DoD Awards $125M Utility Services Contract for Wright-Patterson AFB Water Systems

Contract Overview

Contract Amount: $124,969,223 ($125.0M)

Contractor: American Water Operations and Maintenance, LLC

Awarding Agency: Department of Defense

Start Date: 2017-09-29

End Date: 2068-11-30

Contract Duration: 18,690 days

Daily Burn Rate: $6.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: IGF::CT::IGF UTILITY SERVICES CONTRACT FOR THE PRIVATIZATION OF THE WATER DISTRIBUTION AND WASTEWATER COLLECTION UTILITY SYSTEMS AT WRIGHT-PATTERSON AFB, OHIO

Place of Performance

Location: DAYTON, GREENE County, OHIO, 45433

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $125.0 million to AMERICAN WATER OPERATIONS AND MAINTENANCE, LLC for work described as: IGF::CT::IGF UTILITY SERVICES CONTRACT FOR THE PRIVATIZATION OF THE WATER DISTRIBUTION AND WASTEWATER COLLECTION UTILITY SYSTEMS AT WRIGHT-PATTERSON AFB, OHIO Key points: 1. The contract, valued at $124.97 million, covers water distribution and wastewater collection. 2. Awarded to American Water Operations and Maintenance, LLC, through full and open competition. 3. Long-term duration (2017-2068) suggests significant infrastructure investment and potential for price fluctuations. 4. The fixed-price with economic price adjustment (EPA) structure aims to mitigate inflation risks.

Value Assessment

Rating: good

The contract value of $124.97 million over 51 years appears reasonable for comprehensive utility privatization. Benchmarking against similar large-scale public utility privatization contracts would provide further validation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating a robust price discovery process. This method generally leads to more competitive pricing compared to sole-source or limited competition.

Taxpayer Impact: While the long-term nature and EPA clause introduce potential for cost increases, the competitive award aims to secure efficient service delivery, ultimately benefiting taxpayers.

Public Impact

Ensures reliable water and wastewater services for a major Air Force base. Potential for modernization and improved efficiency of utility infrastructure. Long-term commitment may impact future base development and operational planning. Economic price adjustments could lead to increased costs for the government over time.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (51 years)
Economic Price Adjustment (EPA) clause
No small business participation noted

Positive Signals

Full and open competition
Clear scope of work for essential services
Experienced contractor

Sector Analysis

This contract falls within the Public Utilities sector, specifically focusing on water supply and irrigation systems. Large-scale utility privatization contracts are common for government facilities to leverage private sector expertise and investment, often with long-term agreements.

Small Business Impact

The data indicates that small business participation was not a factor in this contract award (ss: false, sb: false). This is common for large, specialized infrastructure contracts where prime contractors are typically large corporations.

Oversight & Accountability

The long duration and fixed-price with EPA structure warrant ongoing oversight to ensure performance standards are met and that price adjustments are justified and within reasonable bounds. Regular performance reviews and audits are crucial.

Related Government Programs

Water Supply and Irrigation Systems
Department of Defense Contracting
Defense Logistics Agency Programs

Risk Flags

Long-term contract duration increases exposure to economic fluctuations.
Economic Price Adjustment (EPA) clause poses a risk of cost overruns.
Lack of small business participation may limit broader economic impact.
Potential for contractor performance issues over an extended period.
Dependency on a single contractor for critical infrastructure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $125.0 million to AMERICAN WATER OPERATIONS AND MAINTENANCE, LLC. IGF::CT::IGF UTILITY SERVICES CONTRACT FOR THE PRIVATIZATION OF THE WATER DISTRIBUTION AND WASTEWATER COLLECTION UTILITY SYSTEMS AT WRIGHT-PATTERSON AFB, OHIO

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 $125.0 million.

What is the period of performance?

Start: 2017-09-29. End: 2068-11-30.

What is the projected annual cost of this contract, and how does it compare to the government operating the utility systems directly?

The total contract value is $124.97 million over approximately 51 years, averaging around $2.45 million per year. A direct comparison to government operation costs would require detailed historical operating data for the Wright-Patterson AFB utility systems. However, privatization aims to achieve cost savings through private sector efficiencies and capital investment, which may offset direct government operational expenses.

What are the specific risks associated with the Economic Price Adjustment (EPA) clause over a 51-year period?

The primary risk of the EPA clause is the potential for significant cost escalation due to inflation, changes in commodity prices (e.g., chemicals, energy), and labor costs over the 51-year term. While it protects the contractor from unforeseen cost increases, it exposes the government to potentially higher-than-budgeted expenditures, necessitating careful monitoring of indexation and justification for adjustments.

How will the effectiveness and efficiency of the privatized utility services be measured and ensured throughout the contract's long duration?

Effectiveness and efficiency will be measured through performance metrics defined in the contract, such as water quality standards, response times for repairs, system uptime, and compliance with environmental regulations. The Defense Logistics Agency (DLA) will likely conduct regular performance reviews, site inspections, and potentially audits to ensure American Water Operations and Maintenance, LLC, is meeting its contractual obligations and delivering reliable, cost-effective utility services.

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: SPE60013R0809

Offers Received: 6

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: $628,721,580

Exercised Options: $628,721,580

Current Obligation: $124,969,223

Actual Outlays: $5,428,393

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline