VA Awards $59.4M Electric Power Contract to Black Hills Service Company, LLC for 16 Years

Contract Overview

Contract Amount: $59,443,986 ($59.4M)

Contractor: Black Hills Service Company, LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-09-30

End Date: 2045-02-28

Contract Duration: 7,456 days

Daily Burn Rate: $8.0K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: VISN 23 BLACK HILLS UESC

Place of Performance

Location: HOT SPRINGS, FALL RIVER County, SOUTH DAKOTA, 57747

State: South Dakota Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $59.4 million to BLACK HILLS SERVICE COMPANY, LLC for work described as: VISN 23 BLACK HILLS UESC Key points: 1. Significant long-term contract valued at $59.4 million. 2. Sole-source award raises questions about competition and potential cost savings. 3. Extended contract duration (over 16 years) may limit flexibility and market responsiveness. 4. Focus on electric power distribution suggests critical infrastructure support for VISN 23.

Value Assessment

Rating: questionable

The contract value of $59.4 million over approximately 16 years is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to similar electric power distribution services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating a lack of competition. This method limits price discovery and may result in higher costs for taxpayers.

Taxpayer Impact: The sole-source nature of this award means taxpayers may not be receiving the best possible price due to the absence of competitive bidding.

Public Impact

Veterans in VISN 23 will receive reliable electric power services. Long-term commitment ensures consistent infrastructure support for facilities. Potential for higher costs due to lack of competition impacts taxpayer funds.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Long contract duration
Lack of transparency in pricing

Positive Signals

Ensures critical infrastructure support
Long-term stability for service provider

Sector Analysis

This contract falls within the Utilities and Energy sector, specifically electric power distribution. Government contracts for essential utilities often involve long-term commitments, but competitive bidding is typically preferred to ensure cost-effectiveness.

Small Business Impact

The awardee is BLACK HILLS SERVICE COMPANY, LLC. Information regarding its size or whether it is a small business is not provided, but the sole-source nature suggests it may not have been selected through a process that actively sought small business participation.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny to ensure the VA obtained fair pricing and that competition was appropriately considered or justified. Oversight should focus on the justification for the sole-source award and ongoing performance monitoring.

Related Government Programs

Electric Power Distribution
Department of Veterans Affairs Contracting
Department of Veterans Affairs Programs

Risk Flags

Sole-source award limits competition and potentially increases costs.
Long contract duration (over 16 years) may not reflect evolving technology or market prices.
Lack of provided justification for sole-source award.
No clear indication of small business participation in the award process.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $59.4 million to BLACK HILLS SERVICE COMPANY, LLC. VISN 23 BLACK HILLS UESC

Who is the contractor on this award?

The obligated recipient is BLACK HILLS SERVICE COMPANY, 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 $59.4 million.

What is the period of performance?

Start: 2024-09-30. End: 2045-02-28.

What is the justification for awarding this critical electric power contract on a sole-source basis, and were alternative competitive strategies explored?

The justification for a sole-source award is crucial for understanding why competition was bypassed. Agencies typically cite unique capabilities, urgent needs, or lack of other responsible sources. Without this justification, it's impossible to assess if the VA missed opportunities for better pricing or innovative solutions that a competitive process might have yielded.

How does the $59.4 million price over 16 years compare to industry benchmarks for similar electric power distribution services, especially considering the lack of competition?

Benchmarking this contract's price against similar sole-source or competitively awarded contracts is essential. The absence of competition makes direct comparison difficult, but industry data on per-kilowatt-hour costs, infrastructure maintenance, and service level agreements can provide a reference point. A significant deviation from benchmarks would raise concerns about value for money.

What mechanisms are in place to ensure service quality and cost control throughout the 16-year duration of this sole-source contract?

Given the long-term, sole-source nature, robust oversight is critical. This includes clearly defined performance metrics, regular service reviews, and mechanisms for price adjustments based on objective criteria (e.g., inflation indices). The VA must actively manage the contract to prevent cost creep and ensure the continued delivery of essential services.

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

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Black Hills Corporation

Address: 7001 MT RUSHMORE RD, RAPID CITY, SD, 57702

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: $90,888,274

Exercised Options: $59,443,986

Current Obligation: $59,443,986

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 47PA0419D0014

IDV Type: IDC

Timeline