Long-Term Electrical Utility Contract for MSHA Academy Awarded to American Electric Power for $4.29 Million

Contract Overview

Contract Amount: $4,292,163 ($4.3M)

Contractor: American Electric Power Company, Inc.

Awarding Agency: Department of Labor

Start Date: 2020-03-19

End Date: 2030-03-31

Contract Duration: 3,664 days

Daily Burn Rate: $1.2K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: ELECTRICAL UTILITY SERVICE FOR MSHA, MINE ACADEMY, 1301 AIRPORT RD., BEAVER, WV 25813 FOR THE PERIOD 3/1/2020 - 2/28/2030

Place of Performance

Location: DANIELS, RALEIGH County, WEST VIRGINIA, 25832

State: West Virginia Government Spending

Plain-Language Summary

Department of Labor obligated $4.3 million to AMERICAN ELECTRIC POWER COMPANY, INC. for work described as: ELECTRICAL UTILITY SERVICE FOR MSHA, MINE ACADEMY, 1301 AIRPORT RD., BEAVER, WV 25813 FOR THE PERIOD 3/1/2020 - 2/28/2030 Key points: 1. Contract covers a decade of electrical utility services for the MSHA Mine Academy in West Virginia. 2. Sole-source award to American Electric Power Company, Inc. raises questions about competition and potential cost savings. 3. The firm fixed price contract provides cost certainty but may limit flexibility for price adjustments. 4. Sector context suggests utility services are essential but often subject to regulatory oversight and market fluctuations.

Value Assessment

Rating: questionable

The contract's value of $4.29 million over 10 years needs comparison with similar utility service contracts in the region. Without competitive bidding, it's difficult to assess if this price represents fair market value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

The contract was awarded on a sole-source basis, indicating a lack of competition. This method bypasses the opportunity for price discovery through competitive bidding, potentially leading to higher costs for taxpayers.

Taxpayer Impact: The absence of competition in this sole-source award may result in taxpayers paying more than necessary for essential utility services.

Public Impact

Ensures continuous operation of the MSHA Mine Academy by providing essential electrical services. Long-term commitment locks in a provider, potentially offering stability but limiting future cost-saving opportunities. Taxpayers are committed to a significant expenditure over a decade without the benefit of competitive pricing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and price discovery.
Long contract duration (10 years) may not reflect current market rates.
Lack of clear justification for sole-source award.

Positive Signals

Provides essential service for a critical government facility.
Firm fixed price contract offers budget predictability.

Sector Analysis

This contract falls within the Utilities sector, specifically providing electrical power. Utility services are generally considered essential infrastructure, but pricing can be influenced by regulatory environments and market competition, which appears absent here.

Small Business Impact

The contract was not awarded to a small business. There is no indication of subcontracting opportunities for small businesses within this sole-source award.

Oversight & Accountability

Oversight of this sole-source contract should focus on ensuring the provided services meet all requirements and that the pricing remains reasonable throughout the 10-year term, despite the lack of competitive pressure.

Related Government Programs

Fossil Fuel Electric Power Generation
Department of Labor Contracting
Office of the Assistant Secretary for Administration and Management Programs

Risk Flags

Lack of competition may lead to inflated costs.
Long-term commitment without market adjustments.
Potential for vendor lock-in.
Absence of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Labor awarded $4.3 million to AMERICAN ELECTRIC POWER COMPANY, INC.. ELECTRICAL UTILITY SERVICE FOR MSHA, MINE ACADEMY, 1301 AIRPORT RD., BEAVER, WV 25813 FOR THE PERIOD 3/1/2020 - 2/28/2030

Who is the contractor on this award?

The obligated recipient is AMERICAN ELECTRIC POWER COMPANY, INC..

Which agency awarded this contract?

Awarding agency: Department of Labor (Office of the Assistant Secretary for Administration and Management).

What is the total obligated amount?

The obligated amount is $4.3 million.

What is the period of performance?

Start: 2020-03-19. End: 2030-03-31.

What is the justification for awarding this essential utility service on a sole-source basis instead of seeking competitive bids?

The justification for a sole-source award is crucial for understanding why competition was bypassed. Typically, sole-source contracts are used when only one vendor can provide the required goods or services due to unique capabilities, urgent needs, or specific circumstances. Without this justification, it's difficult to assess if the government received the best possible value.

How does the contract's pricing compare to benchmarks for similar electrical utility services in West Virginia over a 10-year period?

Benchmarking the contract's price against similar utility services in West Virginia is essential for evaluating value. Given the 10-year duration and firm fixed price, comparing the average annual cost and total expenditure to regional averages for commercial or government contracts of similar scale would reveal potential overpayment or cost-effectiveness.

What mechanisms are in place to ensure the effectiveness and efficiency of the electrical utility service provided by American Electric Power over the contract's long term?

Effectiveness and efficiency are monitored through service level agreements, performance metrics, and regular reporting. The Department of Labor should have established clear performance standards and a process for addressing any service deficiencies. Periodic reviews of the contract's performance and cost-effectiveness are vital, especially given the long duration and sole-source nature.

Industry Classification

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

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: 1 RIVERSIDE PLZ, COLUMBUS, OH, 43215

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

Financial Breakdown

Contract Ceiling: $6,076,563

Exercised Options: $6,076,563

Current Obligation: $4,292,163

Actual Outlays: $3,684,870

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00P12BSD0845

IDV Type: IDC

Timeline