DoD's $32M electricity contract for USAG Humphreys awarded to Korea Electric Power Corporation

Contract Overview

Contract Amount: $32,049,809 ($32.0M)

Contractor: Korea Electric Power Corporation

Awarding Agency: Department of Defense

Start Date: 2019-11-27

End Date: 2020-09-30

Contract Duration: 308 days

Daily Burn Rate: $104.1K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: SUPPLY OF ELECTRICITY FOR USAG HUMPHREYS

Plain-Language Summary

Department of Defense obligated $32.0 million to KOREA ELECTRIC POWER CORPORATION for work described as: SUPPLY OF ELECTRICITY FOR USAG HUMPHREYS Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. The contract covers electricity supply, a critical utility service. 3. Performance period is approximately 10 months. 4. The contract type is Firm Fixed Price, providing cost certainty. 5. No small business set-aside was utilized. 6. The award was a Delivery Order under an unspecified basic agreement.

Value Assessment

Rating: fair

Benchmarking the value for this specific electricity supply contract is challenging without comparable market data for the USAG Humphreys location. The firm fixed price structure offers predictability. However, the lack of competition raises questions about whether the price reflects the best possible value for the government. Further analysis would require understanding the local electricity market rates and the specific terms of the contract.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Korea Electric Power Corporation, was solicited. This approach bypasses the competitive bidding process, which typically leads to better price discovery and potentially lower costs for the government. The rationale for a sole-source award would need to be justified by factors such as unique capabilities or lack of alternative sources.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as the government does not benefit from the competitive pressure that drives down prices.

Public Impact

US Army Garrison Humphreys personnel and operations benefit from a reliable electricity supply. Ensures continuous power for critical infrastructure and daily activities at the military base. The geographic impact is localized to the USAG Humphreys installation in South Korea. Supports the operational readiness of US forces stationed in the region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to suboptimal pricing.
Sole-source award requires strong justification to ensure fair value.
Dependence on a single provider for a critical utility.

Positive Signals

Firm Fixed Price contract provides cost certainty.
Ensures essential utility service for a key military installation.

Sector Analysis

The energy sector, particularly utility provision, is essential for all government operations. This contract falls under the broader category of infrastructure support services. While specific market size data for electricity supply to military bases in South Korea is not readily available, the global market for energy is vast. This contract represents a specific, localized instance of government procurement within the energy utility domain.

Small Business Impact

This contract did not include a small business set-aside. Given the sole-source nature of the award and the specific requirements for utility provision at a large military installation, it is unlikely that small businesses would have been primary candidates for this particular contract. Subcontracting opportunities for small businesses are not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and financial management divisions. Accountability measures are inherent in the Firm Fixed Price contract type, which obligates the contractor to deliver the specified service at the agreed-upon price. Transparency is limited due to the sole-source nature of the award, as the competitive process, which usually involves public solicitations and bid disclosures, was not employed.

Related Government Programs

Base Operations Support Services
Utility Privatization Programs
Defense Logistics Agency Energy Contracts

Risk Flags

Sole-source award lacks competitive pricing.
Potential for higher costs due to lack of competition.
Dependence on a single provider for critical infrastructure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.0 million to KOREA ELECTRIC POWER CORPORATION. SUPPLY OF ELECTRICITY FOR USAG HUMPHREYS

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 $32.0 million.

What is the period of performance?

Start: 2019-11-27. End: 2020-09-30.

What is the historical spending pattern for electricity at USAG Humphreys?

Historical spending data for electricity at USAG Humphreys prior to this specific contract award is not detailed in the provided information. However, understanding past expenditures would be crucial for assessing the reasonableness of the current $32 million award. Analyzing trends in energy consumption, pricing fluctuations, and previous contract vehicles would offer valuable context. Without this historical perspective, it is difficult to determine if this award represents an increase, decrease, or stable level of spending for this essential service at the installation.

How does the price of this contract compare to similar electricity contracts for other US military bases in South Korea?

Direct comparison of this $32 million contract for electricity supply at USAG Humphreys to similar contracts at other US military bases in South Korea is challenging without access to specific contract details and pricing structures for those other installations. Factors such as base size, energy demand, local utility rates, and contract terms (e.g., duration, fixed vs. variable pricing) can significantly influence costs. The sole-source nature of this award also complicates direct benchmarking, as competitive contracts often yield different pricing outcomes. A thorough comparison would require a detailed analysis of multiple contracts, accounting for these variables.

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

Sole-source awards for critical utility services like electricity introduce several risks. Primarily, the lack of competition can lead to inflated prices, as the government does not benefit from market pressures that typically drive down costs. There's also a risk of reduced service quality or innovation if the sole provider faces no competitive threat. Furthermore, dependence on a single supplier can create vulnerabilities in the supply chain; any disruption with the sole provider could have significant operational impacts on the military installation. Ensuring robust contract management and performance monitoring becomes even more critical in such scenarios.

What is the track record of Korea Electric Power Corporation in supplying electricity to government facilities?

Korea Electric Power Corporation (KEPCO) is the primary electric utility provider in South Korea and has a long history of supplying electricity across the nation, including to government and military facilities. While specific details of their performance on past US military contracts are not provided here, KEPCO is a major, established entity responsible for a significant portion of South Korea's power generation and distribution. Their extensive experience suggests a capacity to meet the demands of large installations like USAG Humphreys. However, a comprehensive assessment would involve reviewing performance metrics, any past disputes, or specific commendations related to their service to government entities.

What is the potential impact of this contract on the local South Korean electricity market?

This contract represents a significant, albeit localized, demand for electricity from a major US military installation. As KEPCO is the dominant utility provider in South Korea, this contract likely fits within their existing infrastructure and supply capabilities. The direct impact on the broader South Korean electricity market may be minimal, as KEPCO already serves a vast customer base. However, it underscores the US military's reliance on local infrastructure and providers for essential services. The contract's value of $32 million signifies a substantial revenue stream for KEPCO from this specific government account.

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: Government of the Republic of Korea

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: $32,049,809

Exercised Options: $32,049,809

Current Obligation: $32,049,809

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W91QVN18D0008

IDV Type: IDC

Timeline