DoD Spent $135M on Natural Gas, Awarded to WGL Energy Services Under Full and Open Competition
Contract Overview
Contract Amount: $134,746,666 ($134.7M)
Contractor: WGL Energy Services, Inc.
Awarding Agency: Department of Defense
Start Date: 2008-10-01
End Date: 2010-09-30
Contract Duration: 729 days
Daily Burn Rate: $184.8K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 37
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Energy
Official Description: DIRECT SUPPLY NATURAL GAS FOR VARIOUS GOV'T INSTALLATIONS IN UNITED STATES
Place of Performance
Location: DOVER AFB, KENT County, DELAWARE, 19902
State: Delaware Government Spending
Plain-Language Summary
Department of Defense obligated $134.7 million to WGL ENERGY SERVICES, INC. for work described as: DIRECT SUPPLY NATURAL GAS FOR VARIOUS GOV'T INSTALLATIONS IN UNITED STATES Key points: 1. The contract for natural gas supply spanned two years and involved multiple government installations. 2. WGL Energy Services, Inc. was the sole awardee, indicating a competitive bidding process. 3. The contract type, Fixed Price with Economic Price Adjustment, carries some risk of cost overruns. 4. Spending falls within the broader energy sector, with natural gas being a critical commodity.
Value Assessment
Rating: good
The total award value of $135M over two years suggests a significant volume of natural gas. Benchmarking against similar large-scale government energy contracts would be necessary for a precise value assessment, but the scale appears substantial.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting multiple bidders likely participated. This method generally promotes price discovery and competitive pricing, leading to potentially better value for the government.
Taxpayer Impact: The competitive nature of the award is positive for taxpayers, as it likely resulted in a more favorable price than a non-competitive procurement.
Public Impact
Ensures consistent energy supply for critical government operations across various installations. Supports national energy infrastructure by procuring a vital commodity. Potential for price fluctuations due to economic price adjustment clause impacts utility costs for taxpayers. Contributes to the operational readiness of Department of Defense facilities.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment clause introduces cost uncertainty.
- Contract duration of 729 days (2 years) may not capture long-term market shifts effectively.
Positive Signals
- Awarded under full and open competition.
- Secures essential energy supply for government installations.
Sector Analysis
This contract falls within the energy sector, specifically focusing on the procurement of natural gas, a key utility for government facilities. Spending benchmarks for similar large-scale energy procurements would provide further context on cost-effectiveness.
Small Business Impact
The data does not indicate whether small businesses were involved as subcontractors or prime contractors. Further analysis would be needed to determine the extent of small business participation in this procurement.
Oversight & Accountability
The contract was managed by the Defense Logistics Agency, a key procurement arm for the DoD. Standard oversight processes for large energy contracts would apply, focusing on delivery, quality, and adherence to contract terms.
Related Government Programs
- Crude Petroleum and Natural Gas Extraction
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Economic Price Adjustment clause
- Potential for price volatility in natural gas markets
- Contract duration may not align with optimal long-term market strategy
Tags
crude-petroleum-and-natural-gas-extracti, department-of-defense, de, do, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $134.7 million to WGL ENERGY SERVICES, INC.. DIRECT SUPPLY NATURAL GAS FOR VARIOUS GOV'T INSTALLATIONS IN UNITED STATES
Who is the contractor on this award?
The obligated recipient is WGL ENERGY SERVICES, INC..
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $134.7 million.
What is the period of performance?
Start: 2008-10-01. End: 2010-09-30.
What was the average annual cost per installation, and how does it compare to market rates?
The total contract value of $135M over 729 days averages approximately $185,180 per day. Divided by 37 installations, this is roughly $5,000 per installation per day. Comparing this to market rates for direct supply natural gas would require detailed regional pricing data and consumption profiles for each installation to assess value accurately.
What is the potential financial risk associated with the 'Economic Price Adjustment' clause?
The Economic Price Adjustment (EPA) clause allows for changes in the contract price based on fluctuations in specific economic indicators, typically related to fuel costs. This introduces risk for the government as natural gas prices can be volatile. The extent of the risk depends on the specific index used and the volatility of natural gas markets during the contract period.
How effectively did the 'Full and Open Competition' process ensure competitive pricing for this natural gas contract?
Full and open competition is designed to maximize the number of potential bidders, thereby fostering a competitive environment. This process typically leads to better price discovery and potentially lower prices for the government compared to sole-source or limited competition. The specific outcome depends on the number and quality of bids received.
Industry Classification
NAICS: Mining, Quarrying, and Oil and Gas Extraction › Oil and Gas Extraction › Crude Petroleum and Natural Gas Extraction
Product/Service Code: CHEMICALS AND CHEMICAL PRODUCTS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: SP060008R0401
Offers Received: 37
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)
Evaluated Preference: NONE
Contractor Details
Parent Company: WGL Holdings Inc. (UEI: 153776278)
Address: 13865 SUNRISE VALLEY DR # 200, HERNDON, VA, 11
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $134,746,666
Exercised Options: $134,746,666
Current Obligation: $134,746,666
Contract Characteristics
Multi-Year Contract: Yes
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060008D7510
IDV Type: IDC
Timeline
Start Date: 2008-10-01
Current End Date: 2010-09-30
Potential End Date: 2010-09-30 00:00:00
Last Modified: 2010-06-30
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