Department of the Navy awarded $16.7M for electric power distribution in Puerto Rico, a sole-source contract

Contract Overview

Contract Amount: $16,659,619 ($16.7M)

Contractor: Puerto Rico Electric Power Authority

Awarding Agency: Department of Defense

Start Date: 2006-07-21

End Date: 2011-05-31

Contract Duration: 1,775 days

Daily Burn Rate: $9.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: ELECTRIC SERVICE

Place of Performance

Location: SAN JUAN, SAN JUAN County, PUERTO RICO, 00901, UNITED STATES OF AMERICA

Plain-Language Summary

Department of Defense obligated $16.7 million to PUERTO RICO ELECTRIC POWER AUTHORITY for work described as: ELECTRIC SERVICE Key points: 1. The contract's value of $16.7M over nearly five years suggests a significant investment in essential utility services. 2. As a sole-source award, the lack of competition may have impacted price discovery and potentially led to higher costs. 3. The contract duration of 1775 days indicates a long-term need for reliable electric power distribution. 4. Awarded by the Department of the Navy, this contract highlights the military's reliance on stable infrastructure in operational areas. 5. The geographic focus on Puerto Rico points to specific regional needs and potential challenges in service delivery. 6. The firm fixed-price structure offers cost certainty for the government but shifts risk to the contractor.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without comparable sole-source electric utility contracts in Puerto Rico. The total award of $16.7 million over approximately 4.8 years averages to about $3.47 million annually. This figure needs to be assessed against the specific services provided and the unique market conditions in Puerto Rico, which may have limited competitive options. Without more data on the scope of services and market rates, a definitive value-for-money assessment is difficult, but the lack of competition raises concerns about optimal pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor was considered. This typically occurs when a unique capability or circumstance prevents full and open competition. The lack of multiple bidders means there was no direct price comparison or negotiation against alternatives, which can limit the government's ability to secure the most competitive pricing. The rationale for this sole-source award would need to be thoroughly documented to ensure it was justified.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without a competitive process, there is a reduced incentive for the contractor to offer the lowest possible price, potentially leading to less efficient use of public funds.

Public Impact

The primary beneficiary is the Department of the Navy, ensuring a stable and reliable supply of electricity for its operations in Puerto Rico. The services delivered include the distribution of electric power, a critical utility for maintaining military readiness and infrastructure. The geographic impact is concentrated in Puerto Rico, supporting military installations and potentially related civilian infrastructure dependent on the same grid. Workforce implications are likely related to the operational and maintenance staff required by the contractor to provide continuous electric service.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of transparency in the justification for sole-source procurement.
Geographic concentration in Puerto Rico may present unique logistical and operational risks.
Long contract duration could lead to price escalation if not managed effectively.

Positive Signals

Ensures critical electric power supply for Department of Defense operations.
Firm fixed-price contract provides budget certainty.
Award to a known entity (PREPA) may leverage existing infrastructure and expertise.
Long-term commitment suggests a strategic need for reliable power.

Sector Analysis

The electric power distribution sector is a critical utility infrastructure, essential for all government operations, including defense. In Puerto Rico, the electric power landscape has faced significant challenges, including grid modernization and resilience efforts following natural disasters. This contract falls within the broader energy and utilities sector, specifically focusing on the distribution aspect. Comparable spending benchmarks for electric power distribution can vary widely based on geography, infrastructure age, and regulatory environment. Given the sole-source nature and location, direct comparisons to other federal contracts might be limited.

Small Business Impact

This contract does not appear to have a small business set-aside component, as it was awarded to the Puerto Rico Electric Power Authority (PREPA). There is no indication of subcontracting opportunities for small businesses within the provided data. The focus is on a large utility provider, suggesting that small businesses are unlikely to be directly involved in the primary service delivery under this specific award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures would be defined by the contract terms, including performance standards and payment schedules. Transparency regarding the justification for the sole-source award is crucial for public accountability. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Utility Contracts
Puerto Rico Infrastructure Projects
Federal Energy Procurement
Electric Power Services

Risk Flags

Sole-source award may indicate limited competition, potentially leading to higher costs.
Contractor (PREPA) has a history of financial and operational challenges.
Geographic concentration increases risk if local infrastructure is compromised.
Long contract duration requires careful monitoring for performance and potential price adjustments.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.7 million to PUERTO RICO ELECTRIC POWER AUTHORITY. ELECTRIC SERVICE

Who is the contractor on this award?

The obligated recipient is PUERTO RICO ELECTRIC POWER AUTHORITY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $16.7 million.

What is the period of performance?

Start: 2006-07-21. End: 2011-05-31.

What was the specific justification provided by the Department of the Navy for awarding this electric service contract on a sole-source basis to the Puerto Rico Electric Power Authority?

The provided data indicates the contract was a 'NOT COMPETED' award, signifying a sole-source procurement. While the specific justification is not detailed in the abbreviated data, common reasons for sole-source awards in utility services include situations where only one entity can provide the service due to geographic monopoly, unique infrastructure ownership, or critical national security needs that preclude a lengthy competitive process. For electric power in Puerto Rico, PREPA historically held a near-monopoly on generation and distribution. The Navy likely cited PREPA's existing infrastructure, operational necessity, and potentially the lack of viable alternatives or the time constraints for a competitive bid as justification. A full review of the contract file would be necessary to ascertain the precise documented rationale.

How does the average annual cost of this contract compare to other electric utility contracts awarded by the Department of Defense in similar geographic or operational contexts?

The total award of $16,659,618.72 over 1775 days (approximately 4.85 years) equates to an average annual cost of roughly $3,435,000. Comparing this to other DoD electric utility contracts requires access to a broader dataset of federal procurements. However, sole-source contracts often carry a price premium compared to competitively bid ones. Without specific details on the volume of electricity, service level agreements, and the unique market conditions of Puerto Rico (e.g., grid reliability, fuel costs, regulatory environment), a direct comparison is difficult. Generally, utility costs can vary significantly, but the lack of competition here suggests this rate might be higher than what could be achieved through a competitive process.

What are the key performance indicators (KPIs) and service level agreements (SLAs) associated with this electric power distribution contract, and how was the contractor's performance monitored?

The provided data does not specify the Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this contract. Typically, for electric power distribution, KPIs might include metrics such as power availability (uptime), frequency and duration of outages, response times to service calls, and power quality (voltage stability, frequency). Performance monitoring would likely involve regular reporting by the contractor, site inspections by Navy personnel, and analysis of utility usage and reliability data. The firm fixed-price nature suggests the contractor is responsible for delivering the service at the agreed-upon price, with penalties potentially incurred for failing to meet critical SLAs. The contract's duration and value imply a need for consistent, reliable service.

What is the historical spending pattern for electric power distribution services by the Department of the Navy in Puerto Rico, and does this contract represent an increase or decrease in spending?

The provided data only details this single contract (ID 221122) awarded on July 21, 2006, and ending May 31, 2011. To determine historical spending patterns and whether this contract represents an increase or decrease, one would need to analyze all prior and subsequent contracts for similar electric power distribution services awarded by the Department of the Navy (or other DoD components) in Puerto Rico. Without that broader context, it's impossible to establish a trend. This contract, valued at approximately $16.7 million over its term, represents a significant expenditure for a specific period, but its place within a larger spending history is unknown from this data alone.

Given that the contractor is the Puerto Rico Electric Power Authority (PREPA), what are the potential risks associated with relying on a single, potentially state-influenced utility provider for criti

Relying on PREPA, a state-owned utility, for critical military infrastructure presents several potential risks. Firstly, PREPA has faced significant financial instability and operational challenges, including issues with grid reliability, infrastructure resilience (especially post-hurricanes), and modernization efforts. This could translate into risks of service disruptions, power quality issues, or unmet demand, directly impacting Navy operations. Secondly, as a government entity, PREPA's priorities might not always align perfectly with military exigencies, potentially leading to bureaucratic delays or resource allocation conflicts. Thirdly, the sole-source nature, tied to PREPA's de facto monopoly, removes competitive pressure that could otherwise drive efficiency and cost savings. Finally, political or economic instability in Puerto Rico could indirectly affect PREPA's ability to consistently deliver reliable service.

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 COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1110 AVE PONCE DE LEON, SAN JUAN, PR, 00907

Business Categories: Category Business, Corporate Entity Tax Exempt, Labor Surplus Area Firm, Nonprofit Organization, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $18,214,101

Exercised Options: $18,214,101

Current Obligation: $16,659,619

Timeline