DoD's $30.3M electricity contract for USFK locations awarded to Korea Electric Power Corporation

Contract Overview

Contract Amount: $30,273,520 ($30.3M)

Contractor: Korea Electric Power Corporation

Awarding Agency: Department of Defense

Start Date: 2018-11-14

End Date: 2019-09-30

Contract Duration: 320 days

Daily Burn Rate: $94.6K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: SUPPLY OF ELECTRICITY FOR USFK LOCATIONS

Plain-Language Summary

Department of Defense obligated $30.3 million to KOREA ELECTRIC POWER CORPORATION for work described as: SUPPLY OF ELECTRICITY FOR USFK LOCATIONS Key points: 1. Value for money assessed against market rates for electricity in South Korea. 2. Competition dynamics indicate a sole-source award, potentially limiting price negotiation. 3. Risk indicators include reliance on a single provider for critical infrastructure. 4. Performance context is tied to ensuring operational readiness for USFK. 5. Sector positioning is within the defense infrastructure and utilities sector.

Value Assessment

Rating: fair

The contract value of $30.3 million for electricity supply to USFK locations needs to be benchmarked against prevailing commercial rates in South Korea. Without specific per-unit cost data or comparison to similar government contracts for utility services in the region, a precise value-for-money assessment is challenging. However, the fixed-price nature suggests some cost certainty for the government. The absence of competition may have influenced the final negotiated price.

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. This approach is typically used when only one source is capable of providing the required goods or services, or in situations where it is not in the public interest to compete. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices through market forces.

Taxpayer Impact: Taxpayers may have paid a higher price than if the contract had been competed. The absence of competitive pressure reduces the government's leverage in price negotiations.

Public Impact

US Forces Korea (USFK) personnel and operations benefit from reliable electricity supply. Essential services including base operations, housing, and command facilities are supported. Geographic impact is concentrated on US military installations within South Korea. Workforce implications are minimal for the contracting agency, but the contractor employs personnel for electricity provision.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price escalation due to sole-source nature.
Dependence on a single supplier for critical infrastructure.
Limited transparency into cost build-up without competitive bidding.

Positive Signals

Ensures continuity of essential services for military operations.
Fixed-price contract provides budget predictability.
Established relationship with a known utility provider in the region.

Sector Analysis

This contract falls within the Utilities and Energy sector, specifically focusing on electricity supply. The market for utility services is often characterized by natural monopolies or heavily regulated environments, which can lead to sole-source or limited competition awards. The size of this contract, approximately $30.3 million, is moderate within the context of large-scale government utility procurements, but significant for ensuring the operational readiness of a major military command.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the nature of electricity supply and the sole-source award to a large utility provider, subcontracting opportunities for small businesses are unlikely to be a primary focus of this specific award.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Army, with specific contracting officers and program managers responsible for monitoring performance and ensuring compliance with contract terms. Transparency is limited due to the sole-source nature, and specific accountability measures would be detailed within the contract itself. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Utilities Contracts
USFK Infrastructure Support
Foreign Military Base Operations
Electric Power Generation and Distribution

Risk Flags

Sole-source award may limit price competition.
Reliance on a single provider for critical infrastructure.
Potential for price increases without competitive pressure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.3 million to KOREA ELECTRIC POWER CORPORATION. SUPPLY OF ELECTRICITY FOR USFK LOCATIONS

Who is the contractor on this award?

The obligated recipient is KOREA ELECTRIC POWER CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $30.3 million.

What is the period of performance?

Start: 2018-11-14. End: 2019-09-30.

What is the historical spending pattern for electricity supply to USFK locations?

Historical spending data for electricity supply to USFK locations would reveal trends in contract values, award types, and contractor performance over time. Analyzing past contracts can identify if this $30.3 million award is consistent with previous expenditures, if prices have increased or decreased, and whether the sole-source approach has been a recurring method of procurement for these services. Understanding historical patterns is crucial for assessing the long-term cost-effectiveness and strategic sourcing of utility services for USFK.

How does the unit cost of electricity under this contract compare to commercial rates in South Korea?

A detailed comparison of the unit cost of electricity under this contract to commercial rates in South Korea is essential for a robust value-for-money assessment. This would involve obtaining the specific kilowatt-hour (kWh) rate from the contract and comparing it against average residential, commercial, and industrial electricity prices published by South Korean energy authorities or reputable market research firms. Significant deviations could indicate overpayment or favorable pricing, depending on the contract terms and the specific service level agreements.

What are the specific risks associated with a sole-source award for critical utility services?

Sole-source awards for critical utility services like electricity present several risks. Firstly, the absence of competition can lead to higher prices than might be achieved through a competitive bidding process, impacting the government's budget. Secondly, it creates a dependency on a single provider, which can be problematic if that provider experiences operational issues, financial instability, or decides to alter its service terms. This dependency also reduces the government's leverage in negotiating service improvements or cost reductions. Finally, it can limit innovation and the adoption of new technologies that might be introduced by competing firms.

What performance metrics are included in the contract to ensure service quality?

The contract likely includes specific performance metrics to ensure the quality and reliability of the electricity supply. These could encompass standards for uptime, voltage stability, response times to outages, and adherence to safety regulations. The Department of the Army would monitor these metrics to ensure the contractor, Korea Electric Power Corporation, is meeting its obligations. Failure to meet these metrics could result in penalties or other contractual remedies, though the specifics would be detailed in the contract's performance work statement.

What is the track record of Korea Electric Power Corporation in supplying utilities to government installations?

Korea Electric Power Corporation (KEPCO) is the primary electric utility in South Korea and has a long history of providing electricity. Its track record in supplying utilities to government installations, including U.S. military bases, would be a key consideration in the sole-source award decision. Assessing KEPCO's past performance, including reliability, customer service, and adherence to contractual obligations with similar entities, would inform the government's confidence in this award. Information on past performance evaluations or any significant issues would be crucial.

Industry Classification

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

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

Parent Company: Jeonbuk National University (UEI: 688005487)

Address: 55 JEOLLYEOK-RO, NAJU

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $30,273,520

Exercised Options: $30,273,520

Current Obligation: $30,273,520

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W91QVN18D0008

IDV Type: IDC

Timeline