DoD's $23.1M electric power distribution contract awarded to American Water Enterprises, LLC, runs for 50 years

Contract Overview

Contract Amount: $23,138,769 ($23.1M)

Contractor: American Water Enterprises, LLC

Awarding Agency: Department of Defense

Start Date: 2003-09-26

End Date: 2053-09-25

Contract Duration: 18,262 days

Daily Burn Rate: $1.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE REDETERMINATION

Sector: Other

Official Description: AWARD OF TRANSFER CONTRACT FROM MICC TO DLA

Place of Performance

Location: FORT LEAVENWORTH, LEAVENWORTH County, KANSAS, 66027

State: Kansas Government Spending

Plain-Language Summary

Department of Defense obligated $23.1 million to AMERICAN WATER ENTERPRISES, LLC for work described as: AWARD OF TRANSFER CONTRACT FROM MICC TO DLA Key points: 1. Long-term contract duration suggests a need for sustained service delivery. 2. Fixed Price Redetermination contract type allows for price adjustments based on actual costs. 3. Awarded via full and open competition, indicating a broad market search. 4. Contractor has a significant duration of service, potentially indicating reliability. 5. Geographic location in Kansas may point to specific regional infrastructure needs. 6. The contract's value is spread over a very long period, impacting annual cost analysis.

Value Assessment

Rating: fair

The contract's total value of $23.1 million over 50 years equates to approximately $462,775 annually. This annual figure appears reasonable for a large-scale, long-term utility service contract, especially considering potential infrastructure maintenance and upgrades. However, without specific details on the scope of services and the assets managed, a direct comparison to similar contracts is challenging. The Fixed Price Redetermination structure suggests that while an initial price is set, it can be adjusted, which could lead to cost overruns if not managed carefully.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded through full and open competition, suggesting that multiple vendors had the opportunity to bid. The presence of two bids indicates a moderate level of competition for this long-term utility service requirement. While competition is present, the long duration and specialized nature of electric power distribution might limit the number of truly capable bidders.

Taxpayer Impact: Full and open competition generally benefits taxpayers by encouraging competitive pricing and potentially leading to better service quality. However, the long-term nature of this contract means that initial competitive advantages may diminish over time.

Public Impact

Military installations in Kansas requiring reliable electric power distribution services will benefit. Ensures continuous operation of critical infrastructure for defense purposes. Supports the local workforce in Kansas through employment opportunities related to utility management and maintenance. The contract's geographic focus is on Kansas, impacting federal infrastructure within that state.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 50-year duration presents a significant long-term commitment and potential for escalating costs over time.
Fixed Price Redetermination pricing can lead to cost increases if not closely monitored.
The limited number of bidders (2) might suggest a lack of robust competition for such a specialized, long-term service.
Potential for contractor performance degradation over such an extended contract period.
Reliance on a single contractor for critical infrastructure for five decades carries inherent risks.

Positive Signals

Awarded through full and open competition, indicating a structured procurement process.
The contractor's long-term engagement suggests a history of performance and reliability.
The contract ensures a stable and continuous supply of essential utility services.
Long-term contracts can provide cost predictability and reduce administrative burden associated with frequent re-procurement.
The fixed price component, even with redetermination, provides a baseline for cost control.

Sector Analysis

Electric power distribution is a critical component of infrastructure, essential for the operation of government facilities, including military bases. The market for such services is often characterized by specialized expertise and significant capital investment. Long-term contracts are common for utility services to ensure stability and facilitate necessary infrastructure upgrades. This contract fits within the broader category of federal infrastructure and facilities management spending, which is substantial across various agencies.

Small Business Impact

There is no indication that this contract included small business set-asides, and the contractor, American Water Enterprises, LLC, is a large entity. Subcontracting opportunities for small businesses may exist within the scope of work, such as maintenance, repair, or specialized services, but this is not explicitly detailed in the award information. The primary impact is on the large utility service provider market rather than the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Logistics Agency (DLA) and potentially the Department of Defense's Inspector General. Mechanisms would include regular performance reviews, audits of costs under the redetermination clause, and adherence to service level agreements. Transparency is facilitated by the contract award notice, but detailed operational oversight information is usually internal.

Related Government Programs

Defense Logistics Agency Utility Services
Military Base Infrastructure Support
Federal Electric Power Contracts
Long-Term Government Service Contracts

Risk Flags

Long contract duration
Fixed Price Redetermination pricing
Limited number of bidders

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.1 million to AMERICAN WATER ENTERPRISES, LLC. AWARD OF TRANSFER CONTRACT FROM MICC TO DLA

Who is the contractor on this award?

The obligated recipient is AMERICAN WATER ENTERPRISES, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $23.1 million.

What is the period of performance?

Start: 2003-09-26. End: 2053-09-25.

What is the historical spending pattern for electric power distribution services at this specific military installation or within the Kansas region by the DoD?

Historical spending data for electric power distribution at specific military installations or within the Kansas region by the DoD is not publicly available in a consolidated format. However, federal agencies, including the DoD, consistently allocate significant funds towards maintaining critical infrastructure like power grids. The duration and value of this new contract suggest a substantial and ongoing requirement. Analyzing past contracts of similar scope and duration, even if for different installations, could provide a benchmark, but direct historical data for this specific location is typically held internally by the agency or contractor.

How does the annual cost of this contract compare to industry benchmarks for similar utility services for large federal facilities?

The annual cost of this contract, approximately $462,775 ($23.1M / 50 years), needs to be evaluated against the specific services provided, the size of the facility, and the complexity of the distribution network. For large federal facilities, especially military bases with high power demands and security requirements, this annual figure might be considered competitive or even low, depending on the scope. Industry benchmarks for utility services can vary widely based on geographic location, infrastructure age, and service level agreements. Without a detailed scope of work, it's difficult to provide a precise benchmark, but the long-term nature suggests a focus on sustained, reliable service which often commands a premium.

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

Specific Key Performance Indicators (KPIs) and Service Level Agreements (SLAs) for this contract are not detailed in the public award notice. However, for an electric power distribution contract of this nature, typical KPIs would likely include metrics such as power reliability (e.g., average outage duration and frequency), response times for emergencies, adherence to safety standards, and efficiency of power delivery. SLAs would define the expected performance levels for these metrics, often with associated penalties for non-compliance and potential incentives for exceeding targets. These details are usually outlined in the full contract documentation.

What is the track record of American Water Enterprises, LLC, in managing similar long-term, large-scale utility contracts for the federal government?

American Water Enterprises, LLC, is part of American Water Works Company, Inc., a large utility company with extensive experience in water and wastewater services. While their primary focus is often water, they do engage in related infrastructure management. Their track record in managing large-scale, long-term utility contracts for the federal government, particularly in electric power distribution, would need to be assessed based on their specific project history, past performance reviews, and any reported issues or successes. The fact that they were awarded this significant 50-year contract suggests they met the government's criteria for experience and capability in this domain.

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

The primary risks associated with a 50-year contract include technological obsolescence, significant changes in energy markets (e.g., renewable energy integration), potential for contractor performance degradation over time, and the long-term financial commitment for the government. Mitigation strategies often involve robust contract management, periodic reviews and potential renegotiations of terms, inclusion of flexibility clauses to adapt to new technologies or market conditions, and strong oversight mechanisms. The Fixed Price Redetermination clause also allows for adjustments, which can help manage cost risks, though it requires careful monitoring to prevent excessive increases.

How does the 'Fixed Price Redetermination' contract type function in practice for this specific award, and what are its implications?

The 'Fixed Price Redetermination' (FPR) contract type means that an initial price is established, but it can be adjusted later based on actual costs incurred by the contractor, subject to certain limitations and approvals. For this $23.1M contract over 50 years, the FPR likely applies to specific phases or periods within the contract. This allows the government to benefit from a fixed price baseline while acknowledging that costs for long-term infrastructure services can fluctuate due to unforeseen circumstances, material costs, or labor changes. The implication is that the final total cost may differ from the initial estimate, requiring diligent oversight by the contracting agency to ensure redetermined prices remain fair and reasonable.

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: SP060001R0026

Offers Received: 2

Pricing Type: FIXED PRICE REDETERMINATION (A)

Evaluated Preference: NONE

Contractor Details

Address: 1 WATER ST, CAMDEN, NJ, 08102

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

Financial Breakdown

Contract Ceiling: $94,399,022

Exercised Options: $94,399,022

Current Obligation: $23,138,769

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline