Vandenberg AFB water privatization contract awarded for over $111M to American Water Operations and Maintenance, LLC

Contract Overview

Contract Amount: $111,793,343 ($111.8M)

Contractor: American Water Operations and Maintenance, LLC

Awarding Agency: Department of Defense

Start Date: 2016-06-01

End Date: 2066-05-31

Contract Duration: 18,261 days

Daily Burn Rate: $6.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: IGF::OT::IGF CONTRACT AWARDED FOR THE PRIVATIZATION OF THE WATER DISTRIBUTION AND WASTEWATER COLLECTION SYSTEMS AT VANDENBERG AFB, CA.

Place of Performance

Location: LOMPOC, SANTA BARBARA County, CALIFORNIA, 93437

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $111.8 million to AMERICAN WATER OPERATIONS AND MAINTENANCE, LLC for work described as: IGF::OT::IGF CONTRACT AWARDED FOR THE PRIVATIZATION OF THE WATER DISTRIBUTION AND WASTEWATER COLLECTION SYSTEMS AT VANDENBERG AFB, CA. Key points: 1. The contract's long duration (over 50 years) suggests a need for stable, long-term infrastructure management. 2. Fixed-price with economic price adjustment indicates potential for cost fluctuations over the contract's life. 3. Awarded via full and open competition, implying a robust bidding process. 4. The contract covers essential services: water distribution and wastewater collection. 5. The significant value suggests a substantial impact on the base's operational capabilities.

Value Assessment

Rating: fair

The contract value of $111.8 million over 50 years represents an average annual cost of approximately $2.2 million. Benchmarking this against similar privatized utility contracts for military bases is challenging due to the unique nature and long-term scope. However, the fixed-price with economic price adjustment structure suggests a baseline cost with provisions for inflation and other economic factors, which needs careful monitoring to ensure value for money over the extended period.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, indicating that multiple bidders were likely considered. This approach generally fosters competitive pricing and allows the government to select the most advantageous offer based on technical and cost factors. The presence of 5 bidders (as indicated by 'no': 5) suggests a healthy level of interest and competition for this type of long-term infrastructure service.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it typically drives down costs through a competitive bidding process, ensuring the government secures the best possible price for essential services.

Public Impact

Residents and personnel at Vandenberg AFB benefit from reliable water and wastewater services. The contract ensures the operation and maintenance of critical utility infrastructure. The geographic impact is localized to Vandenberg Air Force Base in California. This contract supports jobs related to utility management and maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long-term nature of the contract (over 50 years) could lead to price escalation concerns if economic price adjustments are not carefully managed.
Fixed-price with economic price adjustment contracts can be susceptible to inflation, potentially increasing the total cost over time.
Reliance on a single contractor for such a critical, long-duration service raises questions about long-term contractor performance and potential for complacency.

Positive Signals

Awarded through full and open competition, suggesting a competitive process that likely secured a reasonable initial price.
The contract addresses essential services critical for the base's operations and personnel well-being.
The long duration provides stability and predictability for both the government and the contractor in managing vital infrastructure.

Sector Analysis

This contract falls within the Utilities and Energy Services sector, specifically focusing on water and wastewater management. Privatization of such services is a common strategy for government entities to leverage private sector expertise and potentially reduce long-term operational burdens. The market for utility privatization can be competitive, with specialized firms bidding on long-term infrastructure management contracts.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of specific subcontracting requirements for small businesses in the provided data. This suggests that the primary contractor, American Water Operations and Maintenance, LLC, will likely manage the services directly or through its own resources, potentially limiting direct opportunities for small businesses within this specific award.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Logistics Agency (DLA) and the Department of Defense. Mechanisms would include performance reviews, audits, and adherence to contract terms. Transparency is generally maintained through contract award databases and reporting requirements, though specific day-to-day operational oversight details are not provided.

Related Government Programs

Vandenberg AFB Operations and Maintenance Contracts
DoD Utility Privatization Programs
Water and Wastewater Management Services Contracts

Risk Flags

Long-term contract duration
Economic Price Adjustment clause
Critical infrastructure service

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $111.8 million to AMERICAN WATER OPERATIONS AND MAINTENANCE, LLC. IGF::OT::IGF CONTRACT AWARDED FOR THE PRIVATIZATION OF THE WATER DISTRIBUTION AND WASTEWATER COLLECTION SYSTEMS AT VANDENBERG AFB, CA.

Who is the contractor on this award?

The obligated recipient is AMERICAN WATER OPERATIONS AND MAINTENANCE, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $111.8 million.

What is the period of performance?

Start: 2016-06-01. End: 2066-05-31.

What is the historical spending pattern for water and wastewater services at Vandenberg AFB prior to this privatization contract?

Historical spending data for water and wastewater services at Vandenberg AFB prior to the June 2016 award is not directly available in the provided data. However, such contracts are often initiated to achieve cost savings or operational efficiencies compared to in-house management. To assess the value of this $111.8 million, 50-year contract, a comparison would ideally be made against the projected costs of the Air Force managing these systems internally over the same period, considering infrastructure upgrades, staffing, and maintenance. Without pre-award internal cost data, a direct historical spending comparison is not feasible from the given information.

How does the pricing structure (Fixed Price with Economic Price Adjustment) compare to other long-term utility privatization contracts?

The Fixed Price with Economic Price Adjustment (FPEPA) structure is common for long-term contracts involving infrastructure and services where input costs (like labor, energy, materials) are subject to change over extended periods. This structure aims to provide cost certainty for the government on the base price while allowing the contractor to adjust for inflation and other economic factors, preventing significant losses or windfalls due to market volatility. Compared to purely fixed-price contracts, FPEPA offers more flexibility but requires robust mechanisms to verify and justify price adjustments. Compared to cost-plus contracts, it offers more cost certainty for the government. The specific economic indices used for adjustment in this contract would be key to a detailed comparison.

What are the key performance indicators (KPIs) used to measure the success of this contract?

Specific Key Performance Indicators (KPIs) for this contract are not detailed in the provided award data. However, for utility privatization contracts of this nature, typical KPIs would likely include water quality compliance (meeting EPA and DoD standards), wastewater discharge compliance, system uptime and reliability (e.g., percentage of time water is available, wastewater system operational status), response times for service calls and emergencies, infrastructure maintenance completion rates, and customer satisfaction metrics from base personnel. The contract's performance would be evaluated against these metrics, often with associated incentives or penalties.

What is the track record of American Water Operations and Maintenance, LLC in managing similar large-scale government contracts?

American Water Operations and Maintenance, LLC is a subsidiary of American Water Works Company, Inc., a large, established utility management company. They have a significant history of operating and maintaining water and wastewater systems for various municipal, industrial, and government clients. While specific details on their track record with large-scale DoD privatization contracts are not in the provided data, their parent company's extensive experience suggests a substantial capacity and established processes for managing such complex, long-term infrastructure projects. A deeper dive into their past performance on similar contracts, including any past performance reviews or disputes, would be necessary for a comprehensive assessment.

What are the potential risks associated with a 50-year contract for utility services?

The primary risks associated with a 50-year contract for utility services include: 1) **Cost Escalation:** Economic price adjustments could lead to significantly higher costs over time due to inflation, changes in energy prices, or regulatory requirements. 2) **Technological Obsolescence:** Infrastructure and operational technologies may become outdated over 50 years, requiring potential renegotiations or significant reinvestment. 3) **Contractor Performance Decline:** Long-term contracts can sometimes lead to a decline in contractor diligence or innovation over time. 4) **Loss of Government Control/Flexibility:** The government commits to a specific provider for an extended period, potentially limiting its ability to adapt to changing needs or adopt new technologies. 5) **Contractor Viability:** Ensuring the long-term financial stability and operational capacity of the contractor over five decades is a risk.

How does the privatization of these services align with broader Department of Defense goals for infrastructure management?

The privatization of utility services like water distribution and wastewater collection aligns with broader Department of Defense (DoD) goals to leverage private sector expertise, reduce the operational burden on military personnel, and potentially achieve cost efficiencies. DoD Instruction 4165.26, 'Utility Privatization,' encourages such partnerships to modernize infrastructure, ensure reliable service delivery, and allow the military to focus on its core mission. By transferring the responsibility for operation, maintenance, and capital investment to a specialized private entity, the DoD can aim to upgrade aging systems and ensure compliance with environmental regulations while managing long-term costs through structured agreements like this one.

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: SP060010R0809

Offers Received: 5

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

Evaluated Preference: NONE

Contractor Details

Parent Company: American Water Works Company, Inc.

Address: 1025 LAUREL OAK RD, VOORHEES, NJ, 08043

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

Financial Breakdown

Contract Ceiling: $489,443,651

Exercised Options: $489,443,651

Current Obligation: $111,793,343

Actual Outlays: $7,123,945

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline