DoD's $23M Little Rock AFB Electrical Utility Privatization Contract with Entergy Arkansas Faces Long Term, Limited Competition Concerns
Contract Overview
Contract Amount: $23,086,054 ($23.1M)
Contractor: Entergy Arkansas, LLC
Awarding Agency: Department of Defense
Start Date: 2009-09-30
End Date: 2061-09-22
Contract Duration: 18,985 days
Daily Burn Rate: $1.2K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: UTILITY PRIVATIZATION FOR THE ELECTRICAL UTILITY SYSTEM AT LITTLE ROCK AFB.
Place of Performance
Location: LITTLE ROCK, PULASKI County, ARKANSAS, 72201
State: Arkansas Government Spending
Plain-Language Summary
Department of Defense obligated $23.1 million to ENTERGY ARKANSAS, LLC for work described as: UTILITY PRIVATIZATION FOR THE ELECTRICAL UTILITY SYSTEM AT LITTLE ROCK AFB. Key points: 1. Contract awarded for $23.09M to Entergy Arkansas, LLC for electrical utility privatization. 2. Long duration (2009-2061) raises questions about long-term value and adaptability. 3. While awarded under 'Full and Open Competition', the nature of utility privatization may limit future competitive opportunities. 4. Sector: Defense Logistics Agency (DLA) spending on essential infrastructure.
Value Assessment
Rating: fair
The contract value of $23.09M is spread over a very long period (over 50 years). Benchmarking is difficult due to the unique nature of utility privatization and the extended timeframe. The initial award amount appears reasonable for the scope, but long-term cost escalation is a significant unknown.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was initially awarded through full and open competition. However, the long-term nature of utility privatization often leads to a de facto sole-source situation for ongoing operations and maintenance once the initial privatization is complete, potentially limiting future price discovery.
Taxpayer Impact: Taxpayer funds are committed for a very extended period. While privatization aims for efficiency, the long duration necessitates careful monitoring to ensure continued value and prevent cost overruns.
Public Impact
Ensures reliable electrical power for Little Rock AFB operations. Long-term commitment may impact future base modernization plans. Potential for private sector efficiencies in utility management. Extended contract duration raises questions about adaptability to future technological changes.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Long contract duration (over 50 years)
- Potential for limited future competition
- Uncertainty of long-term cost escalation
- Dependence on a single provider for essential services
Positive Signals
- Initial award through full and open competition
- Potential for private sector efficiencies
- Ensures critical infrastructure reliability
Sector Analysis
This contract falls within the Defense sector, specifically focusing on essential infrastructure maintenance and operation. Utility privatization is a common strategy to leverage private sector expertise and capital for long-term infrastructure needs, often involving significant upfront investment and long-term service agreements.
Small Business Impact
The data indicates the award went to Entergy Arkansas, LLC, a large utility provider. There is no specific information provided regarding the involvement or subcontracting opportunities for small businesses in this particular contract.
Oversight & Accountability
The long duration of this contract requires robust oversight mechanisms to ensure Entergy Arkansas, LLC meets its obligations and that the terms remain favorable to the government over the decades. Regular performance reviews and audits will be crucial for accountability.
Related Government Programs
- Electric Power Distribution
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Long-term contract duration creates significant future uncertainty.
- Potential for vendor lock-in and limited future competition.
- Risk of cost escalation over the extended period.
- Adaptability to future technological and regulatory changes is questionable.
- Lack of explicit small business participation noted.
Tags
electric-power-distribution, department-of-defense, ar, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $23.1 million to ENTERGY ARKANSAS, LLC. UTILITY PRIVATIZATION FOR THE ELECTRICAL UTILITY SYSTEM AT LITTLE ROCK AFB.
Who is the contractor on this award?
The obligated recipient is ENTERGY ARKANSAS, LLC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $23.1 million.
What is the period of performance?
Start: 2009-09-30. End: 2061-09-22.
What are the key performance indicators (KPIs) used to measure the success of this utility privatization contract over its long lifespan, and how are they adjusted for inflation or technological advan
Key performance indicators likely focus on reliability metrics (e.g., uptime, outage frequency/duration), response times for maintenance, and adherence to safety and environmental standards. These KPIs should be reviewed periodically to ensure they remain relevant and are adjusted for inflation and technological advancements to maintain fair pricing and service quality over the contract's extensive duration.
Given the long-term nature of the contract, what provisions exist to address potential changes in energy technology, regulatory environments, or the base's future energy demands?
The contract should include clauses for periodic review and potential renegotiation to accommodate significant shifts in energy technology, evolving environmental regulations, or changes in the base's energy consumption patterns. Flexibility mechanisms, such as options for upgrades or modifications, are crucial to prevent the contract from becoming obsolete or overly burdensome.
How does the government ensure continued cost-effectiveness and value for taxpayer money over the 50+ year contract term, especially considering potential market shifts or monopolistic tendencies in u
Ensuring long-term cost-effectiveness requires robust benchmarking against similar privatized utility contracts and market rates, alongside strict performance monitoring. The government should have mechanisms to re-evaluate pricing structures periodically and potentially incorporate competitive elements or alternative sourcing options if feasible, mitigating risks associated with long-term, single-provider agreements.
Industry Classification
NAICS: Utilities › Electric Power Generation, Transmission and Distribution › Electric Power Distribution
Product/Service Code: UTILITIES AND HOUSEKEEPING › UTILITIES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: SP060003R0092
Offers Received: 3
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Entergy Corporation
Address: 425 W CAPITOL AVE 40TH FL, LITTLE ROCK, AR, 72201
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $103,964,316
Exercised Options: $103,964,316
Current Obligation: $23,086,054
Actual Outlays: $2,786,452
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Timeline
Start Date: 2009-09-30
Current End Date: 2061-09-22
Potential End Date: 2061-09-22 00:00:00
Last Modified: 2025-11-19
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