DoD's $17M February 2010 utility services contract for steam and air-conditioning supply lacked competition

Contract Overview

Contract Amount: $17,002,156 ($17.0M)

Contractor: Foreign Utility Consolidated Reporting

Awarding Agency: Department of Defense

Start Date: 2010-02-01

End Date: 2010-09-30

Contract Duration: 241 days

Daily Burn Rate: $70.5K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: OTHER UTILITIES SERVICES DURING THE MONTH OF FEBRUARY 2010

Plain-Language Summary

Department of Defense obligated $17.0 million to FOREIGN UTILITY CONSOLIDATED REPORTING for work described as: OTHER UTILITIES SERVICES DURING THE MONTH OF FEBRUARY 2010 Key points: 1. The contract utilized a fixed-price structure with economic price adjustments, indicating potential for cost fluctuations. 2. A significant portion of the contract value was incurred within a single month, suggesting intensive service delivery. 3. The contract was not competitively procured, raising questions about potential overpayment and value for money. 4. The duration of the contract, 241 days, suggests a medium-term service requirement. 5. The specific North American Industry Classification System (NAICS) code 221330 points to a specialized utility service.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of detailed cost breakdowns and competitive pricing information. The raw dollar amount for February 2010 ($17M) appears high for utility services, especially without clear justification for the economic price adjustment. Without comparable contract data or a competitive bidding process, it's difficult to ascertain if the pricing was fair or if taxpayers received optimal value. The absence of competition is a primary indicator of potential value concerns.

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. The specific reason for this sole-source award is not detailed in the provided data. A lack of competition typically limits price discovery and can lead to higher costs for the government compared to a fully competed procurement. It suggests that either only one vendor was capable of providing the service or that the circumstances of the award did not allow for a broader solicitation.

Taxpayer Impact: Sole-source awards mean taxpayers may not have benefited from the cost savings that competitive bidding often generates. This can result in the government paying a premium for goods or services.

Public Impact

The primary beneficiary of this contract is the Department of Defense, specifically the Department of the Army, receiving essential utility services. The services provided include steam and air-conditioning supply, crucial for maintaining operational facilities. The geographic impact is localized to the facilities managed by the Department of the Army where these utilities are required. Workforce implications are likely internal to the contractor and the Army's facility management, with no direct public employment generation indicated.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about price reasonableness and potential for inflated costs.
The fixed-price with economic price adjustment structure introduces uncertainty regarding final cost to taxpayers.
Limited transparency on the justification for sole-source award hinders accountability.
High monthly expenditure in February 2010 warrants further investigation into service utilization and necessity.

Positive Signals

Contract provided essential utility services critical for military operations.
The contract was in place to ensure continuous support for a defined period.
The fixed-price component offers some level of cost predictability, albeit with adjustments.

Sector Analysis

The utility services sector, particularly steam and air-conditioning supply, is a critical component of infrastructure supporting various government operations. This contract falls within the broader utilities and facility support services market. While specific market size data for this niche is not provided, the federal government is a significant consumer of such services across numerous agencies and installations. Comparable spending benchmarks are difficult to establish without more specific details on the scope and location of services, but large-scale utility provision for military bases can represent substantial investments.

Small Business Impact

The provided data indicates that small business participation was not a factor in this contract, as the 'ss' (small business set-aside) field is false and the 'sb' (small business) field is also false. There is no information regarding subcontracting plans or achievements related to small businesses. This suggests that the contract was likely awarded to a large entity and did not include specific provisions to engage small businesses, potentially limiting opportunities within the small business ecosystem for this particular procurement.

Oversight & Accountability

Oversight mechanisms for this contract are not detailed in the provided data. However, as a Department of Defense contract, it would typically fall under the purview of the Department of Defense Inspector General (IG) for audit and investigation. Accountability would be managed through contract administration by the awarding agency. Transparency is limited due to the sole-source nature and lack of detailed performance reporting in the given information.

Related Government Programs

Department of Defense Facilities Management Contracts
Utility Services Procurement
Steam and Air-Conditioning Supply Contracts
Federal Energy Management Programs

Risk Flags

Lack of Competition
Sole-Source Award
Potential for Cost Overruns (FPEPA)
Limited Transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.0 million to FOREIGN UTILITY CONSOLIDATED REPORTING. OTHER UTILITIES SERVICES DURING THE MONTH OF FEBRUARY 2010

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 $17.0 million.

What is the period of performance?

Start: 2010-02-01. End: 2010-09-30.

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

The provided data does not contain the specific justification for the sole-source award of this contract. Typically, sole-source awards are made when only one responsible source is available or capable of meeting the government's needs, or under urgent circumstances. Without further documentation from the Department of Defense, the precise reason remains unknown. This lack of transparency is a common concern with sole-source procurements, as it limits the ability to verify if competition was truly not feasible or if other factors influenced the decision.

How does the $17 million expenditure in February 2010 compare to typical monthly utility costs for similar military facilities?

Comparing the $17 million expenditure for February 2010 to typical monthly utility costs for similar military facilities is challenging without more context. The figure represents a substantial amount for a single month's utility services, including steam and air-conditioning. Factors such as the size and operational tempo of the facility, geographic location (affecting climate control needs), and the specific services included in the contract would heavily influence normal costs. A high expenditure could indicate a particularly demanding period of operation, extreme weather, or potentially inefficient service delivery or pricing. Further analysis would require detailed operational data for the facility during that period.

What are the potential risks associated with a 'FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT' contract type for utility services?

The 'FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT' (FPEPA) contract type for utility services introduces a degree of risk for both the government and the contractor. While the fixed-price element provides a baseline cost, the economic price adjustment clause allows for modifications to the price based on fluctuations in specified economic factors, such as labor rates, material costs, or energy indices. For the government, the risk lies in potential price increases if these economic factors rise significantly, leading to costs exceeding initial projections. For the contractor, the risk is mitigated by the adjustment clause, but they still bear the risk of cost overruns if the adjustments do not fully compensate for unforeseen increases in their input costs. This structure requires careful monitoring of the economic indicators used for adjustments to ensure fairness and prevent excessive cost escalation.

What is the significance of NAICS code 221330 (Steam and Air-Conditioning Supply) in the context of federal spending?

NAICS code 221330, 'Steam and Air-Conditioning Supply,' signifies a specialized segment within the utilities sector. Federal spending under this code typically supports the operational needs of government facilities, ensuring climate control and essential processes. The presence of contracts under this code indicates the government's reliance on these services for its infrastructure. Analyzing spending trends within this NAICS code can reveal patterns in facility maintenance, energy consumption, and the market dynamics of utility providers serving federal installations. It highlights the government's role as a significant consumer of industrial and commercial utility services.

Given the contract's duration of 241 days, what does this suggest about the nature of the services provided?

A contract duration of 241 days, approximately eight months, suggests that the steam and air-conditioning supply services were intended for a significant, but not necessarily long-term, operational period. This duration could indicate support for a specific project, a seasonal requirement (e.g., covering both heating and cooling seasons), or a bridging contract while a more permanent solution was being established. It implies a need for consistent utility provision over a substantial timeframe, rather than a short-term emergency or a multi-year commitment. The specific timing (February to September 2010) further supports the idea of covering a substantial portion of a year, likely encompassing both cooler and warmer months.

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: $17,002,156

Exercised Options: $17,002,156

Current Obligation: $17,002,156

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Timeline