VA awards $134M natural gas contract to Constellation Energy for Kentucky facilities

Contract Overview

Contract Amount: $134,065 ($134.1K)

Contractor: Constellation Newenergy - GAS Division, LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-10-01

End Date: 2025-09-30

Contract Duration: 364 days

Daily Burn Rate: $368/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: UTILITIES -NATURAL GAS

Place of Performance

Location: LEXINGTON, FAYETTE County, KENTUCKY, 40511

State: Kentucky Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $134,064.75 to CONSTELLATION NEWENERGY - GAS DIVISION, LLC for work described as: UTILITIES -NATURAL GAS Key points: 1. Contract value represents significant investment in energy infrastructure for VA facilities. 2. Sole awardee suggests potential for limited competition or specialized service offering. 3. Fixed-price contract type offers cost certainty for the government. 4. Contract duration of one year aligns with annual budget cycles. 5. Geographic focus on Kentucky indicates localized utility needs. 6. No small business set-aside noted, requiring further review of subcontracting plans.

Value Assessment

Rating: good

The contract value of $134 million for natural gas distribution over one year appears substantial, reflecting the scale of VA operations in Kentucky. Benchmarking this against similar utility contracts for large federal facilities is necessary to fully assess value for money. The firm fixed-price structure provides predictability, but the absence of detailed performance metrics or unit cost comparisons makes a definitive value assessment challenging without further data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. However, the award to a single entity, Constellation NewEnergy - Gas Division, LLC, suggests that either this vendor offered the most competitive proposal or specialized capabilities. The level of competition is positive for price discovery, but the single award warrants a closer look at the bidding process and the number of actual proposals received.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down prices and encourage innovation. The award to one vendor, however, means taxpayers are relying on the competitiveness of that single bid to ensure fair pricing.

Public Impact

Veterans receiving care at VA facilities in Kentucky will benefit from reliable energy services. The contract ensures the continuous supply of natural gas for heating, cooking, and other essential functions at these facilities. The geographic impact is concentrated within the state of Kentucky, serving specific VA medical centers and administrative buildings. The contract supports jobs within the energy sector, particularly in natural gas distribution and related services in Kentucky.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of detailed performance metrics makes it difficult to assess contractor efficiency.
Potential for price volatility in natural gas markets could impact long-term value if not managed effectively.
Dependence on a single supplier for a critical utility poses a supply chain risk.

Positive Signals

Firm fixed-price contract provides budget certainty for the VA.
Awarded through full and open competition, suggesting a competitive bidding process.
Contract duration of one year allows for periodic re-evaluation of market conditions and vendor performance.

Sector Analysis

The energy sector, specifically natural gas distribution, is a critical component of infrastructure supporting government operations. This contract falls within the utilities sub-sector, which is characterized by regulated pricing and significant infrastructure investment. The market size for natural gas distribution is substantial, with major utility providers serving large geographic areas. This contract represents a significant portion of spending for natural gas within the VA's Kentucky operations.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This suggests that the primary award was made to a large business. Further investigation into the contractor's subcontracting plan would be necessary to determine if small businesses will have opportunities to participate in fulfilling this contract, potentially through specialized services or supply chain roles.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of Veterans Affairs contracting officers and program managers. Accountability measures are typically embedded within the contract terms, including performance standards and payment schedules. Transparency is facilitated through contract databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Utilities - Natural Gas
Federal Energy Management Program
Department of Veterans Affairs Facilities Management

Risk Flags

Single awardee despite full and open competition
Lack of detailed performance metrics in summary data
Potential for natural gas price volatility

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $134,064.75 to CONSTELLATION NEWENERGY - GAS DIVISION, LLC. UTILITIES -NATURAL GAS

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 Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $134,064.75.

What is the period of performance?

Start: 2024-10-01. End: 2025-09-30.

What is the historical spending pattern for natural gas at these specific VA facilities in Kentucky?

Analyzing historical spending data for natural gas at the targeted VA facilities in Kentucky is crucial for contextualizing the current $134 million award. Without specific historical figures, it's difficult to determine if this contract represents an increase, decrease, or stable level of expenditure. Factors such as changes in facility usage, energy efficiency upgrades, or fluctuations in natural gas market prices over previous years would inform whether this award is cost-effective. A trend analysis would reveal if previous contracts were also awarded to Constellation NewEnergy or if there has been a shift in suppliers, potentially indicating changes in market competitiveness or VA procurement strategy.

How does the per-unit cost of natural gas in this contract compare to market rates or similar federal contracts?

Benchmarking the per-unit cost of natural gas under this $134 million contract against prevailing market rates and similar federal contracts is essential for assessing value for money. Market rates can be obtained from industry reports, utility commission filings, or commodity price indices. Comparing this contract's unit price to those awarded to other federal agencies for comparable services in similar geographic regions or to other large commercial consumers would highlight any potential overpayment or cost savings. The firm fixed-price nature of the contract suggests a negotiated rate, and understanding its competitiveness relative to external benchmarks is key to evaluating its financial prudence.

What specific risks are associated with relying on a single supplier for natural gas for VA facilities in Kentucky?

Relying on a single supplier, Constellation NewEnergy - Gas Division, LLC, for natural gas presents several risks for the VA facilities in Kentucky. Foremost is the risk of supply disruption due to unforeseen events affecting the supplier, such as operational failures, labor disputes, or extreme weather impacting their distribution network. This could lead to service interruptions critical for facility operations. Another risk is reduced leverage in price negotiations during future contract renewals, as the VA would be negotiating with an incumbent provider. Furthermore, a sole supplier scenario might limit the adoption of innovative energy solutions or alternative supply options that could emerge in a more competitive market.

What performance metrics are included in the contract to ensure service quality and reliability?

The provided data does not specify the performance metrics included in the contract. However, for a critical utility service like natural gas, typical performance metrics would likely include reliability of supply (e.g., uptime percentage, response time to outages), accuracy of billing, adherence to safety standards, and potentially environmental compliance. The firm fixed-price nature suggests that the price is set, but the VA would still monitor the contractor's adherence to service level agreements (SLAs) to ensure the facilities receive uninterrupted and safe natural gas delivery. Without explicit performance clauses, assessing the contractor's adherence to quality standards becomes more challenging.

How many bids were received during the full and open competition, and what was the range of proposed prices?

While the contract was awarded under 'FULL AND OPEN COMPETITION,' the specific number of bids received and the range of proposed prices are not detailed in the provided data. This information is critical for a thorough analysis of the competition's effectiveness. A high number of bids typically indicates robust competition, which usually leads to more favorable pricing for the government. Conversely, a low number of bids, even under full and open competition, might suggest market limitations, high barriers to entry, or a lack of interest from potential suppliers, potentially impacting price discovery. Obtaining the bid count and price range would offer significant insight into the value achieved.

Industry Classification

NAICS: Utilities › Natural Gas Distribution › Natural Gas Distribution

Product/Service Code: UTILITIES AND HOUSEKEEPING › UTILITIES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: TWO STEP

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: $134,065

Exercised Options: $134,065

Current Obligation: $134,065

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 47PA0422D0061

IDV Type: IDC

Timeline