Department of the Army awards $31M contract for electric power generation services in Alaska

Contract Overview

Contract Amount: $31,024,224 ($31.0M)

Contractor: Golden Valley Electric Association Inc

Awarding Agency: Department of Defense

Start Date: 2019-02-01

End Date: 2028-09-30

Contract Duration: 3,529 days

Daily Burn Rate: $8.8K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: GVEA ELECTRICAL POWER SERVICES

Place of Performance

Location: FORT WAINWRIGHT, FAIRBANKS NORTH STAR County, ALASKA, 99703

State: Alaska Government Spending

Plain-Language Summary

Department of Defense obligated $31.0 million to GOLDEN VALLEY ELECTRIC ASSOCIATION INC for work described as: GVEA ELECTRICAL POWER SERVICES Key points: 1. Contract awarded on a non-competitive basis, raising questions about potential cost savings through competition. 2. Long-term contract duration (2019-2028) suggests a sustained need for these services. 3. Fossil fuel electric power generation is a critical but environmentally sensitive sector. 4. The contract's value is significant within the context of utility services for military installations. 5. Performance is tied to a fixed price, which can offer cost certainty but may limit flexibility. 6. The awardee, Golden Valley Electric Association Inc., is a regional provider, indicating potential local market dynamics.

Value Assessment

Rating: fair

The contract value of $31 million over its duration appears substantial for electric power generation services. Without comparable contract data for similar services in Alaska or for Department of Defense installations of comparable size, a precise value-for-money assessment is difficult. The fixed-price nature of the contract provides cost certainty for the government, but it's unclear if this price was benchmarked against market rates or if a competitive process could have yielded a lower price. The lack of competition is a primary factor limiting a 'good' or 'excellent' rating.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a 'NOT AVAILABLE FOR COMPETITION' basis, indicating that a full and open competition was not conducted. This typically occurs when only one responsible source is available or in cases of urgent need. The lack of competition means there was no direct price comparison against other potential providers, which could lead to a less favorable price for the government compared to a competitive scenario. The specific justification for the sole-source award would be crucial for a deeper analysis.

Taxpayer Impact: The absence of competition means taxpayers may not have benefited from the potential cost savings that could arise from multiple bidders vying for the contract. This could result in a higher overall expenditure for the government.

Public Impact

Military personnel and operations at the Department of the Army installation in Alaska benefit from reliable electric power. The contract ensures the continuous supply of electricity, a fundamental requirement for base operations and readiness. Services are geographically focused within Alaska, supporting the specific needs of the Army's presence in the state. The contract supports the operational workforce of Golden Valley Electric Association Inc. and potentially related local service providers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Non-competitive award limits price discovery and potential savings for taxpayers.
Long contract duration may not adapt to evolving energy technologies or market price fluctuations.
Reliance on fossil fuels for power generation carries environmental risks and potential future regulatory challenges.

Positive Signals

Award to a regional electric cooperative suggests support for local infrastructure and services.
Fixed-price contract provides budget certainty for the Department of the Army.
Long-term award indicates a stable and predictable energy supply for a critical military function.

Sector Analysis

The contract falls within the energy sector, specifically focusing on electric power generation. This is a critical utility service for any large consumer, including military installations. The market for electric power generation can be influenced by regional monopolies, regulatory environments, and the availability of fuel sources. Given the location in Alaska, the market dynamics are likely shaped by the specific infrastructure and resource availability in that state. Comparable spending benchmarks would typically involve analyzing per-kilowatt-hour costs for similar government facilities or large industrial users in the region.

Small Business Impact

The data indicates that this contract was not awarded to a small business (sb: false) and does not appear to be a small business set-aside. Therefore, there are no direct subcontracting implications for small businesses stemming from this specific award. The primary contractor is Golden Valley Electric Association Inc., which is likely a larger utility cooperative, not typically classified as a small business for federal contracting purposes.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the fixed-price contract terms, requiring the contractor to deliver services as specified. Transparency is limited due to the sole-source nature of the award; detailed justifications for the non-competitive award would be key to assessing transparency. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Utility Privatization Program
Federal Energy Regulatory Commission (FERC) regulated utilities
Alaska Electric Power Generation and Distribution
Military Base Energy Security Contracts

Risk Flags

Non-competitive award
Long-term contract duration
Fossil fuel reliance

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.0 million to GOLDEN VALLEY ELECTRIC ASSOCIATION INC. GVEA ELECTRICAL POWER SERVICES

Who is the contractor on this award?

The obligated recipient is GOLDEN VALLEY ELECTRIC ASSOCIATION INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $31.0 million.

What is the period of performance?

Start: 2019-02-01. End: 2028-09-30.

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

The provided data indicates the contract was awarded under 'NOT AVAILABLE FOR COMPETITION' (ct: NOT AVAILABLE FOR COMPETITION). This classification typically implies that a full and open competition was not feasible or conducted. Common reasons include that only one responsible source exists, or there is an urgent, compelling need that precludes competition. Without further documentation from the Department of the Army, the precise justification remains unknown. This could be due to the unique infrastructure requirements of providing power to a specific military installation in Alaska, the limited number of qualified providers in the region, or a critical operational necessity that prevented a lengthy competitive bidding process. Understanding this justification is crucial for assessing whether the government received fair value and if taxpayers' funds were used efficiently.

How does the per-unit cost of electricity under this contract compare to market rates in Alaska?

The provided data does not include specific per-unit cost metrics (e.g., cost per kilowatt-hour) or detailed breakdowns of the total contract value related to energy production. Therefore, a direct comparison to market rates in Alaska is not possible with the given information. To perform such an analysis, one would need to obtain the contract's pricing details and compare them against publicly available electricity rates for similar customer types (e.g., industrial, government) in the relevant geographic region of Alaska. Factors such as the type of fuel used (fossil fuel), transmission costs, and the reliability requirements specific to a military installation would also need to be considered for a comprehensive benchmark.

What are the potential risks associated with a long-term, non-competitive contract for electric power?

A long-term, non-competitive contract for electric power presents several potential risks. Firstly, the lack of competition means the government may be paying a premium price, as there was no opportunity for multiple bidders to drive down costs through a competitive bidding process. Secondly, a fixed-price contract over a long duration (2019-2028) might not adequately account for fluctuations in fuel costs or technological advancements in energy generation, potentially leading to either the government overpaying if prices fall or the contractor being disadvantaged if costs rise significantly beyond projections. Thirdly, relying on a single provider for a critical utility like electricity creates a dependency risk; any disruption in service from the sole provider could have severe operational impacts on the military installation. Finally, the continued use of fossil fuels, as indicated by the 'Fossil Fuel Electric Power Generation' NAICS code, carries environmental risks and potential future regulatory compliance costs.

What is the historical spending pattern for electric power services by the Department of the Army in Alaska?

The provided data only pertains to a single contract awarded in February 2019. It does not offer historical spending patterns for electric power services by the Department of the Army in Alaska. To analyze historical spending, one would need access to procurement data for previous years, identifying all contracts related to electric power generation and distribution awarded by the Army within Alaska. This would allow for an assessment of trends in contract values, types of services procured, competition levels, and pricing over time. Without this broader dataset, it's impossible to determine if the $31 million award represents an increase, decrease, or stable level of spending compared to prior periods.

What is the track record of Golden Valley Electric Association Inc. in fulfilling government contracts?

The provided data does not include information on the track record of Golden Valley Electric Association Inc. specifically concerning government contracts. It only identifies the company as the awardee for this particular Department of the Army contract. To assess their track record, one would need to research their past performance on federal contracts, including factors such as on-time delivery, quality of service, adherence to contract terms, and any history of disputes or contract terminations. Information from sources like the Federal Procurement Data System (FPDS) or contractor performance assessment reporting tools (CPARS) would be necessary to evaluate their reliability and past performance with government entities.

Industry Classification

NAICS: Utilities › Electric Power Generation, Transmission and Distribution › Fossil Fuel Electric Power Generation

Product/Service Code: UTILITIES AND HOUSEKEEPING › UTILITIES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 758 ILLINOIS ST, FAIRBANKS, AK, 99701

Business Categories: Category Business, Corporate Entity Tax Exempt, Nonprofit Organization, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $49,189,431

Exercised Options: $34,454,540

Current Obligation: $31,024,224

Actual Outlays: $8,879,788

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00P16BSD1184

IDV Type: IDC

Timeline