DoD's $109M contract for Hill AFB electrical system privatization awarded to City Light & Power, Inc

Contract Overview

Contract Amount: $109,092,129 ($109.1M)

Contractor: City Light & Power, Inc.

Awarding Agency: Department of Defense

Start Date: 2014-06-12

End Date: 2064-11-30

Contract Duration: 18,434 days

Daily Burn Rate: $5.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: IGF::OT::IGF CT - PRIVATIZATION OF THE ELECTRICAL DISTIBUTION SYSTEM AT HILL AIR FORCE BASE, UTAH

Place of Performance

Location: HILL AFB, DAVIS County, UTAH, 84056

State: Utah Government Spending

Plain-Language Summary

Department of Defense obligated $109.1 million to CITY LIGHT & POWER, INC. for work described as: IGF::OT::IGF CT - PRIVATIZATION OF THE ELECTRICAL DISTIBUTION SYSTEM AT HILL AIR FORCE BASE, UTAH Key points: 1. Long-term contract spanning over 30 years suggests a need for sustained infrastructure management. 2. The contract type (Fixed Price with Economic Price Adjustment) aims to balance cost certainty with market fluctuations. 3. Awarded through full and open competition, indicating a potentially competitive bidding process. 4. The privatization of a critical utility system may introduce new operational efficiencies and risks. 5. The significant duration and value point to a substantial commitment of federal resources. 6. Focus on electric power distribution highlights a core operational need for the base.

Value Assessment

Rating: fair

The contract value of $109 million over approximately 30 years averages around $3.6 million annually. Benchmarking this against similar utility privatization contracts is challenging without specific details on the scope of services, infrastructure condition, and market rates for such long-term agreements. The Fixed Price with Economic Price Adjustment (FPEPA) structure allows for adjustments, which can mitigate some risk for the contractor but may lead to cost increases for the government over time. A detailed cost-benefit analysis comparing this to traditional government-operated utility services would be necessary for a comprehensive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple qualified vendors had the opportunity to bid. This method is generally preferred as it fosters a competitive environment, potentially leading to better pricing and service offerings for the government. The number of bidders is not specified, but the 'full and open' designation implies a robust competition was sought.

Taxpayer Impact: Full and open competition typically benefits taxpayers by driving down costs through market forces and encouraging innovation among bidders, leading to more efficient service delivery.

Public Impact

The primary beneficiaries are the Department of Defense and personnel at Hill Air Force Base, Utah, who will receive reliable electric power distribution services. The contract ensures the continued operation and maintenance of a critical utility infrastructure, supporting the base's mission. The geographic impact is localized to Hill Air Force Base, Utah. While not directly creating new federal jobs, the contract likely impacts the workforce through the contractor's employment of personnel for operations and maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long-term nature of the contract (over 30 years) increases the risk of unforeseen cost escalations due to economic price adjustments.
Dependence on a single contractor for a critical utility system could pose risks if the contractor faces financial difficulties or operational failures.
Privatization of essential services may raise concerns about long-term government control and oversight.
The fixed-price nature with adjustments might not fully shield the government from all cost volatility.

Positive Signals

Awarded through full and open competition, suggesting a competitive process that could lead to favorable terms.
The contract aims to ensure reliable electric power distribution, a critical function for base operations.
The FPEPA contract type attempts to provide a degree of cost stability while acknowledging market dynamics.
Long-term commitment allows for strategic planning and investment in infrastructure by the contractor.

Sector Analysis

The defense sector relies heavily on robust utility infrastructure to support its installations. Contracts for privatizing or managing electrical distribution systems are common within the Department of Defense, aiming to leverage private sector expertise and potentially reduce long-term operational burdens. The market for utility services is typically characterized by regulated pricing and long-term infrastructure investments. This contract fits within the broader trend of public-private partnerships for managing government facilities and infrastructure.

Small Business Impact

The provided data indicates that small business participation (ss: false, sb: false) was not a specific set-aside requirement for this contract. This suggests that the primary focus was on full and open competition among all qualified vendors, potentially larger firms with the capacity to manage such a large-scale, long-term utility contract. There is no explicit information on subcontracting plans for small businesses, which would be a key area to investigate for potential impacts on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Logistics Agency (DLA) or the specific contracting command at Hill Air Force Base. Mechanisms likely include regular performance reviews, audits, and adherence to service level agreements outlined in the contract. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Logistics Agency Contracts
Hill Air Force Base Operations
Utility Privatization Contracts
Department of Defense Infrastructure Management
Electric Power Distribution Services

Risk Flags

Long-term commitment
Potential for cost escalation
Contractor performance risk
Dependence on single provider

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $109.1 million to CITY LIGHT & POWER, INC.. IGF::OT::IGF CT - PRIVATIZATION OF THE ELECTRICAL DISTIBUTION SYSTEM AT HILL AIR FORCE BASE, UTAH

Who is the contractor on this award?

The obligated recipient is CITY LIGHT & POWER, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $109.1 million.

What is the period of performance?

Start: 2014-06-12. End: 2064-11-30.

What is the historical spending pattern for electrical distribution services at Hill Air Force Base prior to this privatization contract?

Analyzing historical spending patterns for electrical distribution at Hill Air Force Base before this contract is crucial for establishing a baseline. Without specific historical data, it's difficult to definitively state the previous expenditure. However, typically, bases would incur costs related to in-house maintenance, repair, energy procurement, and potentially capital improvements for their electrical infrastructure. These costs would be borne through direct appropriations and managed by base personnel. Comparing the average annual cost under this new $109 million, 30-year contract (approximately $3.6 million/year) to previous direct government spending would reveal whether privatization is leading to cost savings or increased expenses. Factors like inflation, energy price volatility, and the scope of services covered under the previous arrangement versus the current contract need careful consideration for an accurate comparison.

How does the pricing structure (Fixed Price with Economic Price Adjustment) compare to other utility privatization contracts awarded by the DoD?

The Fixed Price with Economic Price Adjustment (FPEPA) is a common contract type used for long-term services where input costs are subject to fluctuation, such as utilities. For privatization contracts, this structure aims to provide the government with a degree of price certainty while allowing the contractor to adjust for significant changes in economic conditions (e.g., inflation, fuel costs). Compared to other DoD utility contracts, FPEPA is frequently employed for services like energy, water, and waste management over extended periods. The specific adjustment indices and caps defined within this contract would determine its precise competitiveness and risk allocation relative to others. A detailed review of the contract's economic adjustment clauses against benchmarks from similar long-term utility agreements would be necessary to fully assess its pricing competitiveness.

What are the key performance indicators (KPIs) and service level agreements (SLAs) associated with this contract, and how is performance monitored?

While specific KPIs and SLAs are not detailed in the provided summary data, contracts of this nature for critical infrastructure typically include stringent performance metrics. These often encompass reliability (e.g., uptime percentage, frequency and duration of outages), response times for repairs, power quality standards (voltage, frequency), and adherence to safety protocols. Performance monitoring is usually conducted by a government contracting officer's representative (COR) or a designated technical point of contact. Regular performance reviews, site inspections, and analysis of contractor-submitted reports are standard oversight mechanisms. Failure to meet KPIs or SLAs can result in contractual remedies, including financial penalties or termination.

What is the track record of City Light & Power, Inc. in managing similar large-scale utility privatization contracts for federal agencies?

Assessing the track record of City Light & Power, Inc. (CLP) is essential for understanding their capability to manage this significant contract. CLP has a history of working with federal agencies, including the Department of Defense, on utility infrastructure projects. Research into their past performance on similar long-term, large-value contracts, particularly those involving privatization of electrical distribution systems, would provide insight into their operational efficiency, financial stability, and ability to meet contractual obligations. Past performance reviews, client testimonials, and any history of disputes or contract modifications would be key indicators of their reliability and suitability for this role at Hill Air Force Base.

What are the potential risks associated with privatizing the electrical distribution system at a major military installation like Hill AFB?

Privatizing critical infrastructure like an electrical distribution system at a major military installation carries several potential risks. These include: 1) Loss of direct government control over a vital asset, potentially impacting operational flexibility during emergencies or security threats. 2) Contractor performance issues, such as inadequate maintenance, service disruptions, or failure to invest in necessary upgrades, which could compromise base operations. 3) Financial instability of the contractor, leading to service interruptions or a need for government intervention. 4) Security vulnerabilities, as a privatized system might present different attack surfaces or require enhanced cybersecurity measures. 5) Potential for cost overruns, despite fixed-price elements, due to unforeseen circumstances or aggressive escalation clauses. 6) Challenges in transitioning the system back to government control if the contract is terminated or expires.

How does the duration of this contract (over 30 years) impact the government's flexibility and long-term planning?

A contract duration exceeding 30 years represents a significant long-term commitment for the government. This extended timeframe provides the contractor with the certainty needed to make substantial capital investments in infrastructure upgrades and maintenance. For the government, it offers a stable, long-term utility service solution without the immediate burden of direct management and capital expenditure. However, it also reduces flexibility. Modifying the contract terms or scope to adapt to changing technological needs, evolving mission requirements, or unforeseen economic shifts becomes more complex and potentially costly over such a long period. Furthermore, it locks the government into a specific service provider and pricing structure for decades, potentially limiting opportunities to leverage future market innovations or renegotiate terms under different economic conditions.

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: SP060010R0802

Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: Amber Infrastructure LLC

Address: 6312 S FIDDLERS GREEN CIR STE 200E, GREENWOOD VILLAGE, CO, 80111

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

Financial Breakdown

Contract Ceiling: $445,733,913

Exercised Options: $445,733,913

Current Obligation: $109,092,129

Actual Outlays: $1,619,433

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline