected from significant price fluctuations. However, if the negotiated fixed price was based on assumptions that prove inaccurate due to market volatility, the government might end up paying a premium compared to prevailing market rates, representing a financial risk.
Industry Classification
NAICS: Utilities › Natural Gas Distribution › Natural Gas 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
Parent Company: Southern Company GAS (UEI: 933956211)
Address: 5100 E VIRGINIA BEACH BLV, NORFOLK, VA, 03
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $15,623,395
Exercised Options: $15,623,395
Current Obligation: $15,623,395
Parent Contract
Parent Award PIID: GS00P98BSD0110
IDV Type: IDC
Timeline
Start Date: 1999-10-19
Current End Date: 2008-09-30
Potential End Date: 2008-09-30 00:00:00
Last Modified: 2009-12-17
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