DoD's $13.5M steam and air-conditioning supply contract with Applied Energy LLC awarded non-competitively
Contract Overview
Contract Amount: $13,517,839 ($13.5M)
Contractor: Applied Energy LLC
Awarding Agency: Department of Defense
Start Date: 1979-09-12
End Date: 2018-09-30
Contract Duration: 14,263 days
Daily Burn Rate: $948/day
Competition Type: NOT AVAILABLE FOR COMPETITION
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Other
Official Description: UTILITY SERVICES
Place of Performance
Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92136
Plain-Language Summary
Department of Defense obligated $13.5 million to APPLIED ENERGY LLC for work described as: UTILITY SERVICES Key points: 1. Contract awarded on a sole-source basis, raising questions about potential cost savings from competition. 2. Long contract duration of over 14,000 days suggests a need for ongoing utility services. 3. The firm-fixed-price structure aims to provide cost certainty for the government. 4. Contractor Applied Energy LLC has a long history with this specific service for the Navy. 5. The contract's value is significant, but benchmarking against similar utility service contracts is needed for a full value assessment. 6. Geographic location in California may influence pricing due to regional utility costs.
Value Assessment
Rating: fair
The contract's total value of $13.5 million over its extended period suggests a substantial commitment. Without specific details on the scope of services (e.g., volume of steam and air conditioning provided), a direct per-unit cost comparison is challenging. However, the non-competitive award raises concerns about whether the government secured the best possible price. Benchmarking against similar long-term utility service contracts for federal facilities, especially in California, would be necessary to assess value for money.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning it was not competed. The data indicates 'NOT AVAILABLE FOR COMPETITION,' suggesting that the Department of the Navy determined that only one source, Applied Energy LLC, could fulfill the requirement. This lack of competition limits the government's ability to leverage market forces to drive down prices and potentially explore innovative solutions from a wider range of providers.
Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to ensure the lowest possible price. It also reduces transparency in the procurement process.
Public Impact
The primary beneficiary is the Department of the Navy, ensuring essential utility services for its facilities. Services delivered include the supply of steam and air-conditioning, critical for operational readiness and personnel comfort. The geographic impact is concentrated in California, where the Navy facilities requiring these services are located. The contract supports the operational workforce at the specific Navy installations receiving the utility services.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pricing and potential innovation.
- Long contract duration may obscure current market value and lead to price creep if not managed.
- Lack of detailed service scope makes precise value-for-money assessment difficult.
Positive Signals
- Firm-fixed-price contract provides cost certainty for the government.
- Contractor has a long-standing relationship, potentially indicating reliability and understanding of specific needs.
- Awarded by the Department of the Navy, a major federal agency with significant procurement oversight.
Sector Analysis
This contract falls within the broader utility services sector, which is essential for the functioning of government facilities. The market for utility services, particularly steam and air conditioning, is often characterized by regional monopolies or limited providers due to infrastructure requirements. Federal spending in this area supports the continuous operation of critical infrastructure. Comparable spending benchmarks would likely focus on long-term service agreements for large institutional or industrial facilities.
Small Business Impact
There is no indication that this contract included a small business set-aside. Given the nature of utility services and the sole-source award, it is unlikely that small businesses were significantly involved as prime contractors. Subcontracting opportunities for small businesses are not specified but would depend on the specific needs of Applied Energy LLC and the Navy's requirements.
Oversight & Accountability
The Department of the Navy is responsible for oversight of this contract. As a definitive contract, it is subject to standard federal procurement regulations and oversight mechanisms. Transparency is limited due to the sole-source nature. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse, but the specific oversight activities for this contract are not detailed in the provided data.
Related Government Programs
- Federal Utility Services Contracts
- Department of Defense Facilities Management
- Navy Base Operations Support
- Long-Term Service Agreements
Risk Flags
- Sole-source award
- Long contract duration
- Lack of competition
Tags
utility-services, department-of-defense, department-of-the-navy, california, definitive-contract, firm-fixed-price, sole-source, large-contract, infrastructure, long-term-service-agreement
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $13.5 million to APPLIED ENERGY LLC. UTILITY SERVICES
Who is the contractor on this award?
The obligated recipient is APPLIED ENERGY LLC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Navy).
What is the total obligated amount?
The obligated amount is $13.5 million.
What is the period of performance?
Start: 1979-09-12. End: 2018-09-30.
What is the specific justification for the sole-source award of this contract?
The provided data indicates the contract was awarded as 'NOT AVAILABLE FOR COMPETITION,' which is a designation for sole-source procurements. The specific justification for why only Applied Energy LLC could fulfill the requirement is not detailed in the data. Typically, sole-source justifications are based on factors such as unique capabilities, urgent needs where competition is impractical, or when only one responsible source exists. For a utility service like steam and air conditioning, this could potentially relate to existing infrastructure, proprietary technology, or specific site requirements that only the incumbent contractor can meet. A formal Justification for Other than Full and Open Competition (JOFOC) would normally be required and publicly available for such awards.
How does the $13.5 million contract value compare to similar utility service contracts for federal facilities?
Benchmarking the $13.5 million value requires more context on the specific services provided, such as the volume of steam and air conditioning, the duration of service, and the geographic location's cost of living and utility rates. However, for large federal facilities, especially those with extensive infrastructure needs, multi-million dollar contracts for essential utilities over extended periods are not uncommon. The key concern with this contract is its sole-source nature; without competition, it's difficult to ascertain if this represents a market-competitive price or a premium paid due to the lack of alternative bidders. Comparing it to other sole-source utility contracts or competitively awarded ones of similar scope and duration would be necessary for a robust comparison.
What are the potential risks associated with a sole-source contract of this duration?
A primary risk of a sole-source contract, especially one with a long duration (over 39 years based on the start and end dates), is the potential for inflated costs due to the absence of competitive pressure. The contractor may have less incentive to control costs or offer innovative efficiencies. Another risk is vendor lock-in, where the government becomes dependent on a single provider, making it difficult and costly to switch even if performance or pricing becomes unsatisfactory. Furthermore, without regular competitive re-evaluation, the contract's terms might not keep pace with evolving market conditions or technological advancements in utility provision, potentially leading to suboptimal value over time.
What is the historical spending pattern for steam and air-conditioning supply at this Navy facility?
The provided data shows a single definitive contract awarded to Applied Energy LLC for steam and air-conditioning supply, starting in 1979 and ending in 2018, with a total value of $13,517,839.47. This suggests a long-standing relationship and consistent need for these services at the specific Navy facility. The data does not reveal prior contracts or spending patterns before 1979, nor does it detail annual spending within this contract period. However, the sheer duration and value indicate that this has been a significant and continuous expenditure for the Department of the Navy at this location.
What is the track record of Applied Energy LLC in providing utility services to the federal government?
Applied Energy LLC has a significant track record with the Department of the Navy, as evidenced by this $13.5 million contract spanning nearly four decades (1979-2018) for steam and air-conditioning supply. The long duration suggests a level of performance that met the Navy's requirements over an extended period. While the sole-source nature raises questions about pricing, it can also imply a level of trust and established operational capability. Further investigation into other contracts held by Applied Energy LLC, their performance ratings (e.g., CPARS), and any past issues or commendations would provide a more comprehensive view of their track record.
Industry Classification
NAICS: Utilities › Water, Sewage and Other Systems › Steam and Air-Conditioning Supply
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
Address: 8835 BALBOA AVE STE D, SAN DIEGO, CA, 92123
Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $13,517,839
Exercised Options: $13,517,839
Current Obligation: $13,517,839
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 1979-09-12
Current End Date: 2018-09-30
Potential End Date: 2018-09-30 00:00:00
Last Modified: 2018-07-11
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