DLA awards 50-year, $7M utility services contract for Gillem Enclave privatization

Contract Overview

Contract Amount: $7,026,452 ($7.0M)

Contractor: Utility Systems of Georgia, Inc.

Awarding Agency: Department of Defense

Start Date: 2018-03-01

End Date: 2066-02-28

Contract Duration: 17,531 days

Daily Burn Rate: $401/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: IGF::OT::IGF CONTRACT AWARD OF 50-YEAR UTILITY SERVICES CONTRACT IN CONJUNCTION WITH PRIVATIZATION OF THE WATER, WASTEWATER, AND NATURAL GAS SYSTEMS AT GILLEM ENCLAVE, GA

Place of Performance

Location: FOREST PARK, CLAYTON County, GEORGIA, 30297

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $7.0 million to UTILITY SYSTEMS OF GEORGIA, INC. for work described as: IGF::OT::IGF CONTRACT AWARD OF 50-YEAR UTILITY SERVICES CONTRACT IN CONJUNCTION WITH PRIVATIZATION OF THE WATER, WASTEWATER, AND NATURAL GAS SYSTEMS AT GILLEM ENCLAVE, GA Key points: 1. Long-term contract duration suggests significant infrastructure investment and operational commitment. 2. Fixed-price with economic price adjustment indicates potential for cost fluctuations over the contract's lifespan. 3. Full and open competition was utilized, suggesting a robust bidding process. 4. The contract covers essential utilities (water, wastewater, natural gas), critical for base operations. 5. Awarded by the Defense Logistics Agency, highlighting its role in supporting military installations. 6. The privatization aspect suggests a shift in service delivery model for the Gillem Enclave.

Value Assessment

Rating: good

The contract value of $7.03 million over 50 years equates to approximately $140,529 annually. This appears reasonable for comprehensive utility services at a military installation, especially considering the privatization component which often involves upfront investment by the contractor. Benchmarking against similar long-term utility management contracts for large federal facilities would provide a more precise value-for-money assessment, but the initial figures suggest a fair price for the scope and duration.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of four bidders (no=4) suggests a competitive environment, which typically drives better pricing and service offerings. This level of competition is favorable for the government as it allows for a thorough evaluation of various proposals and ensures that the selected contractor offers the best value.

Taxpayer Impact: Full and open competition generally leads to more cost-effective solutions for taxpayers by fostering a competitive marketplace that incentivizes lower bids and higher quality services.

Public Impact

Military personnel and their families at Gillem Enclave benefit from reliable water, wastewater, and natural gas services. The contract ensures the continuous operation and maintenance of critical utility infrastructure. The geographic impact is localized to Gillem Enclave, Georgia. The contract supports jobs in utility management, operations, and maintenance within the private sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long-term nature of the contract (50 years) presents risks related to contractor performance over an extended period and potential for economic price adjustments to significantly increase costs.
Reliance on a single contractor for essential utilities could create dependency and limit flexibility in service provision.
The privatization model may involve complex transition phases and require ongoing oversight to ensure service standards are met.

Positive Signals

Full and open competition suggests a strong initial selection process and potential for competitive pricing.
The fixed-price with economic price adjustment structure can provide cost stability for essential services while allowing for market fluctuations.
The long duration allows for long-term infrastructure planning and investment by the contractor, potentially leading to improved system reliability.

Sector Analysis

This contract falls within the Utilities and Energy Services sector, specifically focusing on the management and operation of water, wastewater, and natural gas systems. The market for such services is often characterized by long-term contracts, significant capital investment, and regulatory oversight. Federal agencies frequently engage private entities for utility management, particularly when privatization of existing infrastructure is involved, to leverage private sector expertise and financing. Comparable spending benchmarks would typically involve analyzing other long-term utility service contracts awarded to private entities for large government installations.

Small Business Impact

The data indicates that small business participation (sb=false) was not a specific set-aside requirement for this contract. While the primary contractor is Utility Systems of Georgia, Inc., there is no explicit information regarding subcontracting plans with small businesses. The impact on the small business ecosystem would depend on whether the prime contractor actively seeks to engage small businesses for specialized services or supplies related to utility operations.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Logistics Agency (DLA), with potential involvement from the Department of Defense's Inspector General. Accountability measures would be defined within the contract's terms and conditions, likely including performance metrics, reporting requirements, and remedies for non-performance. Transparency is facilitated by the contract award being made under full and open competition, with details available through federal procurement databases.

Related Government Programs

Federal Utility Privatization Program
Department of Defense Base Operations Support Contracts
Water and Wastewater Infrastructure Management Contracts
Public-Private Partnerships for Government Facilities

Risk Flags

Long contract duration (50 years) increases risk of performance degradation and economic volatility.
Economic Price Adjustment clause could lead to significant cost overruns.
Privatization model requires careful oversight to ensure service standards are maintained.
Dependency on a single contractor for critical utilities.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $7.0 million to UTILITY SYSTEMS OF GEORGIA, INC.. IGF::OT::IGF CONTRACT AWARD OF 50-YEAR UTILITY SERVICES CONTRACT IN CONJUNCTION WITH PRIVATIZATION OF THE WATER, WASTEWATER, AND NATURAL GAS SYSTEMS AT GILLEM ENCLAVE, GA

Who is the contractor on this award?

The obligated recipient is UTILITY SYSTEMS OF GEORGIA, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $7.0 million.

What is the period of performance?

Start: 2018-03-01. End: 2066-02-28.

What is the historical spending pattern for utility services at Gillem Enclave prior to this contract?

Prior to this 50-year contract awarded in 2018, utility services at Gillem Enclave were likely managed directly by the Department of Defense or through shorter-term contracts. Specific historical spending data for Gillem Enclave's utility operations is not readily available in the provided data. However, federal agencies typically budget significant funds for utilities, covering water, wastewater, electricity, and natural gas. The transition to a 50-year privatization contract suggests a strategic decision to transfer long-term operational and capital costs to the private sector, implying that previous direct spending may have been substantial but potentially lacked the long-term investment component now being provided by Utility Systems of Georgia, Inc.

How does the annual cost of this contract compare to industry benchmarks for similar utility services at military installations?

The annual cost of this contract, averaging approximately $140,529 ($7.03M / 50 years), needs to be contextualized by the scope of services (water, wastewater, natural gas) and the specific infrastructure at Gillem Enclave. Benchmarking against similar long-term utility management contracts for federal facilities of comparable size and complexity is crucial. While the absolute dollar amount appears modest for a 50-year commitment, it represents the base service cost, excluding potential escalations due to economic price adjustments. Without detailed service level agreements and infrastructure assessments, a precise benchmark is difficult. However, the full and open competition suggests the DLA sought competitive pricing for these essential services.

What are the key performance indicators (KPIs) and service level agreements (SLAs) associated with this 50-year contract?

The provided data does not detail the specific Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this contract. However, for a utility services contract of this nature and duration, typical KPIs would likely include water quality standards, wastewater discharge compliance, natural gas supply reliability, system uptime, response times for service calls and emergencies, and infrastructure maintenance schedules. SLAs would define acceptable performance thresholds for these KPIs, along with remedies or penalties for non-compliance. The Defense Logistics Agency would be responsible for monitoring adherence to these metrics throughout the 50-year term.

What are the potential risks associated with a 50-year contract for utility services, particularly concerning contractor performance and economic fluctuations?

A 50-year contract presents significant risks. Contractor performance can degrade over such a long period due to changes in management, workforce, or operational priorities. Maintaining consistent service quality and responsiveness requires robust oversight. Economic fluctuations pose another major risk, especially with the 'economic price adjustment' clause. Inflation, changes in energy costs, and unforeseen market shifts could lead to substantial cost increases beyond initial projections, impacting the government's long-term budget. Furthermore, technological advancements in utility management might render current systems obsolete, requiring renegotiation or significant reinvestment.

What is the role of Utility Systems of Georgia, Inc. in the privatization of Gillem Enclave's utility systems?

Utility Systems of Georgia, Inc. (USG) is the prime contractor responsible for operating, maintaining, and managing the water, wastewater, and natural gas systems at Gillem Enclave under a 50-year agreement. As part of the privatization initiative, USG likely assumed responsibility for capital investments, upgrades, and day-to-day operations that were previously handled by the government. This model aims to leverage private sector efficiency and expertise to ensure reliable utility services while potentially reducing the long-term financial burden on the Department of Defense. USG's role encompasses ensuring compliance with all relevant environmental and safety regulations.

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: SPE60012R0821

Offers Received: 4

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

Evaluated Preference: NONE

Contractor Details

Address: 500 W MONROE ST, CHICAGO, IL, 60661

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

Financial Breakdown

Contract Ceiling: $43,142,344

Exercised Options: $40,528,191

Current Obligation: $7,026,452

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline