Department of the Army spent $30M on electricity supply services for Grafenwoehr in 2012-2013

Contract Overview

Contract Amount: $30,038,220 ($30.0M)

Contractor: Foreign Utility Consolidated Reporting

Awarding Agency: Department of Defense

Start Date: 2012-10-01

End Date: 2013-09-30

Contract Duration: 364 days

Daily Burn Rate: $82.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: CONSOLIDATED REPORT FOR GRAFENWOEHR FOR ELECTRICITY SUPPLY SERVICES IN OCTOBER 2012.

Plain-Language Summary

Department of Defense obligated $30.0 million to FOREIGN UTILITY CONSOLIDATED REPORTING for work described as: CONSOLIDATED REPORT FOR GRAFENWOEHR FOR ELECTRICITY SUPPLY SERVICES IN OCTOBER 2012. Key points: 1. The contract was awarded through full and open competition, suggesting a competitive pricing environment. 2. The fixed-price with economic price adjustment structure aims to balance cost certainty with market fluctuations. 3. The contract duration of one year is relatively short, potentially allowing for frequent re-evaluation of market rates. 4. The award amount of $30M for a year of utility services indicates significant operational needs at the Grafenwoehr facility. 5. The specific nature of electricity supply services for a military installation implies critical infrastructure support. 6. The absence of small business set-aside suggests the primary focus was on securing the most capable provider.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific per-unit energy consumption data or comparable utility contracts for similar military installations. The total award of $30 million for a year of electricity supply suggests a substantial operational requirement. The fixed-price with economic price adjustment (FPEPA) contract type introduces some variability, making direct comparison to purely fixed-price contracts difficult. However, the award amount appears to be within a reasonable range for large-scale utility services supporting a significant military base.

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 two bidders (no: 2) suggests a moderate level of competition for this specific utility service contract. While two bidders are better than one, a higher number of bids would typically lead to more robust price discovery and potentially lower prices for the government.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it encourages multiple companies to bid, driving down prices through market forces. However, with only two bidders, the potential for significant cost savings may have been limited compared to a scenario with more competitive offers.

Public Impact

The primary beneficiaries are the U.S. Army personnel and operations at the Grafenwoehr training area in Germany, ensuring reliable power supply. The services delivered are essential for the daily functioning of the military installation, including barracks, training facilities, and administrative buildings. The geographic impact is localized to the Grafenwoehr military community in Germany. The contract supports the operational readiness and infrastructure maintenance of a key U.S. Army European facility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases due to the economic price adjustment clause, which could exceed initial budget expectations if energy markets fluctuate significantly.
Limited competition with only two bidders might have resulted in a higher-than-optimal price compared to a more robustly competed contract.
Dependence on a single utility provider for a critical resource like electricity introduces supply chain risk.

Positive Signals

Awarded through full and open competition, which generally promotes fair pricing and access for qualified vendors.
The fixed-price component of the contract provides some level of cost certainty for the base budget.
The contract specifies a clear period of performance, allowing for reassessment and potential renegotiation or re-competition at its conclusion.

Sector Analysis

The defense sector relies heavily on utility services to maintain operational readiness at its numerous installations worldwide. Contracts for electricity supply are crucial for powering everything from administrative buildings to training facilities and living quarters. The market for utility services, especially in overseas locations like Germany, can be complex, involving established providers and regulatory frameworks. This contract fits within the broader category of base operations support services, which are essential for the functioning of military installations.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This is common for large-scale utility contracts where specialized infrastructure and capacity are required, often possessed by larger, established utility providers. There is no explicit information on subcontracting plans, but it is unlikely that significant portions would be subcontracted to small businesses given the nature of the service.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of the Army's contracting command and the facility management at Grafenwoehr. Accountability measures would be embedded in the contract's terms and conditions, including performance standards and payment schedules. Transparency is facilitated by the Federal Procurement Data System (FPDS), which records contract awards. Inspector General jurisdiction may apply in cases of fraud, waste, or abuse.

Related Government Programs

Base Operations Support Services
Utility Privatization Programs
Defense Infrastructure Contracts
Foreign Military Base Services

Risk Flags

Potential for price volatility due to economic price adjustment.
Limited competition (2 bidders) may impact price discovery.
Contract awarded for overseas location, potentially subject to different market dynamics and risks.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.0 million to FOREIGN UTILITY CONSOLIDATED REPORTING. CONSOLIDATED REPORT FOR GRAFENWOEHR FOR ELECTRICITY SUPPLY SERVICES IN OCTOBER 2012.

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 $30.0 million.

What is the period of performance?

Start: 2012-10-01. End: 2013-09-30.

What was the contractor's track record with the Department of Defense prior to this award?

Without specific contractor identification, it is impossible to assess their prior track record. However, for a contract of this magnitude and criticality, the Department of the Army would have likely conducted due diligence to ensure the selected vendor possessed the necessary experience, financial stability, and technical capability to provide reliable electricity supply services. This would typically involve reviewing past performance on similar contracts, assessing financial health, and verifying compliance with relevant regulations and standards. Awarding such a contract implies a level of confidence in the contractor's ability to meet the government's requirements.

How does the awarded price compare to similar electricity supply contracts for overseas military bases?

Direct comparison is difficult without knowing the specific energy consumption metrics (e.g., kWh per square foot, peak demand) and the exact location's energy market rates. However, the $30 million award for a year of service suggests a substantial demand. Overseas utility costs can be higher due to logistical challenges, currency exchange rates, and local market conditions. The fixed-price with economic price adjustment (FPEPA) structure also introduces variability. To assess value, one would need to benchmark the price per unit of energy against similar contracts, adjusted for location and contract type, and consider the reliability and quality of service provided.

What are the primary risks associated with this type of utility contract?

Key risks include price volatility due to the economic price adjustment clause, potential service disruptions from the provider, and geopolitical or regulatory changes in the host country affecting supply. For the government, there's also the risk of inadequate competition leading to suboptimal pricing. Ensuring the contractor maintains robust infrastructure and contingency plans for outages is critical. Furthermore, compliance with environmental regulations and security protocols at a military installation adds another layer of complexity and potential risk.

How effective is the 'Fixed Price with Economic Price Adjustment' contract type for utility services?

This contract type aims to provide a balance between cost certainty and flexibility. The fixed-price component offers a baseline cost, while the economic price adjustment allows for modifications based on predefined economic factors (e.g., inflation, fuel costs). This is particularly useful for long-term service contracts where input costs can fluctuate significantly. For utility services, it helps protect both the government from unexpected price hikes and the contractor from unrecoverable cost increases, theoretically leading to a fairer price and ensuring service continuity. However, it requires careful monitoring of the adjustment indices to prevent excessive cost escalation.

What is the historical spending trend for electricity supply at Grafenwoehr?

The provided data only covers a single contract period (October 2012 - September 2013). To determine historical spending trends, one would need access to procurement data for previous years at the Grafenwoehr facility. Analyzing past contracts would reveal whether spending has increased, decreased, or remained stable, and whether the number of bidders or contract types have changed over time. This would help identify any patterns in energy consumption, pricing, or market dynamics specific to this installation.

What is the significance of the 'Regulation and Administration of Communications, Electric, Gas, and Other Utilities' NAICS code?

The North American Industry Classification System (NAICS) code 926130, 'Regulation and Administration of Communications, Electric, Gas, and Other Utilities,' indicates that this contract falls under the administrative and regulatory functions related to utility services, rather than the direct provision of the utilities themselves. However, in the context of a federal procurement award for 'Electricity Supply Services,' it's more likely that the code is being used broadly to categorize the procurement action related to utility management, even if the actual service is provision. It suggests the contract involves aspects of managing or overseeing utility operations, potentially including regulatory compliance and administration alongside the physical supply.

Industry Classification

NAICS: Public Administration › Administration of Economic Programs › Regulation and Administration of Communications, Electric, Gas, and Other Utilities

Product/Service Code: UTILITIES AND HOUSEKEEPING › UTILITIES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Address: 1275 FIRST ST NE, WASHINGTON, DC, 98

Business Categories: Category Business, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $30,038,220

Exercised Options: $30,038,220

Current Obligation: $30,038,220

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Timeline