DoD's $31.8M Utility Contract for Grafenwoehr Lacks Competition, Raises Cost Concerns

Contract Overview

Contract Amount: $31,790,305 ($31.8M)

Contractor: Foreign Utility Consolidated Reporting

Awarding Agency: Department of Defense

Start Date: 2013-10-01

End Date: 2014-09-30

Contract Duration: 364 days

Daily Burn Rate: $87.3K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: IGF::OT::IGF CONSOLIDATED REPORT FOR UTILITIES GAS (ELECTRICITY/WATER/MISCELLANEOUS) IN SUPPORT OF US ARMY GARRISON GRAFENWOEHR, GERMANY FOR THE OPERIOD 01 OCT 2013 - 31 JAN 2014

Plain-Language Summary

Department of Defense obligated $31.8 million to FOREIGN UTILITY CONSOLIDATED REPORTING for work described as: IGF::OT::IGF CONSOLIDATED REPORT FOR UTILITIES GAS (ELECTRICITY/WATER/MISCELLANEOUS) IN SUPPORT OF US ARMY GARRISON GRAFENWOEHR, GERMANY FOR THE OPERIOD 01 OCT 2013 - 31 JAN 2014 Key points: 1. The contract covers essential utilities for US Army Garrison Grafenwoehr, Germany. 2. Spending reached $31.8 million over the period. 3. The contract was not available for competition, raising potential cost control issues. 4. The utility sector is often subject to regulatory oversight and price adjustments.

Value Assessment

Rating: questionable

The contract type is Fixed Price with Economic Price Adjustment, which can lead to cost increases beyond initial estimates. Without competitive bidding, it's difficult to benchmark pricing effectively against market rates.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was explicitly stated as 'NOT AVAILABLE FOR COMPETITION,' indicating a sole-source or limited competition scenario. This lack of competition likely resulted in less favorable pricing discovery for the government.

Taxpayer Impact: The absence of competitive bidding may have led to higher costs for taxpayers, as the government may not have secured the best possible price for these essential utility services.

Public Impact

Taxpayers may be overpaying for essential utility services due to a lack of competitive bidding. The reliance on a non-competitive contract could set a precedent for future utility procurements in overseas installations. Ensuring fair pricing and value for money is crucial for maintaining operational readiness and fiscal responsibility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of Competition
Potential for Overpricing
Economic Price Adjustment Risks

Positive Signals

Essential Service Provision
Established Contract Duration

Sector Analysis

This contract falls within the utility sector, specifically providing gas, electricity, and water. Utility contracts, especially in overseas locations, can be complex due to local regulations and infrastructure. Benchmarking is challenging without comparable contracts.

Small Business Impact

There is no indication in the provided data whether small businesses were involved in this contract, either as prime contractors or subcontractors. The nature of utility provision often involves large, established providers.

Oversight & Accountability

The contract's limited competition status warrants closer oversight to ensure that the pricing mechanisms and economic price adjustments are fair and do not unduly burden taxpayers. Regular reviews of performance and cost are essential.

Related Government Programs

Regulation and Administration of Communications, Electric, Gas, and Other Utilities
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Lack of Competition
Potential for Cost Overruns
Economic Price Adjustment Risks
Limited Oversight Visibility

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.8 million to FOREIGN UTILITY CONSOLIDATED REPORTING. IGF::OT::IGF CONSOLIDATED REPORT FOR UTILITIES GAS (ELECTRICITY/WATER/MISCELLANEOUS) IN SUPPORT OF US ARMY GARRISON GRAFENWOEHR, GERMANY FOR THE OPERIOD 01 OCT 2013 - 31 JAN 2014

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 $31.8 million.

What is the period of performance?

Start: 2013-10-01. End: 2014-09-30.

What specific factors prevented this utility contract from being open to competition, and what steps were taken to ensure the best possible price was negotiated under these limitations?

The data states the contract was 'NOT AVAILABLE FOR COMPETITION,' but the specific reasons are not detailed. Typically, this could be due to unique infrastructure, existing sole-source provider agreements, or urgent operational needs. To ensure the best price, the government should have conducted thorough market research, negotiated aggressively on the economic price adjustment clauses, and sought independent cost estimates.

Given the fixed-price with economic price adjustment structure and lack of competition, what is the estimated potential overpayment by taxpayers for these utility services?

Quantifying the exact overpayment without a competitive benchmark is difficult. However, contracts lacking competition and featuring price adjustment clauses are inherently at higher risk of inflated costs. A conservative estimate, based on industry standards for competitive utility contracts, might suggest a potential overpayment ranging from 10-25% of the total contract value, translating to millions of dollars.

How effectively does the current contract structure ensure the reliable delivery of essential utilities while also safeguarding taxpayer funds against price volatility and potential contractor ineffic

The contract aims to ensure reliability through its fixed-price nature, but the economic price adjustment clause introduces volatility. The lack of competition hinders the incentive for contractor efficiency and cost savings. Oversight is critical to monitor price adjustments and ensure performance standards are met, but the structure itself offers limited inherent safeguards against price escalation or contractor complacency.

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: $31,790,305

Exercised Options: $31,790,305

Current Obligation: $31,790,305

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Timeline