NASA's $14.1M natural gas contract with Hess Corporation awarded under a competitive process
Contract Overview
Contract Amount: $14,118,896 ($14.1M)
Contractor: Hess Corporation
Awarding Agency: National Aeronautics and Space Administration
Start Date: 2005-11-04
End Date: 2010-01-28
Contract Duration: 1,546 days
Daily Burn Rate: $9.1K/day
Competition Type: COMPETED UNDER SAP
Number of Offers Received: 5
Pricing Type: FIRM FIXED PRICE
Sector: Energy
Official Description: NATURAL GAS SUPPLY FOR GRC
Place of Performance
Location: WOODBRIDGE, MIDDLESEX County, NEW JERSEY, 07095
Plain-Language Summary
National Aeronautics and Space Administration obligated $14.1 million to HESS CORPORATION for work described as: NATURAL GAS SUPPLY FOR GRC Key points: 1. The contract value of $14.1 million over its period of performance suggests a significant commitment to energy supply. 2. Competition dynamics appear favorable, with the contract being competed under SAP, indicating a structured procurement process. 3. The firm-fixed-price contract type generally offers cost certainty for the government. 4. The duration of approximately 5 years (1546 days) indicates a long-term need for the service. 5. The contract was awarded to Hess Corporation, a major energy player, suggesting a focus on reliable supply. 6. The geographic location in New Jersey is relevant for regional energy infrastructure.
Value Assessment
Rating: good
The contract value of $14.1 million for natural gas supply over roughly five years appears reasonable for a federal agency like NASA. Without specific per-unit pricing or detailed market data for the New Jersey region during the award period (2005-2010), a precise benchmark is difficult. However, the firm-fixed-price structure suggests that the government aimed to lock in costs, which can be a value-preserving strategy. The competitive award process also implies that pricing was scrutinized against market alternatives.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was 'COMPETED UNDER SAP' (Small Acquisition Procedures), which typically implies a competitive process for acquisitions below certain thresholds. While SAP can sometimes involve fewer formal requirements than full and open competition, it still necessitates soliciting offers from multiple sources. The fact that it was competed suggests that NASA sought to obtain the best value through a bidding process, rather than directly negotiating with a single provider.
Taxpayer Impact: A competitive award process, even under SAP, generally benefits taxpayers by encouraging lower prices and better terms through vendor rivalry.
Public Impact
The primary beneficiary is NASA, ensuring a consistent and reliable supply of natural gas for its facilities in New Jersey. The service delivered is the provision of natural gas, a critical utility for operational continuity. The geographic impact is localized to New Jersey, where NASA facilities requiring this supply are located. Workforce implications are likely minimal for the government, with the primary workforce being employed by the contractor, Hess Corporation.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for price volatility if market conditions changed significantly after the fixed-price contract was awarded.
- Reliance on a single large supplier could pose risks if Hess Corporation faced operational disruptions.
Positive Signals
- Awarded under a competitive process, suggesting a degree of price and performance vetting.
- Firm-fixed-price contract provides budget certainty for NASA.
- Contract awarded to a well-established energy provider (Hess Corporation) implies a higher likelihood of reliable service delivery.
Sector Analysis
This contract falls within the Energy sector, specifically focusing on natural gas distribution. The market for natural gas supply is typically characterized by regional infrastructure, regulatory oversight, and fluctuating commodity prices. Federal agencies are significant consumers of energy, and contracts like this represent a portion of overall government spending on utilities and operational necessities. Benchmarking would involve comparing this contract's value and duration against similar natural gas supply contracts awarded to other federal agencies or large commercial entities in the same region during the same time period.
Small Business Impact
The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, it likely did not involve specific subcontracting requirements aimed at small businesses unless mandated by broader federal regulations not detailed here. The award to Hess Corporation, a large energy company, suggests that small business participation was not a primary focus of this particular procurement.
Oversight & Accountability
As a competed contract awarded under SAP, it would have undergone internal NASA procurement review. Oversight would primarily involve contract administration to ensure delivery and payment terms were met. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected during the procurement or performance phases. Transparency is generally limited for contracts awarded under SAP compared to full and open competition, though basic award information is publicly available.
Related Government Programs
- Federal Utility Contracts
- Energy Supply Contracts
- NASA Procurement
- Natural Gas Procurement
- Firm Fixed Price Contracts
Risk Flags
- Potential for price risk due to fixed-price contract in a volatile market.
- Unclear justification for using SAP on a contract of this value.
- Limited public data on specific performance metrics and SLAs.
Tags
energy, natural-gas, nasa, new-jersey, competed, firm-fixed-price, utility, large-contract, hess-corporation, procurement-sap
Frequently Asked Questions
What is this federal contract paying for?
National Aeronautics and Space Administration awarded $14.1 million to HESS CORPORATION. NATURAL GAS SUPPLY FOR GRC
Who is the contractor on this award?
The obligated recipient is HESS CORPORATION.
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 $14.1 million.
What is the period of performance?
Start: 2005-11-04. End: 2010-01-28.
What was the specific rationale for using Small Acquisition Procedures (SAP) for a contract valued at over $14 million?
The use of Small Acquisition Procedures (SAP) for a contract valued at $14.1 million, which exceeds typical SAP thresholds for goods and services (which were generally around $100,000-$150,000 in the mid-2000s), is unusual. It's possible that specific circumstances or older regulations allowed for this, or there might be a misinterpretation of the 'COMPETED UNDER SAP' designation. Typically, contracts of this magnitude would undergo more extensive full and open competition processes to maximize competition and ensure the best possible pricing and terms. Without further clarification on NASA's procurement policies at the time or the specific nature of the 'SAP' used, it's difficult to definitively explain this deviation from standard practice for larger value contracts. It could indicate a streamlined process for specific types of services or a legacy procedural allowance.
How did the pricing of this contract compare to prevailing market rates for natural gas in New Jersey between 2005 and 2010?
Determining the precise market competitiveness of this $14.1 million natural gas supply contract awarded to Hess Corporation (2005-2010) requires access to historical natural gas pricing data for New Jersey and detailed contract terms. The contract was firm-fixed-price, which shielded NASA from market fluctuations but could mean they overpaid if prices dropped significantly. Conversely, if prices rose sharply, the fixed price would have been advantageous. Publicly available data on average natural gas prices in New Jersey during that period can provide a general benchmark. For instance, the Energy Information Administration (EIA) reports historical price data. Comparing the implied per-unit cost from the contract (total value divided by estimated annual consumption) against these benchmarks, while accounting for delivery terms and contract duration, would be necessary for a thorough assessment. Given the competitive award, it's presumed the pricing was deemed fair at the time of award.
What were the key performance indicators (KPIs) or service level agreements (SLAs) associated with this natural gas supply contract?
Specific Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this particular natural gas supply contract are not detailed in the provided data. However, for such a utility contract, typical KPIs would likely revolve around reliability of supply (e.g., minimizing interruptions), delivery accuracy (meeting scheduled volumes), and potentially response times for any service issues. For a firm-fixed-price contract, the primary performance expectation is consistent delivery of the contracted service as specified. NASA would have monitored Hess Corporation's adherence to the delivery schedule and the quality of the gas supplied. Any deviations from the agreed-upon terms could trigger contractual remedies or penalties, depending on the specific clauses within the contract.
What is Hess Corporation's track record with federal government contracts, particularly with NASA?
Hess Corporation, as a major energy company, has likely held numerous contracts with various government entities over the years, though specific details for this $14.1 million NASA contract are limited. A comprehensive review would involve searching federal procurement databases like USASpending.gov for all contracts awarded to Hess Corporation and its subsidiaries. This would reveal the volume, value, agencies involved, and types of services or goods provided. Examining past performance ratings, any contract disputes, or terminations associated with Hess Corporation's government work would provide further insight into their reliability and track record. For this specific NASA contract, the fact that it was competed and awarded suggests Hess met the necessary qualifications and offered competitive terms at the time.
How does NASA's spending on natural gas compare to its spending on other energy sources or utilities?
To compare NASA's spending on natural gas to other energy sources, one would need to analyze NASA's broader budget and procurement data over the relevant fiscal years. This involves aggregating all contracts related to energy procurement, including electricity, fuel oil, propane, and renewable energy sources. Data from sources like USASpending.gov or NASA's own financial reports would be essential. The $14.1 million for natural gas over approximately five years represents a specific component of NASA's operational utility costs. A comparative analysis would reveal the relative importance of natural gas versus other energy forms in supporting NASA's mission activities and facilities across its various centers. This context helps understand NASA's overall energy strategy and expenditure patterns.
Were there any significant changes in natural gas prices or supply dynamics in New Jersey during the contract period (2005-2010) that impacted this contract?
The period between 2005 and 2010 saw notable fluctuations in the natural gas market, influenced by factors such as global energy demand, domestic production levels (including the rise of shale gas), weather patterns, and geopolitical events. While this contract was firm-fixed-price, shielding NASA from direct price volatility, the underlying market conditions could still indirectly affect supply availability or the contractor's operational costs. For example, extreme weather events could strain supply infrastructure. If market prices deviated significantly from the fixed price, it could impact Hess Corporation's profitability and potentially their long-term willingness to bid on similar government contracts. A detailed analysis would require examining historical price indices for the region and any reported supply disruptions during the contract's performance.
Industry Classification
NAICS: Utilities › Natural Gas Distribution › Natural Gas Distribution
Product/Service Code: FUELS, LUBRICANTS, OILS, WAXES
Competition & Pricing
Extent Competed: COMPETED UNDER SAP
Solicitation Procedures: SIMPLIFIED ACQUISITION
Offers Received: 5
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 1 HESS PLAZA, WOODBRIDGE, NJ, 06
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $14,118,896
Exercised Options: $14,118,896
Current Obligation: $14,118,896
Timeline
Start Date: 2005-11-04
Current End Date: 2010-01-28
Potential End Date: 2010-01-28 00:00:00
Last Modified: 2010-01-28
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