Department of the Army awarded $28.9M for utility services, with limited competition impacting price discovery

Contract Overview

Contract Amount: $28,903,406 ($28.9M)

Contractor: Foreign Utility Consolidated Reporting

Awarding Agency: Department of Defense

Start Date: 2015-10-01

End Date: 2016-09-30

Contract Duration: 365 days

Daily Burn Rate: $79.2K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: IGF::OT::IGF, CONSOLIDATED REPORT FOR UTILITY SERVICES (HEAT) OCTOBER 2015

Plain-Language Summary

Department of Defense obligated $28.9 million to FOREIGN UTILITY CONSOLIDATED REPORTING for work described as: IGF::OT::IGF, CONSOLIDATED REPORT FOR UTILITY SERVICES (HEAT) OCTOBER 2015 Key points: 1. The contract's fixed-price structure with economic price adjustment offers some cost certainty while allowing for market fluctuations. 2. Limited competition raises concerns about potential overpayment and reduced incentive for cost efficiency. 3. The contract duration of one year suggests a need for regular re-evaluation of market conditions and competition. 4. The absence of small business set-aside indicates a focus on large prime contractors for this utility service. 5. Performance context is limited due to the 'NOT AVAILABLE FOR COMPETITION' status, making direct performance comparisons difficult.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to the limited competition and lack of detailed performance data. The fixed-price with economic price adjustment structure is common for utility services, but the specific pricing relative to market rates for steam and air-conditioning supply is not readily available. Without comparable contract data or a clear understanding of the market, assessing whether the $28.9 million represents excellent value is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was listed as 'NOT AVAILABLE FOR COMPETITION,' indicating a sole-source or limited competition award. This suggests that only one or a very small number of vendors were considered or capable of providing the required steam and air-conditioning supply services. The limited competition likely resulted in less downward pressure on pricing and potentially higher costs for the government compared to a fully competed contract.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of robust competition, as the government had fewer options to negotiate the best possible price.

Public Impact

The Department of the Army benefits from the provision of essential utility services (steam and air-conditioning) for its facilities. This contract ensures the operational readiness and comfort of military personnel and infrastructure. The geographic impact is localized to the facilities served by the Department of the Army within the contract's scope. Workforce implications are likely related to the operation and maintenance of utility infrastructure, potentially involving specialized technicians.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may lead to higher costs for taxpayers.
Lack of transparency in the procurement process due to 'NOT AVAILABLE FOR COMPETITION' status.
Potential for vendor lock-in if market entry barriers are high.

Positive Signals

Ensures essential utility services are provided to a critical government agency.
Fixed-price with economic price adjustment can provide some cost predictability.
Contract addresses a fundamental operational need for the Department of the Army.

Sector Analysis

This contract falls within the Utilities and Energy Services sector, specifically focusing on steam and air-conditioning supply. This sector is characterized by essential services often requiring specialized infrastructure and expertise. Government contracts in this area can be substantial, reflecting the ongoing need for reliable utility provision to federal facilities. Benchmarking against similar utility contracts is difficult without more specific details on the scope and location of services.

Small Business Impact

The contract data indicates that small business participation was not a primary consideration, as there is no indication of a small business set-aside (ss: false, sb: false). This suggests that the prime contractor is likely a large business, and any subcontracting opportunities for small businesses would depend on the prime's procurement practices rather than a contractual requirement. The impact on the small business ecosystem is likely minimal for this specific award.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve the contracting officer's representative (COR) responsible for monitoring performance and ensuring compliance with contract terms. Accountability measures are inherent in the fixed-price with economic price adjustment structure, which ties payment to service delivery and allows for adjustments based on defined economic factors. Transparency is limited by the 'NOT AVAILABLE FOR COMPETITION' designation, making public scrutiny of the procurement process challenging.

Related Government Programs

Utility Services Contracts
Department of Defense Facilities Management
Steam and Air-Conditioning Supply Contracts
Federal Energy Management

Risk Flags

Limited Competition
Lack of Transparency in Procurement
Potential for Overpricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.9 million to FOREIGN UTILITY CONSOLIDATED REPORTING. IGF::OT::IGF, CONSOLIDATED REPORT FOR UTILITY SERVICES (HEAT) OCTOBER 2015

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 $28.9 million.

What is the period of performance?

Start: 2015-10-01. End: 2016-09-30.

What is the historical spending pattern for utility services by the Department of the Army for similar facilities?

Analyzing historical spending patterns for utility services by the Department of the Army is crucial for understanding the context of this $28.9 million award. Without access to specific historical data for this contract or similar facilities, it's difficult to establish a precise trend. However, federal agencies like the Department of Defense consistently require significant spending on utilities to maintain operational infrastructure. Factors such as facility size, geographic location, climate, and the specific types of utilities required (e.g., steam, electricity, water) heavily influence annual spending. A review of past contracts for steam and air-conditioning supply at comparable Army installations would reveal whether this award represents an increase, decrease, or stable level of expenditure. Trends in energy prices and efficiency initiatives also play a role in shaping historical spending.

How does the pricing structure (Fixed Price with Economic Price Adjustment) compare to other utility contracts?

The 'FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT' (FPEPA) pricing structure is a common and often necessary approach for long-term utility service contracts. It provides a baseline fixed price for services while allowing for adjustments based on pre-defined economic factors, such as inflation indices for labor, materials, or energy. This structure offers a degree of cost certainty for the government compared to purely cost-reimbursable contracts, while also protecting the contractor from significant unforeseen cost increases that could jeopardize service delivery. Compared to other utility contracts, FPEPA is generally considered a balanced approach. Fully fixed-price contracts might be used for shorter durations or services with very stable input costs, while cost-plus contracts are rarer for standard utilities unless significant unknowns or research components are involved. The effectiveness of FPEPA hinges on the clarity and fairness of the economic adjustment clauses.

What are the specific risks associated with a 'NOT AVAILABLE FOR COMPETITION' award for utility services?

Awarding utility services on a 'NOT AVAILABLE FOR COMPETITION' basis, often referred to as sole-source or limited competition, carries several inherent risks. The primary risk is the potential for inflated pricing, as the government lacks the leverage of multiple competing bids to drive down costs. This can lead to taxpayers paying more than necessary for the services. Another risk is reduced incentive for the contractor to innovate or improve efficiency, as the absence of competition lessens the pressure to outperform. Furthermore, it can limit the government's access to new technologies or more cost-effective solutions that might be offered by other potential vendors. Finally, it raises concerns about transparency and fairness in the procurement process, potentially leading to perceptions of favoritism or a lack of due diligence in seeking the best value.

What performance metrics or Key Performance Indicators (KPIs) are typically used for steam and air-conditioning supply contracts?

For steam and air-conditioning supply contracts, Key Performance Indicators (KPIs) typically focus on reliability, efficiency, and responsiveness. Common metrics include uptime percentages for the systems (e.g., 99.9% availability of steam), response times for service calls or emergencies, energy efficiency targets (e.g., British Thermal Units per square foot), and adherence to safety and environmental regulations. For steam supply, this might involve maintaining specific pressure and temperature levels. For air-conditioning, it would include maintaining setpoint temperatures and humidity levels within specified tolerances. Quality of service, such as the condition of delivered steam or the effectiveness of cooling, is also monitored. These KPIs are crucial for ensuring the continuous and effective operation of essential building services and are often tied to contract payment or award fees.

How does the contract duration of 365 days influence the assessment of value and risk?

A contract duration of 365 days (one year) for utility services like steam and air-conditioning supply is relatively short in the context of infrastructure services. This short duration has several implications for assessing value and risk. On the positive side, it allows the government to re-evaluate the market and competition annually, providing opportunities to potentially secure better pricing or terms in subsequent contract periods if competition increases. It also limits the government's long-term exposure to potentially suboptimal pricing or performance from a single vendor. However, a one-year term might not provide sufficient incentive for the contractor to make significant long-term investments in efficiency improvements or infrastructure upgrades, as the return on investment period is limited. For the government, it also means a recurring administrative burden of conducting procurements or extensions annually.

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: 1800 F ST NW, WASHINGTON, DC, 20405

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $28,903,406

Exercised Options: $28,903,406

Current Obligation: $28,903,406

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline