Fort Riley Utility Services Inc. awarded $142.8M contract for water and wastewater systems, spanning 30 years

Contract Overview

Contract Amount: $142,835,982 ($142.8M)

Contractor: Fort Riley Utility Services Inc

Awarding Agency: Department of Defense

Start Date: 2017-09-29

End Date: 2068-06-30

Contract Duration: 18,537 days

Daily Burn Rate: $7.7K/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 THIS CONTRACT IS AWARDED FOR THE OWNERSHIP, OPERATION AND MAINTENANCE OF THE WATER AND WASTEWATER UTILITY SYSTEMS AT FORT RILEY, KANSAS.

Place of Performance

Location: FORT RILEY, GEARY County, KANSAS, 66442

State: Kansas Government Spending

Plain-Language Summary

Department of Defense obligated $142.8 million to FORT RILEY UTILITY SERVICES INC for work described as: IGF::OT::IGF THIS CONTRACT IS AWARDED FOR THE OWNERSHIP, OPERATION AND MAINTENANCE OF THE WATER AND WASTEWATER UTILITY SYSTEMS AT FORT RILEY, KANSAS. Key points: 1. Contract value of $142.8M over 30 years suggests a long-term commitment to utility infrastructure. 2. Awarded through full and open competition, indicating a potentially competitive bidding process. 3. The fixed-price with economic price adjustment structure aims to balance cost certainty with market fluctuations. 4. Long duration of the contract (over 18,000 days) necessitates robust performance monitoring. 5. The contract covers essential services for Fort Riley, ensuring operational readiness. 6. The North American Industry Classification System (NAICS) code 221310 points to a focus on water supply and irrigation systems.

Value Assessment

Rating: fair

The contract's total value of $142.8M over nearly 31 years averages approximately $4.6M annually. Benchmarking this against similar long-term utility service contracts for large military installations is challenging due to the unique nature of such comprehensive agreements. The fixed-price with economic price adjustment (FPEPA) structure is common for long-duration infrastructure services, aiming to mitigate risks associated with inflation and material cost changes. However, the long-term nature of the contract requires careful monitoring of economic price adjustment clauses to ensure fair pricing over time.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple bidders were likely considered. The presence of four bids (no=4) indicates a degree of competition, which is generally favorable for price discovery and achieving a reasonable market price. The specific details of the bidding process and the number of proposals received would provide further insight into the intensity of the competition.

Taxpayer Impact: Full and open competition typically benefits taxpayers by fostering a competitive environment that can drive down costs and encourage innovative solutions, leading to better value for public funds.

Public Impact

The primary beneficiaries are the residents and operations of Fort Riley, Kansas, who will receive reliable water and wastewater services. The contract ensures the continuous operation and maintenance of critical utility infrastructure, supporting the base's mission. Geographic impact is localized to Fort Riley, Kansas, ensuring essential services for the military installation and its personnel. Workforce implications include potential employment opportunities for skilled labor in utility operations and maintenance within the local Kansas economy.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (30 years) increases the risk of cost overruns due to unforeseen economic shifts or technological obsolescence.
Economic price adjustment clauses, if not carefully managed, could lead to significant cost increases over the contract's life.
Reliance on a single contractor for such a critical, long-term service raises concerns about potential vendor lock-in and reduced future competition.
The fixed-price nature, despite economic adjustments, may not fully capture potential efficiencies or cost savings that could be achieved through alternative service models.
Ensuring consistent service quality and performance over such an extended period requires rigorous oversight and performance metrics.

Positive Signals

Awarded through full and open competition, suggesting a competitive process that likely secured a reasonable initial price.
The long-term nature of the contract provides stability and predictability for essential utility services at Fort Riley.
The fixed-price with economic price adjustment structure is designed to provide cost certainty while accounting for market volatility.
The contract's duration allows for potential economies of scale and long-term planning for infrastructure maintenance and upgrades.
The Defense Logistics Agency's involvement suggests established procurement processes and oversight capabilities.

Sector Analysis

The water supply and irrigation systems sector (NAICS 221310) is a critical component of public and private infrastructure, encompassing the provision of water and the management of wastewater. This contract falls within the broader utilities and infrastructure services market, which is essential for supporting government operations, particularly military installations. The market for such services is often characterized by long-term contracts due to the capital-intensive nature of infrastructure and the need for reliable, continuous service. Comparable spending benchmarks are difficult to establish precisely without detailed knowledge of the specific service requirements and scale of Fort Riley's utility systems, but large military bases typically represent significant utility loads.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb=false) and there is no explicit mention of small business subcontracting requirements. This suggests that the primary contractor, Fort Riley Utility Services Inc., is likely a larger entity capable of managing such a comprehensive utility operation. The absence of small business set-asides in the primary award means that opportunities for small businesses would primarily arise through subcontracting, if mandated or pursued by the prime contractor. The impact on the small business ecosystem would depend on the extent to which the prime contractor engages small businesses for specialized services or supplies.

Oversight & Accountability

Oversight for this contract would likely be managed by the Defense Logistics Agency (DLA), which awarded the contract. Accountability measures would be embedded within the contract's performance standards, service level agreements, and the economic price adjustment clauses. Transparency is generally facilitated through the Federal Procurement Data System (FPDS), where contract awards are reported. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract's execution.

Related Government Programs

Fort Riley Operations and Maintenance
Military Base Utility Services
Department of Defense Infrastructure Contracts
Water and Wastewater Management Services
Long-Term Service Contracts

Risk Flags

Long-term contract duration increases exposure to economic fluctuations.
Economic price adjustment clauses require careful monitoring to control costs.
Potential for vendor lock-in due to the extended service period.
Ensuring consistent service quality over 30 years requires robust oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $142.8 million to FORT RILEY UTILITY SERVICES INC. IGF::OT::IGF THIS CONTRACT IS AWARDED FOR THE OWNERSHIP, OPERATION AND MAINTENANCE OF THE WATER AND WASTEWATER UTILITY SYSTEMS AT FORT RILEY, KANSAS.

Who is the contractor on this award?

The obligated recipient is FORT RILEY UTILITY SERVICES INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $142.8 million.

What is the period of performance?

Start: 2017-09-29. End: 2068-06-30.

What is the track record of Fort Riley Utility Services Inc. in managing similar large-scale utility contracts?

Information regarding the specific track record of Fort Riley Utility Services Inc. in managing large-scale utility contracts is not directly provided in the data. However, the award of a 30-year, $142.8 million contract for ownership, operation, and maintenance of water and wastewater utility systems at Fort Riley suggests a level of capability and experience deemed sufficient by the Defense Logistics Agency (DLA) to undertake this significant responsibility. Further investigation into the company's history, past performance on government contracts, and any prior experience with utility management at military installations would be necessary for a comprehensive assessment of their track record. Publicly available contract databases and company profiles might offer additional insights into their operational history and performance metrics on previous projects.

How does the annual cost of this contract compare to the estimated cost of providing similar utility services in the private sector or for other military installations?

The annual cost of this contract averages approximately $4.6 million ($142.8M / ~31 years). Benchmarking this figure against private sector utility costs or other military installations is complex due to variations in service scope, infrastructure age, regulatory environments, and local market conditions. Private sector utility costs can vary widely based on the size and complexity of the service area, the efficiency of operations, and the specific pricing models employed. For military installations, costs are influenced by factors such as the population served, the type and condition of existing infrastructure, and the specific requirements for operational resilience and security. Without detailed comparative data on the specific services provided at Fort Riley and comparable entities, a precise value-for-money assessment relative to external benchmarks is challenging. However, the competitive bidding process aims to ensure that the price reflects market conditions at the time of award.

What are the primary risks associated with a contract of this duration (30 years), and what mitigation strategies are in place?

The primary risks associated with a 30-year contract include significant potential for cost escalation due to inflation and economic price adjustments, technological obsolescence of equipment and systems, changes in regulatory requirements, and potential degradation of service quality over time if performance is not rigorously monitored. Mitigation strategies typically involve the inclusion of economic price adjustment (EPA) clauses that are carefully structured to reflect actual cost changes without excessive inflation. Performance-based metrics and service level agreements (SLAs) are crucial for ensuring consistent quality, with penalties for non-compliance. Regular contract reviews, performance audits, and contingency planning for unforeseen events or changes in government requirements are also essential. The fixed-price nature, even with EPA, provides a baseline cost control, while the long duration allows for amortization of capital investments.

How effective is the 'Fixed Price with Economic Price Adjustment' (FPEPA) contract type in managing costs for long-term utility services?

The FPEPA contract type is designed to provide a balance between cost certainty for the government and protection against unforeseen economic fluctuations for the contractor, making it suitable for long-duration projects like utility services. It establishes a base price, but allows for adjustments based on predetermined economic factors, such as inflation indices for labor and materials. This can help ensure that the contractor can maintain service quality without incurring unsustainable losses due to market volatility over the contract's lifespan. However, the effectiveness hinges on the specific indices and formulas used for adjustment; poorly defined or overly generous EPA clauses can lead to significant cost increases for the government. Regular review and auditing of the adjustments are critical to ensure they accurately reflect market conditions and prevent unwarranted price hikes, thereby maintaining value for taxpayers.

What are the historical spending patterns for utility services at Fort Riley, and how does this contract align with or deviate from them?

Historical spending patterns for utility services at Fort Riley are not detailed in the provided data. However, the award of a new, long-term contract valued at $142.8 million suggests a significant and ongoing commitment to these services. Typically, such contracts replace or consolidate previous arrangements, potentially reflecting updated needs, infrastructure investments, or changes in contracting strategy. If previous arrangements were shorter-term or involved multiple providers, this new contract indicates a shift towards a consolidated, long-term service model. Analyzing past expenditures would require access to historical contract data for Fort Riley's utility operations. The current contract's duration and total value imply a substantial, sustained investment in maintaining and operating these critical systems, likely aligning with the long-term operational requirements of a major military installation.

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: SPE60015R0800

Offers Received: 4

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

Evaluated Preference: NONE

Contractor Details

Address: 8152 1ST DIVISION RD, FORT RILEY, KS, 66442

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

Financial Breakdown

Contract Ceiling: $850,515,472

Exercised Options: $850,515,472

Current Obligation: $142,835,982

Actual Outlays: $5,113,958

Subaward Activity

Number of Subawards: 166

Total Subaward Amount: $27,073,526

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline