VA awards $5M for natural gas in Kentucky, highlighting stable pricing for a 29-day delivery order

Contract Overview

Contract Amount: $5,053 ($5.1K)

Contractor: Constellation Newenergy - GAS Division, LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2025-09-01

End Date: 2025-09-30

Contract Duration: 29 days

Daily Burn Rate: $174/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: UTILITY NATURAL GAS

Place of Performance

Location: LEXINGTON, FAYETTE County, KENTUCKY, 40506

State: Kentucky Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $5,053.48 to CONSTELLATION NEWENERGY - GAS DIVISION, LLC for work described as: UTILITY NATURAL GAS Key points: 1. Contract value appears reasonable for a short-term utility service. 2. Full and open competition suggests a healthy market for natural gas suppliers. 3. Fixed-price contract mitigates risk of cost escalation for the VA. 4. Short duration of the order may indicate fluctuating demand or a bridge contract. 5. Geographic focus on Kentucky suggests localized utility needs. 6. Contractor has experience in energy supply, but specific VA performance needs further review.

Value Assessment

Rating: good

The contract value of $5.05 million for a 29-day natural gas supply is difficult to benchmark precisely without more granular data on daily consumption and market prices during the delivery period. However, given the nature of utility services and the short timeframe, the amount seems within a plausible range. The firm fixed-price structure provides cost certainty for the Department of Veterans Affairs. Further analysis would require comparing the effective per-unit cost against regional natural gas indices for September 2025.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. This method is generally preferred as it fosters a competitive environment, potentially leading to better pricing and terms for the government. The specific number of bidders is not provided, but the selection of this method suggests a robust market for natural gas distribution services in the region.

Taxpayer Impact: Full and open competition typically benefits taxpayers by driving down prices through market forces and ensuring the government receives the best value available.

Public Impact

Veterans receiving care at VA facilities in Kentucky will benefit from uninterrupted utility services. The contract ensures the delivery of natural gas, a critical utility for heating, cooking, and other essential functions within VA medical centers and administrative buildings. The geographic impact is concentrated in Kentucky, specifically serving VA installations within the state. Workforce implications are minimal, primarily related to the contractor's delivery and operational staff.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of detailed performance metrics for the contractor in the provided data.
Short contract duration raises questions about long-term energy planning and potential for frequent re-competition.
Absence of specific unit pricing makes it hard to assess cost-effectiveness beyond the total award amount.

Positive Signals

Awarded under full and open competition, suggesting a competitive marketplace.
Firm fixed-price contract provides cost certainty and mitigates inflation risk.
Contractor is an established energy provider, likely possessing necessary infrastructure and expertise.
Delivery order mechanism allows for flexibility in meeting immediate needs.

Sector Analysis

The energy sector, specifically utility natural gas, is a critical component of federal operations, supporting everything from facility maintenance to research. Federal spending in this area is often characterized by long-term supply agreements and localized contracts, reflecting the infrastructure-dependent nature of gas distribution. This contract fits within the broader category of operational support services, ensuring essential utilities are available. Benchmarking this specific award against similar short-term natural gas contracts for federal facilities in the region would provide further context on its value.

Small Business Impact

The provided data indicates that small business participation was not a specific set-aside for this contract (ss: false, sb: false). As a large utility contract, it is unlikely that significant subcontracting opportunities for small businesses would be mandated or readily available within the scope of natural gas distribution itself, unless specialized services are required. The primary focus appears to be on securing a reliable energy supply from a qualified provider.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Veterans Affairs' contracting officers and program managers responsible for facility operations in Kentucky. Standard contract administration procedures, including monitoring delivery and adherence to terms, would be in place. Transparency is facilitated by the public nature of federal contract awards, though specific performance data and detailed pricing breakdowns may not always be publicly accessible. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Federal Utility Contracts
Department of Veterans Affairs Operational Support
Natural Gas Supply Agreements
Kentucky Federal Spending

Risk Flags

Short contract duration may indicate a need for further strategic energy planning.
Lack of detailed performance metrics requires close monitoring by the agency.
Limited information on specific unit pricing hinders granular value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $5,053.48 to CONSTELLATION NEWENERGY - GAS DIVISION, LLC. UTILITY 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 $5,053.48.

What is the period of performance?

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

What is the contractor's track record with the Department of Veterans Affairs and other federal agencies?

Constellation NewEnergy - Gas Division, LLC is a significant player in the energy market. While the provided data doesn't detail their specific performance history with the VA or other federal agencies on this particular type of contract, their presence suggests they have the capacity and experience to handle such awards. A deeper dive into contract databases like FPDS-NG would reveal past performance ratings, any past disputes or contract terminations, and the volume and types of contracts they have previously held with the federal government. This information is crucial for assessing reliability and past value delivery.

How does the awarded amount compare to historical spending for natural gas at this VA facility or similar facilities in the region?

Without knowing the specific VA facility or its historical consumption patterns, a direct comparison is challenging. However, the $5.05 million award for a 29-day period suggests a substantial daily cost, likely reflecting the needs of a large medical center or multiple facilities. To benchmark effectively, one would need to analyze historical natural gas expenditures for the relevant VA installations in Kentucky, adjusting for inflation and fluctuations in market prices. Comparing the implied daily or per-unit cost against regional utility rates and indices during the contract period would also be informative.

What are the primary risks associated with this contract, and how are they mitigated?

Key risks include potential price volatility (mitigated by the firm fixed-price structure), supply disruptions (mitigated by the contractor's likely established infrastructure and contingency plans), and performance issues (mitigated by VA oversight and standard contract clauses). Given the short duration, risks related to long-term market shifts are less pronounced. The primary mitigation for price risk is the fixed-price nature of the award, ensuring the VA pays a predetermined rate regardless of market fluctuations during the delivery period.

How effective is the 'full and open competition' strategy in ensuring the best value for this specific natural gas contract?

Full and open competition is generally the most effective strategy for ensuring best value, as it allows the widest possible pool of qualified vendors to bid, fostering price discovery and innovation. For a commodity like natural gas, where market prices are relatively transparent, competition is likely to drive the price close to the prevailing market rate. The effectiveness hinges on the clarity of the solicitation requirements and the VA's ability to evaluate bids based on price and other crucial factors like reliability and delivery capability.

What are the implications of the short contract duration (29 days) for the VA's long-term energy strategy?

A 29-day delivery order for natural gas suggests it might be a short-term solution to bridge a gap, address unexpected demand, or fulfill an immediate need rather than a long-term supply agreement. This could imply that the VA is either re-evaluating its long-term energy strategy, facing supply constraints with existing contracts, or has a highly variable demand pattern. Frequent short-term contracts can sometimes be less cost-effective than longer-term agreements due to the administrative overhead of re-competition and potentially missing out on volume discounts.

Are there any specific performance standards or key performance indicators (KPIs) associated with this delivery order?

The provided data does not specify performance standards or KPIs for this delivery order. Typically, utility contracts include clauses related to reliability of service, delivery timeliness, and potentially quality standards for the natural gas. The VA's contracting officer would be responsible for monitoring adherence to these terms. Without explicit KPIs in the award details, oversight likely relies on general contract management principles and ensuring uninterrupted service delivery as per the agreement.

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: $5,053

Exercised Options: $5,053

Current Obligation: $5,053

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 47PA0425D0016

IDV Type: IDC

Timeline