DoD Awards 600-Month Contract for Electric Power Distribution in Virginia for $9.39M

Contract Overview

Contract Amount: $9,386,724 ($9.4M)

Contractor: Rappahannock Electric Cooperative

Awarding Agency: Department of Defense

Start Date: 2002-01-23

End Date: 2052-01-22

Contract Duration: 18,261 days

Daily Burn Rate: $514/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE REDETERMINATION

Sector: Energy

Official Description: THIS IS A CONTINUATION OF DACA31-02-C-0006, AWARDED JANUARY 23, 2002, DUE TO THE TRANSFER OF CONTRACT ADMINISTRATION. THE PERIOD OF PERFORMANCE IS JANUARY 23, 2002 TO JANUARY 22, 2052 (600 MONTHS).

Place of Performance

Location: FORT A P HILL, CAROLINE County, VIRGINIA, 22427

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $9.4 million to RAPPAHANNOCK ELECTRIC COOPERATIVE for work described as: THIS IS A CONTINUATION OF DACA31-02-C-0006, AWARDED JANUARY 23, 2002, DUE TO THE TRANSFER OF CONTRACT ADMINISTRATION. THE PERIOD OF PERFORMANCE IS JANUARY 23, 2002 TO JANUARY 22, 2052 (600 MONTHS). Key points: 1. Long-term contract (50 years) for essential electric power distribution services. 2. Awarded by Defense Logistics Agency to Rappahannock Electric Cooperative. 3. Significant duration raises questions about long-term cost-effectiveness and market changes. 4. Sector is critical infrastructure, essential for military base operations.

Value Assessment

Rating: questionable

The contract value is $9.39M over 50 years, averaging $187,734 annually. Without specific service details or comparable contracts, assessing value is difficult. However, the extremely long duration suggests potential for overpayment if market rates decrease or technology evolves significantly.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is positive for price discovery. However, the 50-year term may have limited the number of bidders willing to commit to such a long period, potentially impacting the competitiveness of the final price.

Taxpayer Impact: Taxpayers are committed to a fixed price for electric power over an exceptionally long period, potentially missing out on savings from future market fluctuations or technological advancements.

Public Impact

Ensures continuous power supply for a Department of Defense facility in Virginia. Long-term commitment may lock in prices, offering stability but potentially sacrificing savings. The 50-year duration is highly unusual and warrants scrutiny for potential inefficiencies.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Extreme contract duration (50 years)
Potential for price escalation over time
Risk of technological obsolescence impacting service needs

Positive Signals

Ensures stable and continuous power supply
Awarded through full and open competition

Sector Analysis

This contract falls within the Utilities and Energy sector, specifically focusing on electric power distribution. Long-term contracts in this sector are common for infrastructure, but 50 years is exceptionally long, exceeding typical utility franchise agreements.

Small Business Impact

The data does not indicate whether small businesses were involved in this contract. The awardee, Rappahannock Electric Cooperative, is a utility cooperative, and its structure may not directly involve typical small business subcontracting opportunities.

Oversight & Accountability

The extremely long duration of this contract, spanning 50 years, suggests a need for robust oversight to ensure continued value and relevance. Periodic reviews of pricing and service adequacy would be crucial.

Related Government Programs

Electric Power Distribution
Department of Defense Contracting
Defense Logistics Agency Programs

Risk Flags

Excessive contract duration
Potential for cost overruns due to long-term price commitments
Risk of technological irrelevance
Lack of detailed justification for the 50-year term

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $9.4 million to RAPPAHANNOCK ELECTRIC COOPERATIVE. THIS IS A CONTINUATION OF DACA31-02-C-0006, AWARDED JANUARY 23, 2002, DUE TO THE TRANSFER OF CONTRACT ADMINISTRATION. THE PERIOD OF PERFORMANCE IS JANUARY 23, 2002 TO JANUARY 22, 2052 (600 MONTHS).

Who is the contractor on this award?

The obligated recipient is RAPPAHANNOCK ELECTRIC COOPERATIVE.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $9.4 million.

What is the period of performance?

Start: 2002-01-23. End: 2052-01-22.

What is the justification for a 50-year contract term for electric power distribution, and how does it ensure long-term value for the government?

The justification for such an extended term is not provided in the data. Typically, 50-year contracts are rare and may be linked to significant infrastructure investments or unique service requirements. Ensuring long-term value would necessitate mechanisms for regular price redetermination based on market conditions and technological advancements, alongside performance metrics.

What are the primary risks associated with a 50-year contract for electric power, and how are they mitigated?

The primary risks include price escalation beyond market rates, technological obsolescence of distribution infrastructure, and changes in energy sources or demand. Mitigation strategies could involve built-in price adjustment clauses tied to indices, requirements for infrastructure upgrades, and flexibility to adapt to new energy technologies or conservation measures.

How does the fixed-price redetermination contract type impact the government's ability to control costs over the 50-year period?

The fixed-price redetermination (FPR) type allows for an initial fixed price, which is then subject to revision. This offers some cost control compared to a fully fixed price, as it can be adjusted based on actual costs incurred. However, the effectiveness depends heavily on the frequency and criteria for redetermination over the 50-year span.

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: DACA3100R0026

Offers Received: 2

Pricing Type: FIXED PRICE REDETERMINATION (A)

Evaluated Preference: NONE

Contractor Details

Address: 247 INDUSTRIAL CT, FREDERICKSBURG, VA, 22408

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

Financial Breakdown

Contract Ceiling: $59,464,737

Exercised Options: $59,464,737

Current Obligation: $9,386,724

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline