Department of the Army's $14.5M electric service contract awarded to Southern California Edison shows limited competition

Contract Overview

Contract Amount: $14,500,000 ($14.5M)

Contractor: Southern California Edison COM

Awarding Agency: Department of Defense

Start Date: 2007-10-01

End Date: 2008-09-30

Contract Duration: 365 days

Daily Burn Rate: $39.7K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: FY08 ELECTRIC SERVICE

Place of Performance

Location: FORT IRWIN, SAN BERNARDINO County, CALIFORNIA, 92310

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $14.5 million to SOUTHERN CALIFORNIA EDISON COM for work described as: FY08 ELECTRIC SERVICE Key points: 1. The contract represents a significant expenditure for electric services within the Department of the Army. 2. Limited competition suggests potential for higher pricing than a more open market might yield. 3. The contract's duration and fixed-price nature provide cost certainty but may limit flexibility. 4. Performance context is limited without specific delivery metrics or service level agreements. 5. This contract positions the Army as a major consumer of utility services in California. 6. The absence of small business set-asides warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific service level agreements or detailed usage data. The reported award amount of $14.5 million for one year of electric service appears substantial, but its fairness depends heavily on the volume of electricity consumed and the prevailing market rates in Southern California during FY08. Compared to similar large-scale utility contracts, the price per unit (if calculable) would be the key indicator of value. Given the limited competition, there's a risk that the price may not reflect the most economical option available.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This typically occurs when only one vendor can provide the required service, often due to geographic exclusivity or unique infrastructure. The lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to a higher cost for the government than if multiple providers had vied for the contract.

Taxpayer Impact: Taxpayers may have paid a premium for this electric service due to the absence of competitive bidding. Without a competitive process, the government lacked leverage to negotiate the lowest possible price.

Public Impact

The primary beneficiary of this contract is the Department of the Army, ensuring reliable electric service for its facilities. The services delivered are essential utility provision, maintaining operational capabilities. The geographic impact is concentrated in California, where Southern California Edison operates. Workforce implications are likely internal to Southern California Edison, managing grid operations and service delivery.

Waste & Efficiency Indicators

Waste Risk Score: 30 / 10

Warning Flags

Sole-source award limits price negotiation and potentially increases costs for taxpayers.
Lack of competition raises concerns about efficiency and value for money.
No small business participation is indicated, missing opportunities for economic inclusion.

Positive Signals

Ensures essential utility service for critical military operations.
Fixed-price contract provides budget certainty for the awarded period.

Sector Analysis

The energy sector, particularly electric utilities, is a critical infrastructure component for government operations. Large federal agencies are significant consumers of electricity, often requiring contracts with major utility providers. Southern California Edison is a prominent utility company serving a vast region. This contract fits within the broader category of government procurement for essential services, where market dynamics and regulatory environments heavily influence pricing and competition. Comparable spending benchmarks would involve analyzing other large federal facilities' utility costs in similar service territories.

Small Business Impact

This contract does not appear to have a small business set-aside. The sole-source nature of the award further suggests that opportunities for small businesses, either as prime contractors or subcontractors, were likely limited or non-existent. This represents a missed opportunity to leverage the small business industrial base and promote economic participation.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and financial management offices. Accountability measures would involve ensuring service delivery meets the terms of the contract and that payments are processed correctly. Transparency is limited due to the sole-source nature and the lack of publicly available detailed performance metrics. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Federal Utility Contracts
Department of Defense Energy Procurement
California Utility Services

Risk Flags

Sole-source award limits competition.
Potential for above-market pricing due to lack of competition.
Lack of detailed performance metrics hinders value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.5 million to SOUTHERN CALIFORNIA EDISON COM. FY08 ELECTRIC SERVICE

Who is the contractor on this award?

The obligated recipient is SOUTHERN CALIFORNIA EDISON COM.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $14.5 million.

What is the period of performance?

Start: 2007-10-01. End: 2008-09-30.

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

The provided data indicates the contract was 'NOT AVAILABLE FOR COMPETITION,' which is synonymous with a sole-source award. The specific justification would typically be documented in the contract file by the procuring agency. Common reasons for sole-source awards in utility services include situations where a single utility provider has exclusive rights to serve a particular geographic area due to infrastructure ownership (e.g., the electric grid) or where the government facility is uniquely situated and only one provider can physically connect and supply the required power. Without access to the agency's justification documentation, the precise reason remains unconfirmed, but it strongly suggests a lack of alternative providers.

How does the $14.5 million award compare to historical spending for electric services at this Army facility?

To compare the $14.5 million award to historical spending, one would need access to previous contract awards for electric services at the specific Army facility in question. The provided data only includes details for this single FY08 contract. Analyzing historical data would involve searching federal procurement databases (like FPDS or USASpending) for prior awards to Southern California Edison or other utility providers for the same or similar services at that location, covering multiple fiscal years. This would reveal trends in spending, identify any significant price increases or decreases, and help determine if the FY08 amount represents an anomaly or a consistent level of expenditure.

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

The provided data snippet does not include specific Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this contract. Typically, such details are outlined in the contract's statement of work (SOW) or performance work statement (PWS). For an electric service contract, KPIs might include reliability metrics (e.g., frequency and duration of outages), power quality standards (e.g., voltage and frequency stability), response times for service issues, and adherence to billing accuracy. The absence of this information in the summary data makes it difficult to assess the contractor's performance objectively or to evaluate the value received beyond basic service provision.

What is the estimated cost per kilowatt-hour (kWh) or other unit of electricity under this contract?

Calculating a precise cost per unit, such as per kilowatt-hour (kWh), is not possible with the data provided. The award amount is a total dollar figure for the contract period, and the data lacks information on the total electricity consumed (in kWh or other relevant units) during that time. To determine the per-unit cost, one would need both the total expenditure and the total consumption volume. If this information were available, it could be benchmarked against average commercial or industrial electricity rates in Southern California for FY08 to assess cost-effectiveness.

Were there any attempts to negotiate lower prices given the sole-source nature of the award?

The provided data does not specify whether negotiations occurred to lower prices, especially given the sole-source award. In sole-source procurements, agencies often still engage in negotiation, particularly regarding pricing, unless statutory or regulatory exceptions apply (e.g., established utility rates). The agency's contracting officer would typically attempt to secure the most favorable price possible based on available market information, cost data from the contractor, and any applicable rate structures. However, the leverage in sole-source situations is inherently less than in a competitive environment.

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Address: 1241 S GRAND AVE, SANTA ANA, CA, 46

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $14,500,000

Exercised Options: $14,500,000

Current Obligation: $14,500,000

Timeline