Department of the Army spent $35.25M on utility services in October 2012, with limited competition

Contract Overview

Contract Amount: $35,253,722 ($35.3M)

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: $96.9K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: CONSOLIDATED REPORT FOR GRAFENWOEHR FOR OTHER UTILITIES IN OCTOBER 2012

Plain-Language Summary

Department of Defense obligated $35.3 million to FOREIGN UTILITY CONSOLIDATED REPORTING for work described as: CONSOLIDATED REPORT FOR GRAFENWOEHR FOR OTHER UTILITIES IN OCTOBER 2012 Key points: 1. The contract for utility services represents a significant expenditure for the Department of the Army. 2. The procurement method was 'NOT AVAILABLE FOR COMPETITION', raising questions about potential cost efficiencies. 3. The contract duration of one year suggests a need for ongoing utility provision. 4. The fixed-price with economic price adjustment structure allows for cost fluctuations based on market conditions. 5. The specific utility services covered are electric, gas, and other utilities, crucial for base operations. 6. The award was made to DCA, indicating a specific contractor was selected for this service.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without comparable data for similar utility services at military bases. The fixed-price with economic price adjustment clause introduces variability. The total award amount of over $35 million for a one-year utility contract appears substantial, but its value-for-money can only be truly assessed against detailed service level agreements and market rates for utilities in the Grafenwoehr region. Without more specific cost breakdowns or comparisons, it's difficult to definitively state if this represents excellent or fair value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was not competed, being categorized as 'NOT AVAILABLE FOR COMPETITION'. This suggests that either a sole source justification was made, or the procurement fell under specific regulations that limited the competitive process. The lack of open competition means there were likely no other bidders, which can lead to higher prices and reduced incentive for the contractor to offer the most cost-effective solution.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding, as the government did not benefit from the price discovery mechanisms inherent in a competitive procurement process.

Public Impact

Military personnel and their families stationed at Grafenwoehr benefit from reliable utility services. Essential services such as electricity and gas are provided, ensuring operational continuity for the base. The contract supports the infrastructure necessary for the functioning of a major military installation. The provision of utilities is critical for maintaining the quality of life and operational readiness of the base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
The 'NOT AVAILABLE FOR COMPETITION' status requires further investigation into the justification.
Economic price adjustment clauses can lead to unpredictable cost increases.
Limited transparency on the specific breakdown of utility costs.

Positive Signals

Ensures essential utility services for a critical military installation.
Contract duration provides stability for utility provision.
Award to a known entity (DCA) may imply prior satisfactory performance, though not explicitly stated.

Sector Analysis

This contract falls within the Utilities sector, specifically focusing on the provision of essential services like electricity and gas to government facilities. The market for utility services is typically characterized by regulated pricing and localized delivery, especially for large consumers like military bases. While direct market size data for military base utilities is scarce, the overall utility market is vast. This contract represents a significant, albeit localized, expenditure within the broader government procurement of essential services.

Small Business Impact

There is no indication that this contract involved small business set-asides or subcontracting opportunities. The nature of utility provision at a large scale often involves established utility providers or large contracting firms, making it less likely for small businesses to be directly involved unless in a subcontracting capacity for specific, smaller components of the service.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and financial management divisions. Accountability measures would be tied to the performance standards outlined in the contract and the terms of the economic price adjustment. Transparency is limited by the non-competitive nature of the award; further details on the justification for 'NOT AVAILABLE FOR COMPETITION' and the specific pricing structure would be needed for a full assessment.

Related Government Programs

Military Base Operations Support Contracts
Government Utility Services Procurement
Department of Defense Infrastructure Spending

Risk Flags

Non-competitive award
Potential for cost overruns due to economic price adjustment
Lack of transparency in pricing structure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.3 million to FOREIGN UTILITY CONSOLIDATED REPORTING. CONSOLIDATED REPORT FOR GRAFENWOEHR FOR OTHER UTILITIES 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 $35.3 million.

What is the period of performance?

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

What was the specific justification for awarding this contract on a 'NOT AVAILABLE FOR COMPETITION' basis?

The provided data indicates the contract was 'NOT AVAILABLE FOR COMPETITION'. A definitive justification requires access to the contract's Justification and Approval (J&A) document. Typically, such designations are made when only one responsible source is available, or in cases of urgent and compelling need where competition is not feasible. For utility services at a specific location like Grafenwoehr, this could be due to existing infrastructure monopolies, unique site requirements, or specific security considerations that limit the pool of eligible contractors. Without the J&A, the exact reason remains speculative, but it implies a lack of viable alternatives at the time of procurement.

How does the 'FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT' clause typically impact cost certainty for the government?

The 'FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT' (FPEPA) clause aims to balance cost certainty with market volatility. The 'fixed price' component provides a baseline cost, while the 'economic price adjustment' allows for modifications to this price based on pre-defined economic factors, such as changes in fuel costs, labor indices, or inflation rates. For the government, this means the final cost is not entirely fixed and can increase if the specified economic indicators rise. While it can protect contractors from unforeseen cost increases and potentially lead to lower initial bids, it introduces uncertainty in the total expenditure. The government benefits by avoiding excessively high initial fixed prices that might be bid to cover extreme risk, but it assumes the risk of price increases due to economic factors.

What is the typical cost range for utility services at a military installation of Grafenwoehr's size?

Determining a precise 'typical' cost range for utility services at a military installation comparable to Grafenwoehr is complex due to numerous variables. These include the specific services provided (electricity, gas, water, waste, etc.), the geographic location and its associated utility rates, the size and operational tempo of the installation, energy efficiency measures in place, and the contract structure (e.g., fixed price, cost-plus). Grafenwoehr is a large training area, implying significant energy consumption. A $35.25 million annual spend for comprehensive utility services at such a base is substantial but not necessarily outside the realm of possibility, especially considering potential infrastructure maintenance and modernization costs often bundled into such contracts. Without detailed breakdowns and comparisons to similar-sized installations in comparable regions, it's difficult to benchmark accurately.

What are the potential risks associated with a sole-source or limited competition contract for essential services like utilities?

The primary risk associated with sole-source or limited competition contracts for essential services like utilities is the potential for inflated pricing. Without the pressure of competing bids, the awarded contractor may not have a strong incentive to offer the most cost-effective solution. This can lead to taxpayers bearing higher costs than would be incurred in a competitive environment. Additionally, limited competition can reduce innovation and the drive for efficiency, as the contractor may face less pressure to adopt new technologies or improve service delivery. There's also a risk of vendor lock-in, making it difficult and costly to switch providers in the future. Ensuring robust oversight and performance management becomes even more critical in such scenarios.

Can the 'Regulation and Administration of Communications, Electric, Gas, and Other Utilities' description provide insight into the specific services included?

Yes, the description 'Regulation and Administration of Communications, Electric, Gas, and Other Utilities' provides a clear, albeit broad, scope for the contract. It indicates that the contract covers the management and provision of essential utility services. This includes electricity and gas, which are fundamental for heating, lighting, and powering equipment. 'Communications' could imply services related to telecommunications infrastructure or network administration, though this is less common for a utility contract unless integrated with base infrastructure. 'Other Utilities' is a catch-all that might encompass water, sewage, waste management, or steam. The 'Regulation and Administration' aspect suggests the contractor is responsible not only for the physical provision of these services but also for managing their regulatory compliance, billing, and potentially aspects of infrastructure maintenance or oversight.

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

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

Financial Breakdown

Contract Ceiling: $35,253,722

Exercised Options: $35,253,722

Current Obligation: $35,253,722

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Timeline