DoD's $67M utilities contract for Minot AFB water/wastewater systems awarded to Base Utilities Inc

Contract Overview

Contract Amount: $67,227,687 ($67.2M)

Contractor: Base Utilities Inc

Awarding Agency: Department of Defense

Start Date: 2013-08-16

End Date: 2064-02-26

Contract Duration: 18,456 days

Daily Burn Rate: $3.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE REDETERMINATION

Sector: Other

Official Description: UTILITIES SERVICES FOR MINOT AFB WATER AND WASTEWATER SYSTEMS

Place of Performance

Location: MINOT AFB, WARD County, NORTH DAKOTA, 58704

State: North Dakota Government Spending

Plain-Language Summary

Department of Defense obligated $67.2 million to BASE UTILITIES INC for work described as: UTILITIES SERVICES FOR MINOT AFB WATER AND WASTEWATER SYSTEMS Key points: 1. Long-term contract (over 18 years) suggests a need for sustained utility services. 2. Fixed Price Redetermination contract type allows for price adjustments, potentially impacting final cost. 3. Awarded through full and open competition, indicating a broad market search. 4. Contract duration extends significantly beyond typical service agreements. 5. The contract covers essential infrastructure for a major military installation. 6. The North Dakota location may present unique logistical or environmental considerations.

Value Assessment

Rating: fair

The total contract value of $67.2 million over an 18-year period averages approximately $3.7 million annually. Benchmarking this against similar utility service contracts for large military installations is challenging due to the long duration and specific service scope. The Fixed Price Redetermination (FPR) pricing structure means the final cost is not fixed upfront and will be subject to adjustments based on actual costs incurred, which introduces uncertainty in assessing true value-for-money at the outset. Without detailed cost breakdowns or comparisons to other regional utility providers, a definitive value assessment is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. The presence of two bids indicates a moderate level of competition for this essential service. While competition is present, the long-term nature and specialized requirements of maintaining water and wastewater systems at a large military base might limit the pool of qualified bidders. The fact that it was competed broadly is a positive sign for price discovery.

Taxpayer Impact: Full and open competition generally benefits taxpayers by encouraging competitive pricing and potentially leading to more cost-effective solutions. However, the long-term nature of this contract means taxpayers are committed to this provider for an extended period, and the effectiveness of initial competition in securing the best long-term value is key.

Public Impact

Provides essential water and wastewater services to Minot Air Force Base personnel and operations. Ensures the continuous functioning of critical infrastructure for national defense readiness. Supports the local workforce through employment opportunities related to utility maintenance and operation. Impacts the environmental compliance and public health of the surrounding region by managing waste. Geographically focused on Minot, North Dakota, serving a specific military installation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (over 18 years) may limit flexibility to adopt newer technologies or renegotiate terms if market conditions change significantly.
Fixed Price Redetermination pricing introduces uncertainty regarding the final cost to taxpayers.
Dependence on a single contractor for critical infrastructure for an extended period could pose risks if performance degrades.
The specific nature of military base utilities may involve unique security or operational requirements not easily benchmarked.

Positive Signals

Awarded through full and open competition, suggesting a competitive process was followed.
Contract covers essential services vital for the operation of a major military installation.
The long duration indicates a stable, long-term commitment to ensuring service continuity.
The contractor is responsible for maintaining critical water and wastewater infrastructure.

Sector Analysis

The utilities sector, particularly for large government installations, involves significant infrastructure investment and long-term service agreements. Contracts for water and wastewater management are crucial for public health and environmental safety. This contract fits within the broader category of public utilities and infrastructure services, often characterized by regulated pricing and long operational lifecycles. Comparable spending benchmarks are difficult without specific details on the scale and complexity of the systems at Minot AFB, but multi-year utility contracts for federal facilities can range from millions to hundreds of millions of dollars.

Small Business Impact

The contract data indicates that small business participation (ss: false, sb: false) was not a specific set-aside requirement for the prime contract. This suggests the primary award was made to a larger entity capable of fulfilling the extensive requirements. There is no explicit information on subcontracting plans for small businesses within this award. Therefore, the direct impact on the small business ecosystem from this prime contract appears limited, though the prime contractor may engage small businesses for specific services or supplies.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense and the Defense Logistics Agency (DLA). As a definitive contract with a long duration, it likely involves periodic performance reviews, financial audits, and compliance checks to ensure Base Utilities Inc. meets the terms and conditions. The contract type (FPR) necessitates careful monitoring of cost redeterminations. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse is suspected. Transparency is generally maintained through contract award databases, though detailed performance metrics may not be publicly disclosed.

Related Government Programs

Base Operations Support (BOS)
Military Housing Utilities
Water Treatment Services
Wastewater Management Contracts
Federal Infrastructure Maintenance

Risk Flags

Long-term contract duration
Fixed Price Redetermination pricing
Potential for cost overruns
Limited flexibility for technological upgrades

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $67.2 million to BASE UTILITIES INC. UTILITIES SERVICES FOR MINOT AFB WATER AND WASTEWATER SYSTEMS

Who is the contractor on this award?

The obligated recipient is BASE UTILITIES INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $67.2 million.

What is the period of performance?

Start: 2013-08-16. End: 2064-02-26.

What is the historical spending pattern for utilities at Minot AFB prior to this contract?

Detailed historical spending data for utilities specifically at Minot AFB prior to this contract award is not publicly available in the provided data. However, the duration of this new contract (2013-2064) suggests a long-term strategic decision to outsource or consolidate these essential services. The previous approach might have involved multiple smaller contracts, in-house management, or different service providers. Understanding past expenditures would provide a baseline for evaluating the cost-effectiveness of this long-term agreement, but such data requires access to historical procurement records for the base.

How does the annual cost of this contract compare to similar utility services at other large military bases?

The average annual cost of this contract is approximately $3.7 million ($67.2M / 18.4 years). Comparing this figure directly to similar contracts at other large military bases is challenging without detailed scope and service level agreements for those bases. Factors such as geographic location (affecting resource availability and labor costs), the specific size and complexity of the water and wastewater infrastructure, environmental regulations, and the contract type (e.g., fixed-price vs. cost-plus) significantly influence pricing. However, for large installations, annual utility service costs can easily run into several million dollars, making this contract appear within a plausible range, though a precise benchmark requires more granular comparative data.

What are the specific risks associated with a Fixed Price Redetermination (FPR) contract for utilities?

The primary risk of an FPR contract for utilities is the uncertainty of the final cost. While it aims to provide a fair price based on actual costs incurred, it shifts some of the cost risk to the government. Taxpayers may end up paying more than initially anticipated if the contractor's costs escalate unexpectedly due to factors like material price increases, labor cost fluctuations, or unforeseen operational challenges. For the government, effective oversight is crucial to ensure that costs reported by the contractor are reasonable and allowable. This requires robust auditing and verification processes throughout the contract's life.

What performance metrics are typically used to evaluate utility service contracts for military bases?

Performance metrics for utility service contracts typically focus on reliability, quality, and compliance. Key indicators often include water quality testing results (meeting EPA and DoD standards), wastewater treatment effectiveness, system uptime and response times for outages or emergencies, adherence to environmental regulations, and preventative maintenance schedules. For a contract like this, metrics would likely be tied to maintaining specific service levels for water pressure, flow rates, and contaminant levels, as well as ensuring timely repairs and system integrity. The contract itself would detail the specific Key Performance Indicators (KPIs) and associated remedies or incentives.

What is the contractor's track record in managing similar large-scale utility infrastructure projects?

Information regarding Base Utilities Inc.'s specific track record in managing similar large-scale utility infrastructure projects is not detailed in the provided contract data. To assess their capability, one would need to review their past performance on other government or commercial contracts, looking at project size, duration, scope of services, and client satisfaction. A thorough review would also consider any history of contract disputes, performance issues, or successful project completions. Without this external performance data, it's difficult to definitively assess their suitability beyond the fact they won this competitive bid.

How does the extended duration of this contract impact potential future technological upgrades or service innovations?

The extensive 18-year duration of this contract presents a potential challenge for incorporating future technological upgrades or service innovations. Technology in the utilities sector, particularly in areas like water treatment, monitoring, and distribution, can evolve rapidly. A long-term contract might lock the government into existing technologies or service methods, making it more difficult or costly to adopt newer, potentially more efficient or environmentally friendly solutions that emerge during the contract period. Contractual mechanisms for incorporating innovation, or periodic reviews allowing for adjustments, would be crucial to mitigate this risk.

Industry Classification

NAICS: Utilities › Water, Sewage and Other Systems › Water Supply and Irrigation Systems

Product/Service Code: UTILITIES AND HOUSEKEEPING › UTILITIES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: SP060009R0806

Offers Received: 2

Pricing Type: FIXED PRICE REDETERMINATION (A)

Evaluated Preference: NONE

Contractor Details

Address: 389 FIRING LN, MINOT AFB, ND, 58704

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $267,353,140

Exercised Options: $267,353,140

Current Obligation: $67,227,687

Actual Outlays: $5,754,857

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline