DoD's $27.2M utility services contract awarded to Foreign Utility Consolidated Reporting shows potential for cost savings

Contract Overview

Contract Amount: $27,216,633 ($27.2M)

Contractor: Foreign Utility Consolidated Reporting

Awarding Agency: Department of Defense

Start Date: 2017-10-01

End Date: 2018-09-30

Contract Duration: 364 days

Daily Burn Rate: $74.8K/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) FY18 1ST QTR

Plain-Language Summary

Department of Defense obligated $27.2 million to FOREIGN UTILITY CONSOLIDATED REPORTING for work described as: IGF::OT::IGF, CONSOLIDATED REPORT FOR UTILITY SERVICES (HEAT) FY18 1ST QTR Key points: 1. The contract's fixed-price with economic price adjustment structure requires careful monitoring of price fluctuations. 2. Limited competition for this essential service raises questions about optimal price discovery. 3. The contractor's track record and performance history will be key indicators of value. 4. This contract supports critical infrastructure for the Department of the Army. 5. The duration of the contract suggests a need for sustained performance and reliability. 6. Understanding the basis for the economic price adjustment is crucial for assessing long-term value.

Value Assessment

Rating: fair

Benchmarking the $27.2 million award for steam and air-conditioning supply against similar contracts is challenging without more specific service details and geographic context. The fixed-price with economic price adjustment (FPEPA) contract type introduces variability, making direct comparisons difficult. However, the absence of a clear per-unit cost benchmark in the provided data prevents a definitive assessment of value for money. Further analysis would require detailed service level agreements and historical pricing trends to determine if the price is competitive.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a 'NOT AVAILABLE FOR COMPETITION' basis, indicating a sole-source procurement. This means that only one vendor was considered capable of meeting the requirement, likely due to specialized services or unique circumstances. The lack of competition limits the government's ability to leverage market forces to achieve the best possible pricing and terms. It is essential to understand the justification for this sole-source award to ensure it was appropriate and that the government did not forgo potential cost savings.

Taxpayer Impact: Sole-source awards can lead to higher prices for taxpayers as there is no competitive pressure to drive down costs. The government must rely on negotiation and oversight to ensure a fair price.

Public Impact

The Department of the Army benefits from a reliable supply of steam and air-conditioning, crucial for operational readiness. This contract ensures the continuous functioning of essential facilities and infrastructure. The geographic impact is localized to the facilities served by the contractor, supporting military operations. Workforce implications are likely within the contractor's organization, providing employment for utility service personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
The economic price adjustment clause requires careful monitoring to prevent unwarranted cost increases.
Lack of detailed performance metrics makes it difficult to assess service quality and efficiency.
The specific justification for 'NOT AVAILABLE FOR COMPETITION' needs further scrutiny to ensure necessity.

Positive Signals

Contract ensures essential utility services for critical military operations.
Fixed-price component provides some cost predictability, though subject to adjustments.
The contract duration suggests a stable, long-term relationship for service provision.

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 critical for maintaining facility functionality and supporting mission readiness. While specific market size data for this niche is not readily available, it represents a consistent and essential spending category within the broader facilities management and public utilities domain. The Department of Defense is a significant consumer of such services, often requiring robust and reliable providers capable of operating in diverse environments.

Small Business Impact

The provided data indicates that small business participation was not a factor in this contract, as the 'sb' field is false and there is no indication of small business set-asides. This sole-source award to a larger entity means that subcontracting opportunities for small businesses within this specific contract are unlikely unless initiated by the prime contractor. The impact on the small business ecosystem for utility services is minimal for this particular award, as it did not leverage small business capabilities.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures would be defined in the contract's terms and conditions, including performance standards and reporting requirements. Transparency is facilitated through contract databases like FPDS, but detailed operational oversight and Inspector General jurisdiction would depend on specific performance issues or audits initiated by the agency.

Related Government Programs

Department of Defense Facilities Management
Utility Services Contracts
Energy Supply Contracts
Base Operations Support

Risk Flags

Sole-source award may limit cost savings.
Economic Price Adjustment requires careful monitoring.
Lack of competition could impact service quality incentives.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.2 million to FOREIGN UTILITY CONSOLIDATED REPORTING. IGF::OT::IGF, CONSOLIDATED REPORT FOR UTILITY SERVICES (HEAT) FY18 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 $27.2 million.

What is the period of performance?

Start: 2017-10-01. End: 2018-09-30.

What is the historical spending pattern for this specific utility service at the Department of the Army installation?

Analyzing historical spending for this utility service at the specific Department of the Army installation is crucial for understanding cost trends and identifying potential anomalies. Without access to prior contract awards for this exact service at this location, a direct historical comparison is not possible. However, general trends in utility costs (steam, air conditioning) can be influenced by factors such as energy prices, inflation, infrastructure upgrades, and changes in operational demand. If this is a new requirement or a consolidation of previous services, the baseline for comparison would be different. A review of the contract's justification for 'NOT AVAILABLE FOR COMPETITION' might offer insights into why historical options were not pursued or available.

How does the economic price adjustment (EPA) clause in this contract typically function, and what are the potential risks?

The Economic Price Adjustment (EPA) clause in this contract allows for modifications to the contract price based on fluctuations in specified economic factors, such as labor costs, material prices, or energy indices. This is intended to protect both the contractor from unforeseen cost increases and the government from paying inflated prices if costs decrease. The primary risk for the government is that the EPA could lead to significant price increases beyond initial projections, especially in volatile markets. Careful negotiation of the EPA's base index, adjustment formula, and caps is essential to mitigate this risk and ensure that price adjustments are fair and reflect genuine market changes rather than contractor inefficiencies.

What specific services are included under 'Steam and Air-Conditioning Supply' for this contract?

The designation 'Steam and Air-Conditioning Supply' suggests the contract covers the provision and potentially the maintenance of systems that generate and distribute steam for heating and air conditioning services to specified Department of the Army facilities. This could encompass the operation of boilers, chillers, distribution networks, and associated infrastructure. The exact scope would be detailed in the contract's Statement of Work (SOW), which would outline service levels, operating hours, maintenance requirements, performance metrics, and any specific equipment or facility coverage. Without the SOW, the precise nature and extent of the services remain generalized.

What is the justification for awarding this contract on a sole-source basis?

The justification for awarding this contract on a sole-source basis ('NOT AVAILABLE FOR COMPETITION') typically stems from unique capabilities, proprietary technology, or specific circumstances where only one responsible source can fulfill the requirement. For utility services like steam and air-conditioning, this could be due to the contractor owning or controlling the necessary infrastructure (e.g., a central plant serving multiple buildings), possessing unique expertise in maintaining specialized legacy systems, or operating under specific regulatory or geographical constraints that preclude competition. The Federal Acquisition Regulation (FAR) outlines the conditions under which sole-source procurements are permissible, and a formal justification document should exist detailing the rationale.

What are the potential performance risks associated with a sole-source utility services contract?

Performance risks associated with a sole-source utility services contract can be elevated because the lack of competition reduces the incentive for the contractor to excel beyond the minimum contractual requirements. Without the threat of losing future business to competitors, a sole-source provider might be less motivated to innovate, improve efficiency, or proactively address potential issues. Furthermore, the government has fewer options if the contractor underperforms, potentially leading to service disruptions. Robust contract management, clear performance standards, regular monitoring, and strong communication channels are critical to mitigating these risks and ensuring reliable service delivery.

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, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $27,216,633

Exercised Options: $27,216,633

Current Obligation: $27,216,633

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline