NIH awards $2.05M for electric services to Potomac Edison, with no competition

Contract Overview

Contract Amount: $2,054,257 ($2.1M)

Contractor: THE Potomac Edison CO

Awarding Agency: Department of Health and Human Services

Start Date: 2021-10-27

End Date: 2026-10-26

Contract Duration: 1,825 days

Daily Burn Rate: $1.1K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: 110084629044 POTOMAC EDISON (ELECTRIC) NIHAC CAN 8023629 METER# 1 CONTRACT# 75N99022F00001

Place of Performance

Location: BETHESDA, MONTGOMERY County, MARYLAND, 20892

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $2.1 million to THE POTOMAC EDISON CO for work described as: 110084629044 POTOMAC EDISON (ELECTRIC) NIHAC CAN 8023629 METER# 1 CONTRACT# 75N99022F00001 Key points: 1. Spending is for essential electric services to NIH facilities. 2. The contract is a sole-source award, limiting competitive pricing. 3. Potential risks include lack of price negotiation and limited oversight. 4. The utility sector is generally stable, but specific contract terms matter.

Value Assessment

Rating: fair

The $2.05M award over five years for electric services appears reasonable for a utility contract of this duration and scope. However, without competitive bidding, it's difficult to ascertain if this represents the best possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded sole-source, meaning no other vendors were considered. This approach bypasses the competitive process, potentially leading to higher prices and reduced innovation as there is no market pressure to offer better terms.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competition, as the government did not explore options for potentially lower-cost providers or more favorable contract terms.

Public Impact

Ensures continuous power supply for critical NIH research and operations. Lack of competition raises concerns about fair pricing for taxpayers. Sole-source awards can set precedents for future utility contracts. Dependence on a single provider could pose reliability risks if not managed.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery.
No clear justification for sole-source provided.
Long contract duration without competition.

Positive Signals

Essential service provision.
Established utility provider.

Sector Analysis

This contract falls under the utility services sector, specifically electric power. Spending benchmarks for such services vary widely based on location, demand, and contract structure. The NIH's reliance on Potomac Edison for electricity in Maryland is typical for large federal facilities in the region.

Small Business Impact

This contract does not appear to involve small businesses, as it is a sole-source award to a large utility company. There is no indication of subcontracting opportunities for small businesses within this agreement.

Oversight & Accountability

The sole-source nature of this award warrants close oversight to ensure the price remains fair and the service is delivered effectively. Accountability could be strengthened by a clear justification for the lack of competition and regular performance reviews.

Related Government Programs

Other Electric Power Generation
Department of Health and Human Services Contracting
National Institutes of Health Programs

Risk Flags

Sole-source award lacks competitive pricing.
Potential for price inflation over contract duration.
Limited transparency on justification for sole-source.
No clear mechanism for price benchmarking.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $2.1 million to THE POTOMAC EDISON CO. 110084629044 POTOMAC EDISON (ELECTRIC) NIHAC CAN 8023629 METER# 1 CONTRACT# 75N99022F00001

Who is the contractor on this award?

The obligated recipient is THE POTOMAC EDISON CO.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (National Institutes of Health).

What is the total obligated amount?

The obligated amount is $2.1 million.

What is the period of performance?

Start: 2021-10-27. End: 2026-10-26.

What is the justification for awarding this electric service contract sole-source to Potomac Edison, and has the government explored alternative pricing or service models?

The provided data indicates the contract was 'NOT AVAILABLE FOR COMPETITION,' suggesting a sole-source award. A thorough justification should detail why competitive bidding was not feasible, such as unique service requirements or existing infrastructure dependencies. Without this justification, it's difficult to assess if alternative pricing or service models were adequately considered, potentially impacting value for money.

What are the potential risks associated with a sole-source electric utility contract, particularly regarding price escalation and service quality over its five-year term?

The primary risk of a sole-source contract is the lack of competitive pressure, which can lead to inflated prices over the contract's five-year term. Service quality could also be a concern if the provider faces no incentive to exceed basic requirements. The government should implement robust performance monitoring and potentially include price adjustment clauses tied to market indices to mitigate these risks.

How does this contract's pricing compare to similar electric utility contracts awarded competitively by federal agencies in the same region?

Direct comparison is challenging without knowing the specific energy consumption and service level agreements. However, the absence of competition inherently prevents a definitive assessment of whether this $2.05M award represents optimal value. A benchmark analysis against competitively procured utility contracts in Maryland would be necessary to evaluate the pricing effectiveness.

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

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Firstenergy Corp.

Address: 10802 BOWER AVENUE, WILLIAMSPORT, MD, 21795

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

Financial Breakdown

Contract Ceiling: $2,054,257

Exercised Options: $2,054,257

Current Obligation: $2,054,257

Actual Outlays: $1,913,961

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 47PA0418D0035

IDV Type: IDC

Timeline