Department of the Army's $28.8M utility services contract awarded to FOREIGN UTILITY CONSOLIDATED REPORTING shows potential for price adjustments

Contract Overview

Contract Amount: $28,807,420 ($28.8M)

Contractor: Foreign Utility Consolidated Reporting

Awarding Agency: Department of Defense

Start Date: 2011-10-01

End Date: 2012-09-30

Contract Duration: 365 days

Daily Burn Rate: $78.9K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: FY12 UTILITY SERVICES (HEAT) 1ST QTR

Plain-Language Summary

Department of Defense obligated $28.8 million to FOREIGN UTILITY CONSOLIDATED REPORTING for work described as: FY12 UTILITY SERVICES (HEAT) 1ST QTR Key points: 1. The contract's fixed-price with economic price adjustment (FP-EPA) structure introduces potential for cost increases beyond initial estimates. 2. Limited competition for essential utility services can lead to less favorable pricing and reduced contractor innovation. 3. The contract duration of 365 days suggests a need for ongoing service provision, but lacks long-term strategic planning indicators. 4. Performance context is limited due to the 'NOT AVAILABLE FOR COMPETITION' award type, hindering direct comparison of value. 5. The contract falls under the 'Steam and Air-Conditioning Supply' NAICS code, indicating a focus on facility operations. 6. The absence of small business set-aside flags suggests this contract did not prioritize small business participation.

Value Assessment

Rating: fair

Benchmarking the value of this utility services contract is challenging due to the limited competition and the FP-EPA pricing structure. Without comparable bids or a clear market rate for similar services in the specific geographic location, it's difficult to definitively assess if the pricing is optimal. The economic price adjustment clause, while common for utilities, introduces a variable that can impact the final cost, making a precise value-for-money assessment at the outset difficult. Further analysis would require understanding the specific economic factors that trigger price adjustments.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'NOT AVAILABLE FOR COMPETITION' basis, indicating that a full and open competition was not conducted. This typically occurs when only one source is capable of meeting the agency's needs, often due to unique capabilities, proprietary technology, or urgent requirements where competition is impractical. The lack of multiple bidders means there was no direct price comparison or negotiation leverage derived from a competitive bidding process, potentially leading to higher costs for the government.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible price through competition, potentially resulting in taxpayer funds being used less efficiently. This approach bypasses the market's natural price discovery mechanisms.

Public Impact

The primary beneficiaries are likely Department of Defense facilities requiring consistent steam and air-conditioning supply for operational readiness. The services delivered are essential for maintaining a habitable and functional environment within military installations. The geographic impact is localized to the specific military installation(s) served by FOREIGN UTILITY CONSOLIDATED REPORTING. Workforce implications are primarily related to the contractor's employees responsible for operating and maintaining the utility systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to the economic price adjustment clause in a sole-source award.
Lack of competitive pressure may lead to complacency in service quality or efficiency.
Limited transparency in the award process due to non-competitive nature.
Dependence on a single contractor for critical utility services creates a single point of failure risk.

Positive Signals

Ensures continuous provision of essential utility services, critical for military operations.
The FP-EPA contract type, while carrying risk, can protect against unforeseen market fluctuations in utility costs.
Awarding to an established entity may offer a degree of reliability in service delivery.

Sector Analysis

The utility services sector, particularly for large government installations, often involves specialized infrastructure and operational expertise. Contracts for steam and air-conditioning supply are crucial for facility management and can be subject to regional market conditions and regulatory requirements. While this specific award is sole-source, the broader market for utility services involves various players, from large utility companies to specialized facility management firms. Benchmarking often relies on historical data for similar government facilities or regional commercial rates, which are difficult to obtain without competitive solicitations.

Small Business Impact

The contract details indicate that this was not awarded as a small business set-aside, nor are there explicit mentions of subcontracting goals for small businesses. This suggests that the primary contractor is likely a larger entity, and opportunities for small businesses to participate in this specific contract may be limited unless they are direct subcontractors to FOREIGN UTILITY CONSOLIDATED REPORTING. The absence of set-aside provisions means that the contract did not actively aim to boost small business participation within the federal contracting ecosystem for this particular requirement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures would be defined by the contract terms, including performance standards and payment clauses. Transparency is limited due to the sole-source award. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse arise concerning the contract's execution or award.

Related Government Programs

Department of Defense Facility Operations
Utility Infrastructure Management
Steam and Air-Conditioning Services
Fixed-Price with Economic Price Adjustment Contracts

Risk Flags

Sole-source award limits price competition.
Economic price adjustment clause introduces cost uncertainty.
Lack of performance data for comparison.
Potential for contractor dependency.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.8 million to FOREIGN UTILITY CONSOLIDATED REPORTING. FY12 UTILITY SERVICES (HEAT) 1ST QTR

Who is the contractor on this award?

The obligated recipient is FOREIGN UTILITY CONSOLIDATED REPORTING.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $28.8 million.

What is the period of performance?

Start: 2011-10-01. End: 2012-09-30.

What is the historical spending pattern for utility services by the Department of the Army, specifically for steam and air-conditioning?

Analyzing historical spending for utility services by the Department of the Army requires access to comprehensive federal procurement data. While this specific contract represents $28.8 million for FY12, a broader trend analysis would involve examining contract awards over multiple fiscal years across various Army installations. Factors such as the number of contracts awarded, average contract values, and the types of utility services procured (e.g., steam, electricity, water, HVAC) would provide insight. Historically, large military installations have significant utility demands, leading to substantial and recurring federal spending in this category. Understanding the distribution between competitive and non-competitive awards within this historical data is also crucial for assessing overall cost-effectiveness and market dynamics over time.

How does the economic price adjustment (EPA) clause typically function in utility contracts, and what are the potential risks for this specific award?

An Economic Price Adjustment (EPA) clause in a contract allows for modifications to the contract price based on fluctuations in specific economic factors, such as labor costs, material costs, or published indices (e.g., Consumer Price Index, Producer Price Index). For utility services, EPAs are often tied to energy commodity prices or utility rate changes. In this contract with FOREIGN UTILITY CONSOLIDATED REPORTING, the EPA clause means the initial $28.8 million is not the final price. The risk for the government is that these economic factors could increase, leading to higher payments than initially budgeted. Given this is a sole-source award, the government has less leverage to negotiate the terms of the EPA or to seek alternative, potentially lower-cost providers if prices escalate significantly. This necessitates careful monitoring of the indices and a clear understanding of the adjustment triggers.

What are the implications of awarding a utility services contract on a 'NOT AVAILABLE FOR COMPETITION' basis for price discovery and value for money?

Awarding a contract on a 'NOT AVAILABLE FOR COMPETITION' (sole-source) basis significantly hinders price discovery. In a competitive environment, multiple bidders submit proposals, allowing the government to compare prices, technical approaches, and overall value, driving prices down through market forces. Without this competition, the government relies on the contractor's proposed price, which may not reflect the lowest achievable cost. This can lead to a lack of transparency in pricing and potentially higher expenditures for taxpayers. Assessing value for money becomes more difficult as there are no benchmarks from competing offers. The government must then rely on internal cost estimates, historical pricing, or other indirect market data, which may not be as accurate or robust as direct competitive bids.

What is the typical track record of contractors like FOREIGN UTILITY CONSOLIDATED REPORTING in providing utility services to the federal government?

FOREIGN UTILITY CONSOLIDATED REPORTING's track record in providing utility services to the federal government would need to be assessed through specific contract performance history databases and agency records. Generally, companies that secure sole-source utility contracts often possess specialized capabilities, extensive experience, or existing infrastructure critical to the government's needs. However, without specific performance data for this contractor, it's difficult to generalize. A thorough review would involve examining past performance evaluations, any documented disputes or contract terminations, and the duration and scope of previous government contracts held by the entity. The fact that this contract was awarded non-competitively might suggest a history of successful performance or a unique qualification that made them the only viable option.

How does the $28.8 million contract value compare to other federal spending on steam and air-conditioning supply services?

The $28.8 million contract value for FY12 for steam and air-conditioning supply by the Department of the Army is a significant sum, indicative of the substantial operational needs of military installations. To contextualize this, one would need to compare it against the total federal spending in the 'Steam and Air-Conditioning Supply' category (NAICS 221330) across all agencies and fiscal years. This would involve analyzing trends in contract awards, average contract sizes, and the number of contractors involved. Large federal agencies, particularly the Department of Defense, are major consumers of utility services, and their spending can represent a substantial portion of the overall federal expenditure in this sector. Without broader comparative data, it's challenging to definitively state if this contract is high or low relative to the entire federal landscape, but its value suggests a substantial operational requirement.

Industry Classification

NAICS: Utilities › Water, Sewage and Other Systems › Steam and Air-Conditioning Supply

Product/Service Code: UTILITIES AND HOUSEKEEPING › UTILITIES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

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

Evaluated Preference: NONE

Contractor Details

Address: 1275 FIRST ST NE, WASHINGTON, DC, 98

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $28,807,420

Exercised Options: $28,807,420

Current Obligation: $28,807,420

Contract Characteristics

Cost or Pricing Data: NO

Timeline