IRS Spends $3.4M on Ogden Utility Power, Lacking Competition

Contract Overview

Contract Amount: $3,408,845 ($3.4M)

Contractor: Pacificorp

Awarding Agency: Department of the Treasury

Start Date: 2022-10-01

End Date: 2025-09-30

Contract Duration: 1,095 days

Daily Burn Rate: $3.1K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: UTILITY POWER/ ELECTRICAL SERVICE - FISCAL YEAR 2023 OGDEN SERVICE CENTER MAIN BUILDING, UTAH

Place of Performance

Location: OGDEN, WEBER County, UTAH, 84404

State: Utah Government Spending

Plain-Language Summary

Department of the Treasury obligated $3.4 million to PACIFICORP for work described as: UTILITY POWER/ ELECTRICAL SERVICE - FISCAL YEAR 2023 OGDEN SERVICE CENTER MAIN BUILDING, UTAH Key points: 1. Significant spending on essential utility services for the Ogden Service Center. 2. Sole-source award indicates a lack of competitive bidding. 3. Long-term contract duration (3 years) locks in current pricing. 4. Potential for cost savings if competition were introduced.

Value Assessment

Rating: fair

The contract price of $3.4M over three years for electrical distribution services appears reasonable for a sole-source utility provider. Benchmarking is difficult without competitive data, but utility rates are often regulated.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, likely due to the nature of utility services where a single provider typically serves a geographic area. This limits price discovery and competitive pressure.

Taxpayer Impact: Taxpayers bear the full cost without the benefit of competitive pricing, though utility rates may be regulated.

Public Impact

Ensures continuous operation of the IRS Ogden Service Center. Supports essential government functions by providing reliable power. Taxpayer funds are committed for the duration of the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Sole-source award
Long contract duration

Positive Signals

Essential service provision
Stable pricing mechanism (firm fixed price)

Sector Analysis

This contract falls under utility services, specifically electrical power distribution. Spending on utilities is a common operational cost for federal facilities, with benchmarks varying widely based on location and facility size.

Small Business Impact

This contract does not appear to involve small businesses, as it is a sole-source award to a large utility provider.

Oversight & Accountability

Oversight is primarily through contract administration by the Department of the Treasury. The sole-source nature limits opportunities for competitive oversight on pricing.

Related Government Programs

Electric Power Distribution
Department of the Treasury Contracting
Internal Revenue Service Programs

Risk Flags

Sole-source award limits competitive pricing.
Potential for above-market costs due to lack of competition.
Long-term commitment without re-evaluation of market rates.
Dependency on a single utility provider.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $3.4 million to PACIFICORP. UTILITY POWER/ ELECTRICAL SERVICE - FISCAL YEAR 2023 OGDEN SERVICE CENTER MAIN BUILDING, UTAH

Who is the contractor on this award?

The obligated recipient is PACIFICORP.

Which agency awarded this contract?

Awarding agency: Department of the Treasury (Internal Revenue Service).

What is the total obligated amount?

The obligated amount is $3.4 million.

What is the period of performance?

Start: 2022-10-01. End: 2025-09-30.

What is the potential cost savings if this contract were subject to competition?

Quantifying potential savings is challenging without a competitive bidding process. However, competitive solicitations for similar services often yield savings of 10-30% compared to sole-source or non-competitive awards. The lack of competition here means taxpayers may be overpaying for this essential service.

What are the risks associated with a sole-source utility contract?

The primary risk is the lack of price competition, potentially leading to higher costs for taxpayers. Additionally, reliance on a single provider can create vulnerability if that provider experiences service disruptions or changes its pricing structure significantly.

How effective is this contract in ensuring reliable power to the IRS facility?

The contract is likely effective in ensuring reliable power, as utility services are typically robust and regulated. The firm fixed price structure provides cost certainty for the IRS, although it removes flexibility to benefit from potential market downturns.

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

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Berkshire Hathaway Inc.

Address: 825 NE MULTNOMAH ST STE 1800, PORTLAND, OR, 97232

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

Financial Breakdown

Contract Ceiling: $4,205,961

Exercised Options: $3,408,845

Current Obligation: $3,408,845

Actual Outlays: $2,707,921

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline