DOJ's $400K natural gas purchase for Kentucky prison system awarded via sole-source contract

Contract Overview

Contract Amount: $40,000 ($40.0K)

Contractor: Constellation Newenergy - GAS Division, LLC

Awarding Agency: Department of Justice

Start Date: 2026-05-01

End Date: 2026-05-31

Contract Duration: 30 days

Daily Burn Rate: $1.3K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: FY26 P4 CONSTELLATION NATURAL GAS MAY 2026

Place of Performance

Location: LOUISVILLE, JEFFERSON County, KENTUCKY, 40220

State: Kentucky Government Spending

Plain-Language Summary

Department of Justice obligated $40,000 to CONSTELLATION NEWENERGY - GAS DIVISION, LLC for work described as: FY26 P4 CONSTELLATION NATURAL GAS MAY 2026 Key points: 1. Value for money is difficult to assess due to the sole-source nature of the award. 2. Competition dynamics are absent, as the contract was not competed. 3. Risk indicators are low given the short duration and essential service nature. 4. Performance context is limited to a single month of natural gas supply. 5. Sector positioning is within the energy services for federal facilities.

Value Assessment

Rating: fair

The contract value of $400,000 for one month of natural gas supply to a federal facility in Kentucky appears reasonable on its face. However, without competitive bidding, it is challenging to benchmark this price against market rates or similar contracts. The fixed-price nature of the award provides some cost certainty, but the lack of competition prevents a definitive assessment of whether the government secured the best possible value.

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. The data indicates it was 'NOT AVAILABLE FOR COMPETITION'. This approach bypasses the standard competitive process, suggesting potential reasons such as a lack of available suppliers or a critical, time-sensitive need. The absence of competition limits price discovery and may result in higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competitive pressure to drive down prices. Without a competitive process, there is less assurance that the selected vendor's pricing reflects the most economical option available in the market.

Public Impact

The primary beneficiaries are the inmates and staff at the federal correctional facility in Kentucky, who will receive essential heating and power. The service delivered is the distribution of natural gas for a one-month period. The geographic impact is localized to Kentucky, specifically the federal prison system facility served. Workforce implications are minimal, likely involving existing personnel for connection and monitoring.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpayment.
Limited contract duration may indicate a stop-gap measure rather than a long-term solution.
Sole-source awards can set precedents for future non-competitive procurements.

Positive Signals

Awarding to a known entity like Constellation Energy suggests a degree of reliability.
Fixed-price contract provides cost predictability for the specified period.
Essential service ensures operational continuity for the facility.

Sector Analysis

The energy sector, specifically natural gas distribution, is a critical component of infrastructure for government facilities. Federal agencies often procure energy services through various contract types, including fixed-price agreements. While large energy providers like Constellation Energy are common suppliers, the market for natural gas distribution can vary by region. Benchmarking this specific contract's value is difficult without comparative data on similar sole-source awards or regional utility rates for large consumers.

Small Business Impact

This contract does not appear to involve small business set-asides or subcontracting opportunities. The award is made directly to Constellation NewEnergy - Gas Division, LLC, a large energy provider. There is no indication that small businesses are involved in the fulfillment of this specific purchase order.

Oversight & Accountability

Oversight for this contract would fall under the Department of Justice's Federal Prison System. Accountability measures are inherent in the purchase order system, requiring delivery of services as specified. Transparency is limited due to the sole-source nature, but the award details are publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Federal Energy Management Program
Department of Justice Facility Operations
Bureau of Prisons Utility Contracts

Risk Flags

Sole-source award lacks competitive justification.
Limited data for value-for-money assessment.
Short contract duration may indicate a temporary solution.

Frequently Asked Questions

What is this federal contract paying for?

Department of Justice awarded $40,000 to CONSTELLATION NEWENERGY - GAS DIVISION, LLC. FY26 P4 CONSTELLATION NATURAL GAS MAY 2026

Who is the contractor on this award?

The obligated recipient is CONSTELLATION NEWENERGY - GAS DIVISION, LLC.

Which agency awarded this contract?

Awarding agency: Department of Justice (Federal Prison System / Bureau of Prisons).

What is the total obligated amount?

The obligated amount is $40,000.

What is the period of performance?

Start: 2026-05-01. End: 2026-05-31.

What is Constellation Energy's track record with the federal government, particularly the Department of Justice?

Constellation Energy, through its various divisions, has a significant history of contracting with the federal government across multiple agencies, including the Department of Justice. They are a major provider of energy products and services, encompassing electricity, natural gas, and renewable energy solutions. Their contracts often involve large-scale energy supply agreements for federal facilities, including military bases and correctional institutions. While specific performance details for individual contracts are not always publicly detailed, their continued engagement with federal agencies suggests a generally satisfactory performance history. However, a deeper dive into past performance reviews or any documented disputes related to DOJ contracts would be necessary for a comprehensive assessment.

How does the $400,000 price for one month of natural gas compare to similar federal contracts or market rates?

Benchmarking this $400,000 contract for one month of natural gas is challenging without more specific data. The price is influenced by numerous factors including the volume of gas consumed, the specific delivery point, prevailing market prices at the time of award, and the contract terms. As a sole-source award, direct comparison to competitively bid contracts is difficult, as competitive processes typically yield lower prices. To provide a meaningful comparison, one would need to analyze historical natural gas prices for large industrial or institutional consumers in Kentucky during May 2026, or review other sole-source awards for similar facilities. The provided data (br: 1333) might represent a benchmark or internal estimate, but its context is not fully explained.

What are the primary risks associated with a sole-source award for essential utility services like natural gas?

The primary risk associated with a sole-source award for essential utility services like natural gas is the potential for inflated pricing due to the absence of competition. Without competing bids, the government may not be securing the most cost-effective option available in the market. Another risk is reduced transparency in the procurement process, making it harder to justify the expenditure to taxpayers. Furthermore, reliance on a single source could pose a risk if that supplier experiences operational issues or fails to meet contractual obligations, although this is mitigated by the short, one-month duration of this specific contract. The government also loses the opportunity to foster innovation and potentially discover more efficient or cost-saving solutions that might emerge from a competitive bidding process.

What is the typical spending pattern for natural gas at federal correctional facilities in Kentucky?

Determining the typical spending pattern for natural gas at federal correctional facilities in Kentucky requires access to historical procurement data specific to these installations. This contract, valued at $400,000 for one month, provides a single data point for May 2026. To establish a pattern, one would need to examine contracts for the same facility or similar facilities in Kentucky over multiple years, noting monthly and annual expenditures. Factors such as facility size, inmate population, energy efficiency measures, and fluctuations in natural gas market prices would significantly influence these patterns. Without this historical context, it's difficult to ascertain if this $400,000 award represents a typical, higher, or lower expenditure for the service period.

What is the significance of the contract type being a 'Purchase Order' for a 'Firm Fixed Price'?

The contract type being a 'Purchase Order' (PO) signifies a simplified acquisition method, typically used for smaller dollar value purchases, though it can be used for larger amounts under specific circumstances. For a $400,000 award, it suggests the agency is using an efficient method for procuring goods or services. The 'Firm Fixed Price' (FFP) pricing structure is significant because it establishes a set price for the goods or services, regardless of the contractor's actual costs. This shifts the risk of cost overruns entirely to the contractor, providing the government with cost certainty. For essential services like natural gas, an FFP PO offers predictability in budgeting and payment, ensuring the cost for the specified delivery period will not exceed $400,000.

Industry Classification

NAICS: Utilities › Natural Gas Distribution › Natural Gas Distribution

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: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Exelon Corporation

Address: 9400 BUNSEN PKWY STE 100, LOUISVILLE, KY, 40220

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $40,000

Exercised Options: $40,000

Current Obligation: $40,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Timeline