DoD awards $271M for Keesler AFB electric system maintenance over 50 years

Contract Overview

Contract Amount: $27,131,353 ($27.1M)

Contractor: City Light & Power, Inc.

Awarding Agency: Department of Defense

Start Date: 2019-03-01

End Date: 2069-08-31

Contract Duration: 18,446 days

Daily Burn Rate: $1.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: THIS CONTRACT IS AWARDED FOR THE OWNERSHIP, OPERATIONS, AND MAINTENANCE OF THE ELECTRIC DISTRIBUTION SYSTEM AT KEESLER AFB, MISSISSIPPI.

Place of Performance

Location: BILOXI, HARRISON County, MISSISSIPPI, 39534

State: Mississippi Government Spending

Plain-Language Summary

Department of Defense obligated $27.1 million to CITY LIGHT & POWER, INC. for work described as: THIS CONTRACT IS AWARDED FOR THE OWNERSHIP, OPERATIONS, AND MAINTENANCE OF THE ELECTRIC DISTRIBUTION SYSTEM AT KEESLER AFB, MISSISSIPPI. Key points: 1. Long-term contract for essential utility infrastructure. 2. Fixed-price with economic price adjustment aims to manage inflation. 3. Full and open competition suggests a competitive bidding process. 4. Contract duration of over 50 years is exceptionally long for this type of service. 5. Potential for cost overruns due to long-term economic adjustments. 6. Focus on operational reliability for a critical military installation.

Value Assessment

Rating: fair

The contract value of $271.3 million over approximately 50 years averages to about $5.4 million annually. Benchmarking this against similar utility maintenance contracts for large federal facilities is challenging due to the extreme contract length. The fixed-price with economic price adjustment (FPEPA) structure aims to mitigate risk for both parties, but the long duration introduces significant uncertainty regarding future cost escalations and true value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. This approach is generally favorable for price discovery and ensuring the government receives competitive pricing. The presence of four bids suggests a reasonable level of competition, though the specific details of the bidding process and the nature of the proposals are not provided.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it typically drives down costs through a competitive bidding process, ensuring that the selected contractor offers the most advantageous terms.

Public Impact

Provides reliable electricity to Keesler Air Force Base in Mississippi. Ensures continuous operations for critical military functions and personnel. Supports the local workforce through employment opportunities with the contractor. Contributes to the economic stability of the Biloxi-Gautier, Mississippi area.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The exceptionally long contract duration (over 50 years) poses significant long-term financial risk and uncertainty for the government.
Economic price adjustments over such an extended period could lead to substantial cost increases beyond initial projections.
Lack of detailed performance metrics or clear exit strategies within the provided data raises concerns about accountability.
The fixed-price nature, even with adjustments, might not fully capture the most innovative or cost-effective solutions over decades.

Positive Signals

Awarded under full and open competition, suggesting a robust selection process.
The contract ensures a stable and long-term provider for essential utility services.
The fixed-price with economic price adjustment structure provides some cost predictability.
The contractor is responsible for ownership, operations, and maintenance, reducing direct government management burden.

Sector Analysis

This contract falls within the Utilities and Energy Services sector, specifically focusing on the operation and maintenance of electric power distribution systems. The market for such services is typically characterized by established utility providers and specialized infrastructure maintenance firms. The scale of this contract, supporting a large military installation, places it among significant utility service agreements. Comparable spending benchmarks would typically involve annual operating costs for similar-sized industrial or institutional facilities, adjusted for geographic location and specific service requirements.

Small Business Impact

The data indicates that small business participation (ss: false, sb: false) was not a specific set-aside requirement for this contract. Therefore, there are no direct set-aside provisions for small businesses. However, the prime contractor, City Light & Power, Inc., may engage small businesses for subcontracting opportunities related to maintenance, repair, or specialized services, though this is not explicitly detailed in the provided information.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense and the Defense Logistics Agency. Given the long duration, mechanisms for regular performance reviews, audits, and contract modifications would be crucial. Transparency is facilitated by the contract being awarded under full and open competition. However, specific details on ongoing oversight procedures, performance metrics, and accountability measures are not provided in this summary data.

Related Government Programs

Military Base Operations Support Services
Utility Privatization Programs
Federal Energy Management Program
Defense Infrastructure Modernization

Risk Flags

Long-term contract duration
Economic price adjustment uncertainty
Lack of specific performance metrics
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.1 million to CITY LIGHT & POWER, INC.. THIS CONTRACT IS AWARDED FOR THE OWNERSHIP, OPERATIONS, AND MAINTENANCE OF THE ELECTRIC DISTRIBUTION SYSTEM AT KEESLER AFB, MISSISSIPPI.

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 $27.1 million.

What is the period of performance?

Start: 2019-03-01. End: 2069-08-31.

What is the historical spending pattern for electric power distribution maintenance at Keesler AFB prior to this contract?

Information on historical spending patterns for electric power distribution maintenance at Keesler AFB prior to this contract is not directly available in the provided data. This contract, awarded in March 2019 with an end date in August 2069, represents a significant long-term commitment. Understanding past expenditures would be crucial for benchmarking the current $271.3 million award against previous costs, assessing whether the new contract offers improved value or reflects changing market conditions. Without historical data, it's difficult to determine if the annual average cost of approximately $5.4 million is an increase or decrease compared to prior arrangements, or if it aligns with inflation-adjusted historical spending.

How does the annual cost of this contract compare to similar utility maintenance contracts at other large federal installations?

Direct comparison of the annual cost of this contract (averaging approximately $5.4 million) to similar utility maintenance contracts at other large federal installations is challenging due to the unique long-term nature (over 50 years) of the Keesler AFB agreement. Most utility contracts are shorter-term, making direct annual cost comparisons potentially misleading. Factors such as the specific infrastructure complexity, geographic location, local labor rates, and the scope of services (ownership, operations, and maintenance) vary significantly. A comprehensive benchmark would require analyzing contracts with similar scope and duration, which are rare, or adjusting annual costs for differences in facility size, energy consumption, and service level agreements.

What are the specific risks associated with the 'Economic Price Adjustment' clause over a 50+ year contract term?

The 'Economic Price Adjustment' (EPA) clause in a contract of over 50 years introduces significant risks related to long-term cost escalation. While intended to account for inflation and changes in input costs (like labor, materials, and energy), the extended duration means that cumulative adjustments could substantially increase the total contract value beyond initial projections. Predicting economic conditions, inflation rates, and specific cost drivers over five decades is inherently uncertain. This uncertainty poses a risk to the government of potentially overpaying if economic conditions do not escalate as predicted by the EPA formula, or conversely, if the formula does not adequately capture actual cost increases, potentially leading to contractor claims or performance issues.

What performance metrics are in place to ensure the contractor maintains the electric distribution system effectively over the long term?

The provided data does not specify the performance metrics or key performance indicators (KPIs) that are in place to ensure the contractor effectively maintains the electric distribution system at Keesler AFB. For a contract of this duration and criticality, robust performance standards related to system reliability (e.g., uptime, outage frequency/duration), response times for repairs, preventative maintenance schedules, safety compliance, and infrastructure condition assessments would be essential. The absence of this information in the summary data raises a question about the clarity and enforceability of performance expectations and the mechanisms for holding the contractor accountable for maintaining the system to required standards over the next 50+ years.

What is the contractor's track record in managing large-scale utility infrastructure contracts for the federal government?

The provided data identifies 'CITY LIGHT & POWER, INC.' as the contractor but does not offer details on their specific track record in managing large-scale utility infrastructure contracts for the federal government. Assessing their experience with similar long-term, high-value contracts, their performance history on previous government projects, and their financial stability would be crucial for evaluating the risk associated with this award. A thorough review would typically involve examining past performance evaluations, contract completion records, and any history of disputes or contract terminations to gauge their capability and reliability in fulfilling the extensive obligations of this 50-year agreement.

How does the 'ownership' aspect of the contract impact the government's long-term liability and asset management?

The contract includes 'ownership' of the electric distribution system by the contractor, which shifts significant long-term liability and asset management responsibilities from the government to the private entity. This means the contractor is responsible for capital investments in upgrades, replacements, and modernization of the system infrastructure over the 50+ year period. For the government, this potentially reduces upfront capital expenditure and the burden of managing aging infrastructure. However, it also means the government loses direct control over asset lifecycle decisions and must rely on the contractor's management and investment strategy, which is governed by the contract terms and EPA clauses, to ensure the system remains adequate for base needs.

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: SPE60015R0803

Offers Received: 4

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 200-E, 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: $155,756,860

Exercised Options: $155,756,860

Current Obligation: $27,131,353

Actual Outlays: $573,684

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline