DoD's Army Spent $27M on Utility Services in FY11, Facing Limited Competition

Contract Overview

Contract Amount: $27,070,178 ($27.1M)

Contractor: Foreign Utility Consolidated Reporting

Awarding Agency: Department of Defense

Start Date: 2010-10-01

End Date: 2011-09-30

Contract Duration: 364 days

Daily Burn Rate: $74.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: FY11 UTILITY SERVICES (HEAT) 1ST QTR

Plain-Language Summary

Department of Defense obligated $27.1 million to FOREIGN UTILITY CONSOLIDATED REPORTING for work described as: FY11 UTILITY SERVICES (HEAT) 1ST QTR Key points: 1. Significant spending on essential utility services highlights ongoing operational costs for the Department of the Army. 2. The contract's fixed-price with economic price adjustment structure may expose taxpayers to fluctuating energy costs. 3. Limited competition raises concerns about potential overspending and lack of market-driven pricing. 4. The utility sector is critical for government operations, but procurement methods heavily influence cost-effectiveness.

Value Assessment

Rating: questionable

The awarded amount of $27,070,178 for utility services appears high given the fixed-price with economic price adjustment structure. Without comparable contract data or a clear benchmark, it's difficult to definitively assess value, but the lack of competition suggests potential for inflated costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was not available for competition, indicating a sole-source or limited source procurement. This significantly restricts price discovery and negotiation leverage, potentially leading to higher costs for the government compared to an open market scenario.

Taxpayer Impact: Taxpayers may bear increased costs due to the lack of competitive bidding and the economic price adjustment clause, which allows for cost increases based on market fluctuations.

Public Impact

Essential services like steam and air-conditioning are crucial for military base operations, impacting readiness and personnel welfare. The reliance on a single provider for critical utilities can create vulnerabilities in service delivery. Fluctuations in energy prices directly affect the budget allocated for these services, potentially diverting funds from other priorities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Economic price adjustment clause
Potential for cost overruns

Positive Signals

Ensures essential utility services are provided
Fixed price contract structure provides some cost certainty

Sector Analysis

The Department of Defense relies heavily on utility services, such as steam and air-conditioning, for the operation of its facilities. Spending benchmarks in this sector vary widely based on location, facility size, and energy source, but competitive procurement is key to achieving cost efficiency.

Small Business Impact

There is no indication in the provided data whether small businesses were involved in this contract. The limited competition suggests that opportunities for small business participation may have been restricted.

Oversight & Accountability

The limited competition raises questions about the oversight applied during the procurement process. Further review is needed to understand why the contract was not opened to broader competition and if adequate justification exists.

Related Government Programs

Steam and Air-Conditioning Supply
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Lack of competitive bidding
Potential for cost escalation due to EPA
Limited transparency in pricing
Dependency on a single provider for critical services

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.1 million to FOREIGN UTILITY CONSOLIDATED REPORTING. FY11 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 $27.1 million.

What is the period of performance?

Start: 2010-10-01. End: 2011-09-30.

What was the justification for limiting competition on this essential utility services contract?

The justification for limiting competition is crucial for understanding the value received. If the sole provider was the only feasible option due to unique infrastructure or geographic constraints, the cost might be justifiable. However, without this information, the lack of competition raises concerns about potential price inflation and missed opportunities for cost savings through competitive bidding.

How did the economic price adjustment clause impact the final cost compared to a fixed-price contract?

The economic price adjustment (EPA) clause allows for modifications to the contract price based on changes in specified economic factors, typically related to inflation or commodity prices. In this case, it means the final cost could be higher than the initial $27 million if energy prices increased significantly during the contract period. Assessing the actual impact requires comparing the final paid amount against what would have been paid under a firm fixed-price agreement.

What is the benchmark cost for similar utility services contracts within the Department of Defense or other federal agencies?

Establishing a precise benchmark for utility services is challenging due to variations in scale, location, and specific services rendered. However, generally, contracts procured through full and open competition yield lower per-unit costs. The absence of competition here suggests this contract's pricing may exceed typical market rates, warranting further investigation into cost efficiency.

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: 2011 CRYSTAL DR STE 911, ARLINGTON, VA, 08

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $27,070,178

Exercised Options: $27,070,178

Current Obligation: $27,070,178

Contract Characteristics

Cost or Pricing Data: NO

Timeline