DoD's $15.4M electric utility contract for Fort Richardson awarded to Municipality of Anchorage

Contract Overview

Contract Amount: $15,394,697 ($15.4M)

Contractor: Anchorage, Municipality of (INC)

Awarding Agency: Department of Defense

Start Date: 2009-06-15

End Date: 2019-06-14

Contract Duration: 3,651 days

Daily Burn Rate: $4.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: ELECTRIC UTILITY FOR FORT RICHARDSON

Place of Performance

Location: FORT RICHARDSON, ANCHORAGE County, ALASKA, 99505

State: Alaska Government Spending

Plain-Language Summary

Department of Defense obligated $15.4 million to ANCHORAGE, MUNICIPALITY OF (INC) for work described as: ELECTRIC UTILITY FOR FORT RICHARDSON Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract duration of approximately 10 years indicates a long-term need for utility services. 3. The firm fixed-price contract type likely provides cost certainty for the government. 4. The award to a municipal entity may reflect unique local utility infrastructure or service arrangements. 5. Performance is located in Alaska, a region with potentially higher utility operating costs. 6. The contract's value is spread over a decade, requiring careful monitoring of annual spending.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific details on the scope of services and the exact energy consumption of Fort Richardson. However, a 10-year, $15.4 million contract averages to approximately $1.54 million per year. This figure needs to be compared against the cost of electricity for similar military installations or large federal facilities in comparable geographic regions, considering factors like energy demand, infrastructure maintenance, and regulatory environments. The firm fixed-price nature suggests an attempt to control costs, but the overall value depends heavily on the negotiated rate and the actual energy usage over the contract's life.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 2 bids suggests a moderate level of competition for this utility service contract. While two bidders participated, the extent to which this represents robust competition depends on the number of qualified utility providers capable of serving the specific needs of Fort Richardson and the surrounding area. A higher number of bidders typically leads to more competitive pricing and better value for the government.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it encourages multiple companies to bid, potentially driving down prices and ensuring the government receives the best possible value for its expenditure.

Public Impact

The primary beneficiary is the U.S. Army's Fort Richardson, which receives a consistent and reliable supply of electricity. This contract ensures the operational readiness and continuity of essential services at the military installation. The geographic impact is localized to Anchorage, Alaska, where Fort Richardson is situated. The contract supports the local utility infrastructure and potentially the workforce employed by the Municipality of Anchorage's utility services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases over the 10-year duration if not adequately structured in the fixed-price agreement.
Dependence on a single provider for a critical utility service could pose a risk if the provider faces operational issues.
Limited competition (2 bids) might indicate barriers to entry or a niche market, potentially impacting long-term cost-effectiveness.

Positive Signals

Firm fixed-price contract provides budget certainty for the government.
Award to a municipal entity could indicate a stable, long-term service provider with established infrastructure.
Full and open competition, even with two bidders, suggests an effort to secure competitive terms.

Sector Analysis

The electric utility sector is characterized by significant infrastructure investment, regulatory oversight, and often operates as a natural monopoly or is dominated by a few large providers in specific regions. Federal contracts for utility services, especially for large installations like military bases, are crucial for ensuring operational continuity. This contract fits within the broader category of government procurement for essential services, where reliability and cost-effectiveness are paramount. Comparable spending benchmarks would involve analyzing annual electricity costs for other large federal facilities or military bases, adjusted for geographic location, size, and energy consumption patterns.

Small Business Impact

This contract does not appear to have a small business set-aside (ss: false) and there is no indication of small business subcontracting requirements (sb: false). Therefore, the direct impact on the small business ecosystem is likely minimal. The award was made to a municipal entity, which typically does not focus on subcontracting opportunities for small businesses in the same way a private sector prime contractor might. The primary focus of this contract is securing essential utility services for a federal installation.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force, which awarded it on behalf of the Department of Defense. Accountability measures are inherent in the firm fixed-price contract structure, requiring the contractor to deliver services at the agreed-upon price. Transparency is generally maintained through federal procurement databases like FPDS-NG, where contract awards are recorded. Specific oversight mechanisms would include performance monitoring, invoicing reviews, and adherence to service level agreements. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Fort Richardson Operations and Maintenance
Department of Defense Energy Procurement
Federal Utility Services Contracts
Alaska Electric Grid Services

Risk Flags

Long contract duration may limit flexibility
Potential for price escalation not captured in fixed price
Limited competition (2 bidders) could impact long-term value

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.4 million to ANCHORAGE, MUNICIPALITY OF (INC). ELECTRIC UTILITY FOR FORT RICHARDSON

Who is the contractor on this award?

The obligated recipient is ANCHORAGE, MUNICIPALITY OF (INC).

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $15.4 million.

What is the period of performance?

Start: 2009-06-15. End: 2019-06-14.

What was the historical spending pattern for electric utility services at Fort Richardson prior to this contract?

Analyzing historical spending patterns for electric utility services at Fort Richardson prior to this contract (2009-2019) would provide crucial context for evaluating the value and necessity of the $15.4 million award. Without prior data, it's difficult to ascertain if this contract represents an increase, decrease, or stable level of expenditure. Historical data would reveal average annual costs, fluctuations in demand, and potentially identify any previous providers or contract types. This information is essential for benchmarking the current contract's pricing and assessing whether the firm fixed-price agreement over a decade offers better financial predictability or potential savings compared to previous arrangements. Understanding past spending also helps in identifying any trends in energy consumption or pricing specific to the installation's operations and the Alaskan utility market.

How does the per-kilowatt-hour cost under this contract compare to the average commercial or residential rates in Anchorage, Alaska?

Comparing the per-kilowatt-hour (kWh) cost under this contract to average commercial or residential rates in Anchorage, Alaska, is vital for assessing value for money. While specific kWh data isn't provided, the total contract value of $15.4 million over approximately 10 years suggests an average annual expenditure of $1.54 million. To perform a meaningful comparison, one would need to estimate the total kWh consumed by Fort Richardson annually and then divide that by the annual contract value. This calculated rate should then be benchmarked against publicly available average commercial and residential electricity rates for the Municipality of Anchorage. Federal facilities often negotiate bulk rates that may differ significantly from standard tariffs due to volume, but a substantial deviation could indicate either exceptional value or potential overpayment. Factors like demand charges, infrastructure maintenance contributions, and specific service level agreements associated with the federal contract must also be considered in this comparison.

What were the specific criteria used to evaluate the two bids received for this contract?

The specific evaluation criteria used for the two bids received for this contract are not detailed in the provided data. However, for a full and open competition, especially for a service like electric utility provision, evaluation criteria typically encompass factors such as technical approach, past performance, management capability, and price. For a firm fixed-price contract, price often carries significant weight, but technical factors ensuring reliability and service continuity are also critical for essential services like electricity. The relative importance of each criterion would have been outlined in the solicitation documents. Understanding these criteria is key to determining if the award was based on the best overall value to the government, considering both cost and non-cost factors, and whether the municipality's bid was demonstrably superior or simply the lowest price among the limited options.

What are the potential risks associated with a 10-year firm fixed-price contract for electric utility services in a region like Alaska?

A 10-year firm fixed-price contract for electric utility services in Alaska presents several potential risks. Firstly, energy prices in Alaska can be volatile due to factors like fuel costs (if applicable), weather impacts on infrastructure, and regulatory changes. A fixed price locks in the rate, meaning the government might overpay if market prices decrease significantly over the decade. Conversely, if costs for the utility provider escalate unexpectedly (e.g., due to major infrastructure damage from extreme weather or new environmental regulations), the provider might face financial strain, potentially impacting service reliability, although the fixed-price nature aims to transfer this risk to the contractor. Furthermore, technological advancements in energy generation or distribution could emerge during the contract period, making the fixed-price service less competitive or efficient compared to newer alternatives. The long duration also means less flexibility to adapt to changing energy needs or adopt more sustainable practices if they become available and cost-effective.

Does the Municipality of Anchorage have a history of providing reliable utility services to large federal installations?

Information regarding the Municipality of Anchorage's specific history of providing reliable utility services to large federal installations is not detailed in the provided contract data. However, as a municipal entity, it is likely responsible for significant public infrastructure and services within its jurisdiction. Federal agencies typically vet potential contractors thoroughly, especially for critical services like utilities. The fact that the Department of the Air Force awarded a 10-year contract suggests a level of confidence in the municipality's capability and past performance. To fully assess this, one would need to review performance reviews, customer satisfaction data, and any documented issues related to their service provision, particularly to large consumers or government facilities, if such records are publicly available or were part of the contract award process.

Industry Classification

NAICS: Utilities › Electric Power Generation, Transmission and Distribution › Other Electric Power Generation

Product/Service Code: UTILITIES AND HOUSEKEEPING › UTILITIES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W912CZ09R0013

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1120 E 1ST AVE, ANCHORAGE, AK, 99501

Business Categories: Category Business, Government, U.S. Local Government, U.S. National Government, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $42,676,417

Exercised Options: $42,676,417

Current Obligation: $15,394,697

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline