DoD's $33M electricity contract for USFK locations awarded to Korea Electric Power Corporation

Contract Overview

Contract Amount: $33,023,651 ($33.0M)

Contractor: Korea Electric Power Corporation

Awarding Agency: Department of Defense

Start Date: 2021-11-03

End Date: 2022-09-30

Contract Duration: 331 days

Daily Burn Rate: $99.8K/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 $33.0 million to KOREA ELECTRIC POWER CORPORATION for work described as: SUPPLY OF ELECTRICITY FOR USFK LOCATIONS Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Performance period of 331 days suggests a short-term or interim need. 3. The contract type is Firm Fixed Price, which shifts cost risk to the contractor. 4. No small business set-aside was utilized for this procurement. 5. The contract value is substantial, indicating significant energy needs for USFK. 6. The awarding agency is the Department of the Army, supporting DoD operations.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and specific geographic focus on USFK locations. Without competitive bids, it's difficult to assess if the $33 million represents optimal value for the electricity supplied. The firm fixed-price structure provides cost certainty for the government, but the absence of competition raises questions about potential overpricing compared to a more open market scenario. The provided data does not include unit cost comparisons or market rates for electricity in South Korea, making a precise value-for-money assessment difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not openly competed. This approach is typically used when only one responsible source is available or capable of meeting the requirement. The lack of competition means there were no other bidders to compare against, potentially impacting price discovery and the government's ability to secure the most favorable terms. The justification for a sole-source award would need to be robust to ensure taxpayer funds are used efficiently.

Taxpayer Impact: Sole-source awards can lead to higher prices for taxpayers as the government lacks the leverage that competition provides. Without multiple bids, there's less incentive for the contractor to offer the lowest possible price.

Public Impact

US Forces Korea (USFK) personnel and operations benefit from a reliable electricity supply. The contract ensures the continuity of essential services at USFK installations. Geographic impact is concentrated on US military bases within South Korea. The contract supports the operational readiness of US military assets in the region. The primary beneficiary is the Department of Defense's mission in the Korean Peninsula.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
Lack of transparency in the justification for sole-source award.
Absence of small business participation could limit broader economic impact.

Positive Signals

Firm Fixed Price contract shifts cost overrun risk to the contractor.
Ensures continuity of essential services for critical military operations.
Award to a known, established provider (Korea Electric Power Corporation) may ensure reliability.

Sector Analysis

The energy sector, specifically electricity supply, is critical for all government operations, including military installations. This contract falls under the broader category of utility services. While specific market size data for electricity provision to military bases in South Korea is not readily available, the global energy market is vast. Comparable spending benchmarks for similar utility contracts at large overseas military installations would be necessary for a more precise sector analysis. The contract's value suggests a significant demand met by a major utility provider.

Small Business Impact

This contract did not include a small business set-aside, nor is there any indication of subcontracting opportunities for small businesses. The award was made to Korea Electric Power Corporation, a large, established utility company. This means the direct economic benefits for the U.S. small business ecosystem are likely minimal. Future contracts of this nature could explore opportunities for small business participation, particularly in related support services if applicable.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and financial management divisions. As a delivery order under a larger contract (implied by 'aw': 'DELIVERY ORDER'), oversight mechanisms would likely be tied to the parent contract's terms. Transparency regarding the sole-source justification and the specific performance metrics would be key areas for oversight. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Utilities Contracts
Overseas Military Base Support Services
Foreign Utility Services Contracts
Electric Power Distribution Contracts

Risk Flags

Sole-source award may indicate limited competition, potentially leading to higher costs.
Lack of detailed performance metrics in summary data.
Geographic concentration of service delivery.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.0 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 $33.0 million.

What is the period of performance?

Start: 2021-11-03. End: 2022-09-30.

What is the specific justification for awarding this electricity supply contract on a sole-source basis to Korea Electric Power Corporation?

The provided data indicates the contract was awarded as 'NOT AVAILABLE FOR COMPETITION,' which is synonymous with a sole-source award. The specific justification for this determination is not detailed in the provided data. Typically, sole-source justifications are required by federal acquisition regulations and must demonstrate that only one responsible source can satisfy the agency's needs. Reasons can include unique capabilities, urgent and compelling needs where competition is not feasible, or specific international agreements. Without the official justification document, it's impossible to ascertain the precise rationale. However, given the nature of utility provision in a foreign country, it's plausible that KEPCO is the sole entity capable of providing the required scale and reliability of electricity to USFK locations under the necessary terms and conditions.

How does the $33 million contract value compare to historical spending on electricity for USFK locations?

Historical spending data for electricity at USFK locations is not provided in the current dataset, making a direct comparison impossible. To assess this, one would need to access historical contract awards for similar utility services at USFK installations over previous years. Analyzing trends in spending, contract types (fixed-price vs. cost-reimbursement), and competition levels would provide context. A significant increase or decrease in spending compared to historical averages, especially if this contract is for a similar scope and duration, could indicate changes in energy prices, consumption, or contracting strategies. Without this historical data, the $33 million figure stands in isolation.

What are the key performance indicators (KPIs) and service level agreements (SLAs) associated with this contract?

The provided data does not specify the Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this contract. Typically, for electricity supply contracts, KPIs would focus on reliability (e.g., uptime percentage, frequency of outages), power quality (e.g., voltage stability, harmonic distortion), and response times for service disruptions or emergencies. SLAs would define the expected standards for these metrics and potentially outline remedies or penalties for non-performance. As this is a Firm Fixed Price contract, the focus might be more on ensuring delivery rather than detailed performance incentives, but reliability would still be paramount for military operations.

What is the risk profile of Korea Electric Power Corporation as a contractor for this essential service?

Korea Electric Power Corporation (KEPCO) is a major state-owned electric utility in South Korea, suggesting a low risk profile in terms of operational capability and financial stability for providing electricity. As a primary national provider, they possess the infrastructure and expertise necessary for large-scale power distribution. The primary risks associated with this contract would likely stem from external factors rather than KEPCO's inherent capabilities. These could include geopolitical stability in the region, fluctuations in fuel costs (if applicable to their generation mix), or regulatory changes within South Korea that might impact service provision. The sole-source nature, however, introduces a risk of less favorable pricing compared to a competitive environment.

Are there any provisions for energy efficiency or renewable energy integration within this contract?

The provided contract data does not contain information regarding energy efficiency measures or renewable energy integration. This contract focuses on the 'SUPPLY OF ELECTRICITY,' and its description ('Electric Power Distribution') suggests a standard utility service provision. Modern government contracts increasingly incorporate sustainability goals, but without specific details on the contract's clauses or objectives, it's impossible to determine if such provisions are included. Further review of the contract's statement of work or associated performance requirements would be necessary to ascertain any focus on energy efficiency or renewable sources.

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

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: $33,023,651

Exercised Options: $33,023,651

Current Obligation: $33,023,651

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W91QVN18D0008

IDV Type: IDC

Timeline