DOT awards $16M contract for electricity to Potomac Electric Power Co. for its DC headquarters

Contract Overview

Contract Amount: $16,082,494 ($16.1M)

Contractor: Potomac Electric Power CO

Awarding Agency: Department of Transportation

Start Date: 2021-05-11

End Date: 2026-03-31

Contract Duration: 1,785 days

Daily Burn Rate: $9.0K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: TO ACQUIRE ELECTRICITY FOR DOT HQ BUILDING UNDER AREA WIDE CONTRACT 47PA0420D0064

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20590

State: District of Columbia Government Spending

Plain-Language Summary

Department of Transportation obligated $16.1 million to POTOMAC ELECTRIC POWER CO for work described as: TO ACQUIRE ELECTRICITY FOR DOT HQ BUILDING UNDER AREA WIDE CONTRACT 47PA0420D0064 Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. The contract duration of nearly five years suggests a long-term reliance on a single provider. 3. Fixed-price contract structure shifts performance risk to the contractor. 4. The award is for essential utility services, indicating a critical need for uninterrupted power. 5. Geographic concentration in Washington D.C. for a federal agency's primary power source.

Value Assessment

Rating: fair

Benchmarking electricity costs for federal facilities is complex due to varying rates, usage patterns, and contract terms. However, a sole-source award for a significant duration like this one, without clear justification for lack of competition, warrants scrutiny. The fixed-price nature provides cost certainty but doesn't inherently guarantee value for money if the initial price was not competitively determined. Further analysis would require comparing the per-kilowatt-hour rate to commercial rates in the Washington D.C. area and to similar federal utility contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not openly competed. The justification for this approach is not provided in the available data. Typically, sole-source awards occur when only one responsible source can provide the required goods or services. Without a competitive process, it is difficult to assess the level of competition and its impact on price discovery. The absence of multiple bidders suggests potential limitations in market options or a specific justification for direct negotiation.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers compared to competitively bid contracts, as the government may not benefit from the price reductions that competition often drives.

Public Impact

The primary beneficiary is the Department of Transportation, ensuring continuous operation of its headquarters. Essential utility services (electricity) are delivered to a major federal agency. The geographic impact is localized to Washington D.C., specifically the DOT headquarters. There are no direct workforce implications mentioned, as this is a utility service contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition for essential utility services may lead to suboptimal pricing.
Long-term contract duration without competitive re-evaluation could lock in potentially unfavorable rates.
Sole-source justification needs further review to ensure necessity and absence of viable alternatives.

Positive Signals

Fixed-price contract provides cost certainty for the government.
Contract ensures reliable electricity supply, critical for agency operations.
Award to an established utility provider suggests a focus on service reliability.

Sector Analysis

The energy sector, specifically electric power generation and distribution, is a critical infrastructure component for all government operations. Federal agencies are significant consumers of electricity, and contracts for these services are essential for maintaining agency functions. This contract falls under the broader category of utility services, which are often procured through long-term agreements or established rate schedules. The market for electricity in urban areas like Washington D.C. is typically dominated by a few large utility providers.

Small Business Impact

There is no indication that this contract includes small business set-asides or subcontracting requirements. As a sole-source award to a large utility provider, it is unlikely to directly benefit small businesses through prime contracting. Subcontracting opportunities for small businesses are not specified and may be limited given the nature of the service provided.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Transportation's contracting officers and program managers. The contract's fixed-price nature simplifies some aspects of financial oversight. Transparency regarding the sole-source justification and the specific pricing structure would be key areas for oversight. Inspector General involvement would likely be triggered by allegations of fraud, waste, or abuse, rather than routine performance monitoring.

Related Government Programs

Federal Utility Contracts
Department of Transportation Operations
Washington D.C. Energy Services

Risk Flags

Sole-source award lacks competitive justification.
Potential for above-market pricing due to lack of competition.
Long-term commitment without competitive re-evaluation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $16.1 million to POTOMAC ELECTRIC POWER CO. TO ACQUIRE ELECTRICITY FOR DOT HQ BUILDING UNDER AREA WIDE CONTRACT 47PA0420D0064

Who is the contractor on this award?

The obligated recipient is POTOMAC ELECTRIC POWER CO.

Which agency awarded this contract?

Awarding agency: Department of Transportation (Immediate Office of the Secretary of Transportation).

What is the total obligated amount?

The obligated amount is $16.1 million.

What is the period of performance?

Start: 2021-05-11. End: 2026-03-31.

What is the specific justification for awarding this electricity contract on a sole-source basis to Potomac Electric Power Co.?

The provided data indicates the contract was awarded 'NOT AVAILABLE FOR COMPETITION,' which is synonymous with a sole-source justification. While the specific rationale is not detailed, common reasons for sole-source utility contracts include situations where a single utility provider has exclusive rights to serve a geographic area (e.g., a monopoly utility), or when there are unique circumstances requiring a specific provider's infrastructure or services. For federal agencies, this often means the utility is the only entity capable of providing power to the facility's location. A thorough review would involve examining the contracting officer's justification memo to confirm the necessity and the absence of viable competitive alternatives at the time of award.

How does the contract's fixed-price structure compare to other federal electricity contracts in terms of value for money?

A firm fixed-price contract provides cost certainty for the government, as the price is set regardless of the contractor's actual costs. This shifts the risk of cost overruns to the contractor. In terms of value for money, the effectiveness of a fixed-price contract hinges on the initial price negotiation. If the price was established through competitive bidding or robust market research, it is more likely to represent good value. However, for sole-source awards, the absence of competition raises concerns that the fixed price might not be as competitive as it could be. Comparing this contract's per-unit electricity rate (if derivable) to market rates and other federal contracts for similar services in comparable locations would be necessary to fully assess value for money.

What are the potential risks associated with a sole-source, long-term contract for essential utility services?

The primary risk of a sole-source, long-term contract for essential services like electricity is the potential for paying above-market rates due to the lack of competitive pressure. Over nearly five years, the government is locked into a price that may not reflect changes in market conditions, technological advancements, or the emergence of new providers. Another risk is reduced incentive for the contractor to innovate or improve efficiency if they are guaranteed revenue regardless of performance beyond basic service delivery. Furthermore, if the initial sole-source justification was weak or circumstances change, the government may have limited recourse to seek better terms or alternative providers without incurring significant transition costs or service disruptions.

What is the historical spending pattern for electricity at the DOT headquarters, and how does this contract compare?

Historical spending data for electricity at the DOT headquarters is not provided in the current dataset. To establish a baseline and compare this $16.08 million contract, one would need access to previous contract awards or utility bills for the facility covering comparable periods. Analyzing past spending would allow for an assessment of whether the current contract represents an increase, decrease, or stable cost relative to historical consumption and pricing. It would also help identify trends in electricity usage and costs over time, providing context for the current contract's duration and value.

Are there any performance metrics or service level agreements (SLAs) associated with this contract to ensure reliable electricity delivery?

The provided data specifies the contract type as 'FIRM FIXED PRICE' and indicates a duration from May 11, 2021, to March 31, 2026. While the data does not explicitly list performance metrics or SLAs, fixed-price contracts for essential services like electricity typically include clauses that define service reliability standards, such as uptime requirements or response times for outages. Failure to meet these implicit or explicit standards could result in penalties or breach of contract. The effectiveness of oversight would depend on how rigorously these performance aspects are monitored and enforced by the Department of Transportation's contracting officials.

Industry Classification

NAICS: Utilities › Electric Power Generation, Transmission and Distribution › Other Electric Power Generation

Product/Service Code: UTILITIES AND HOUSEKEEPING › UTILITIES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: WC2021M91RPMK0028

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 701 9TH ST NW, WASHINGTON, DC, 20068

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

Financial Breakdown

Contract Ceiling: $17,014,375

Exercised Options: $17,014,375

Current Obligation: $16,082,494

Actual Outlays: $15,113,501

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 47PA0420D0064

IDV Type: IDC

Timeline