DoD's $19.4M electricity contract for USFK in Korea awarded to Korea Electric Power Corporation

Contract Overview

Contract Amount: $19,439,388 ($19.4M)

Contractor: Korea Electric Power Corporation

Awarding Agency: Department of Defense

Start Date: 2024-10-01

End Date: 2025-05-31

Contract Duration: 242 days

Daily Burn Rate: $80.3K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: SUPPLY OF ELECTRICITY FOR USFK CP HUMP

Plain-Language Summary

Department of Defense obligated $19.4 million to KOREA ELECTRIC POWER CORPORATION for work described as: SUPPLY OF ELECTRICITY FOR USFK CP HUMP Key points: 1. Contract awarded on a sole-source basis, raising questions about price competitiveness. 2. Duration of 242 days suggests a need for reliable, ongoing power supply. 3. Firm Fixed Price contract type offers cost certainty for the government. 4. No indication of small business participation, potentially limiting broader economic impact. 5. Focus on electricity supply highlights critical infrastructure needs in a strategic location.

Value Assessment

Rating: fair

The contract value of $19.4 million for approximately 8 months of electricity supply appears to be within a reasonable range for a large-scale military installation. However, without specific benchmarks for electricity costs in South Korea or comparable military base contracts, a definitive value-for-money assessment is challenging. The sole-source nature of the award prevents direct price comparison with potential competitors, which is a key factor in determining optimal value.

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 is typically used when only one source is capable of fulfilling the requirement, often due to unique capabilities, existing infrastructure, or specific geographic necessity. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices or spurred innovation from multiple vendors.

Taxpayer Impact: The absence of competition means taxpayers may not have received the most cost-effective price possible for this essential service. Without competitive pressure, the awarded price is less likely to reflect the lowest achievable market rate.

Public Impact

US Forces Korea (USFK) personnel and operations benefit from a stable and reliable electricity supply. The contract ensures the continuous functioning of critical military infrastructure and facilities at Camp Humphreys. Geographic impact is concentrated in South Korea, supporting U.S. military presence and readiness in the region. The contract supports the operational workforce of Korea Electric Power Corporation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Lack of transparency in the justification for sole-sourcing could mask inefficiencies.
Dependence on a single provider for a critical utility poses a potential supply chain risk.

Positive Signals

Firm Fixed Price contract provides budget certainty for the Department of the Army.
Award to a known entity (Korea Electric Power Corporation) suggests a degree of reliability.
Contract duration indicates a commitment to ensuring sustained operational capability.

Sector Analysis

The energy sector, specifically electric power distribution, is a critical component of national security and infrastructure. This contract falls within the broader defense spending category, where reliable energy is paramount for operational readiness. The market for electricity in South Korea is dominated by large utility providers, making sole-source awards for large consumers like military bases a common, though not always ideal, scenario. Benchmarking this contract against similar large-scale industrial or governmental electricity supply agreements would be necessary for a more precise value assessment.

Small Business Impact

This contract does not appear to include any small business set-asides, nor is there any indication of subcontracting opportunities for small businesses. The award is made directly to a large utility provider, suggesting that the primary focus was on securing a reliable and established source for electricity rather than fostering small business participation. This approach is typical for utility services where specialized infrastructure and capacity are required.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and financial management divisions. Given its sole-source nature, scrutiny may focus on the justification for this award and the reasonableness of the price. Transparency is limited by the lack of a competitive bidding process. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse arise during the contract's performance.

Related Government Programs

Defense Utilities Contracts
USFK Infrastructure Support
Foreign Military Base Operations
Electric Power Supply Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for uncompetitive pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.4 million to KOREA ELECTRIC POWER CORPORATION. SUPPLY OF ELECTRICITY FOR USFK CP HUMP

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 $19.4 million.

What is the period of performance?

Start: 2024-10-01. End: 2025-05-31.

What is the historical spending pattern for electricity at USFK Camp Humphreys?

Historical spending data for electricity at USFK Camp Humphreys is not directly available in the provided data. However, this contract, valued at approximately $19.4 million for an 8-month period (October 1, 2024, to May 31, 2025), suggests a significant ongoing requirement. To understand historical patterns, one would need to access past contract awards for utility services at this specific base or similar installations within USFK. Analyzing trends in energy consumption, pricing fluctuations, and the duration of previous contracts would provide context for the current award's scale and cost. Without this historical data, it's difficult to determine if this $19.4 million represents an increase, decrease, or stable level of spending compared to previous years.

How does the per-unit cost of electricity in this contract compare to market rates in South Korea?

A precise per-unit cost comparison is not feasible with the current data. The contract value is $19,439,388.44 for a period of 242 days. To calculate a per-unit cost, we would need to know the total kilowatt-hours (kWh) of electricity expected to be consumed over this period. This consumption data is not provided. Furthermore, electricity rates can vary significantly based on usage tiers, time of day, and specific tariffs applicable to large industrial or governmental consumers. While Korea Electric Power Corporation (KEPCO) is the primary electricity provider in South Korea, their pricing structure for a military base under a sole-source contract may differ from standard commercial or residential rates. A detailed analysis would require access to the contract's detailed pricing schedule and estimated energy consumption figures.

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

Sole-source awards for critical utility services, like electricity, carry several inherent risks. Firstly, the lack of competition means the government cannot leverage market forces to achieve the lowest possible price, potentially leading to overpayment. Secondly, it reduces the incentive for the sole provider to innovate or improve efficiency, as there is no competitive pressure. Thirdly, it creates a single point of failure; if the sole provider experiences operational issues, the impact on the military installation could be severe. Lastly, it can raise concerns about transparency and fairness in the procurement process, potentially leading to public or congressional scrutiny if the justification for sole-sourcing is not robust or if prices appear excessive.

What is the track record of Korea Electric Power Corporation (KEPCO) in supplying utilities to military installations?

Korea Electric Power Corporation (KEPCO) is the largest electric utility in South Korea and has a long-standing history of providing power across the country. While specific details of their track record supplying U.S. military installations are not provided in this data, it is reasonable to assume that their extensive experience in managing large-scale power distribution networks makes them a capable provider. Their role as the primary national utility suggests a high degree of reliability and infrastructure capacity. However, the performance history specifically related to meeting the unique demands, security requirements, and contractual obligations of a U.S. military base would require further investigation into past performance reviews or contract compliance records.

How does the contract duration of 242 days align with typical electricity supply needs for a military base?

The contract duration of 242 days, approximately eight months, suggests a need for continuous electricity supply that covers a significant portion of a year but may not represent a full annual requirement or a multi-year strategic agreement. Military bases have constant and substantial electricity demands for operations, housing, and infrastructure. A duration of this length could indicate a bridge contract, a specific project-related need, or a renewal of a shorter-term requirement. It is less common for essential utilities like electricity to be contracted for such a limited, non-annual period unless it's part of a larger, phased procurement strategy or a temporary measure pending a more comprehensive long-term solution. Understanding the context of this specific duration would require examining the contract's history and the overall energy strategy for USFK.

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: $19,439,388

Exercised Options: $19,439,388

Current Obligation: $19,439,388

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W91QVN18D0008

IDV Type: IDC

Timeline