Army's $260M electric services contract to Duke Energy Progress, awarded non-competitively, spans 26 years

Contract Overview

Contract Amount: $260,030,233 ($260.0M)

Contractor: Duke Energy Progress, LLC

Awarding Agency: Department of Defense

Start Date: 1996-10-23

End Date: 2022-09-30

Contract Duration: 9,473 days

Daily Burn Rate: $27.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: 199703!2100!0212!KF40 !DIRECTORATE OF CONTRACTING !DAKF4074C0320 !A!*!0068 !19961023!19961031!006997217!006997217!006997217!N!0CU59!CAROLINA POWER & LIGHT COMPANY!411 FAYETTEVILLE STREET M !RALEIGH !NC!27601!24260!051!37!FORT BRAGG !CUMBERLAND !N CAROLINA!0001!+000003176361!N!N!000000000000!S112!ELECTRIC SERVICES !S1 !SERVICES !1000!NOT DISCERNABLE OR CLASSIFIED !4911!3!*!*!*!A!N!B!B !N!J!0!000!*!* !Z!N!Z!* !* !N!C!*!A!A!A!A!A!*!* !*!N!A!A!N!*!*!*!*!*!

Place of Performance

Location: FORT BRAGG, CUMBERLAND County, NORTH CAROLINA, 28310

State: North Carolina Government Spending

Plain-Language Summary

Department of Defense obligated $260.0 million to DUKE ENERGY PROGRESS, LLC for work described as: 199703!2100!0212!KF40 !DIRECTORATE OF CONTRACTING !DAKF4074C0320 !A!*!0068 !19961023!19961031!006997217!006997217!006997217!N!0CU59!CAROLINA POWER & LIGHT COMPANY!411 FAYETTEVILLE STREET M !RALEIGH !NC!27601!24260!051!37!FORT BRAGG !CUMBER… Key points: 1. Contract awarded non-competitively, raising questions about potential cost savings through competition. 2. Long contract duration of 26 years may indicate a stable, long-term need for services. 3. Significant total value suggests a critical infrastructure requirement for Fort Bragg. 4. Awarded to a single provider, limiting opportunities for market-driven price adjustments. 5. The contract's fixed-price nature provides cost certainty for the government but may limit upside for the contractor. 6. Geographic concentration in North Carolina aligns with the location of Fort Bragg.

Value Assessment

Rating: fair

The total award amount of $260 million over 26 years averages to approximately $10 million per year. Without specific benchmarks for electric services at large military installations, it's difficult to definitively assess value. However, the lack of competition suggests potential for higher-than-market pricing. Comparing this to similar long-term utility contracts for other bases or government facilities would be necessary for a more robust value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under 'NOT AVAILABLE FOR COMPETITION' (NAFOC) status, indicating that a competitive process was not utilized. This typically occurs when only one responsible source can fulfill the requirement. The lack of competition means there was no direct price comparison or negotiation against alternative providers, potentially impacting the final price.

Taxpayer Impact: The absence of competition means taxpayers did not benefit from the potential cost reductions that can arise from a bidding process, where multiple companies vie for the contract.

Public Impact

Serves the critical energy needs of Fort Bragg, North Carolina, a major U.S. Army installation. Ensures reliable electric power distribution essential for military operations, housing, and support services. Impacts the local economy in Cumberland County, North Carolina, through service provision and potential employment. Supports the daily functioning and readiness of thousands of military personnel and their families stationed at Fort Bragg.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices compared to a competitive bidding environment.
Long-term nature of the contract could lock the government into unfavorable terms if market conditions change significantly.
Dependence on a single provider for essential utility services creates a single point of failure risk.
Limited transparency into the justification for sole-source award could mask inefficiencies or missed savings opportunities.

Positive Signals

Ensures a stable and reliable supply of electricity to a critical military installation.
The fixed-price contract provides budget certainty for the Department of the Army.
Long-term award may reflect a strategic decision to secure essential infrastructure services for an extended period.
Contractor's established presence and service history in the region may indicate operational expertise.

Sector Analysis

This contract falls within the Utilities and Energy Services sector, specifically focusing on electric power distribution. The market for utility services at large government installations is often characterized by long-term agreements due to the nature of infrastructure and service delivery. While specific benchmarks for military base electricity contracts are not readily available, the scale of this award suggests it is a significant contract within this niche. The duration and value indicate a substantial commitment to ensuring reliable power for a key defense asset.

Small Business Impact

There is no indication that this contract included small business set-asides or subcontracting requirements. As a sole-source award for essential utility services, it is unlikely that small businesses were directly involved in the primary contract. Further investigation would be needed to determine if Duke Energy Progress, LLC has any subcontracting relationships with small businesses for services related to this contract.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. The Inspector General's office may conduct audits or investigations into contract performance and financial management. Transparency is limited due to the sole-source nature, but contract modifications, performance reports, and payment data are usually subject to review and record-keeping requirements.

Related Government Programs

Fort Bragg Utility Services
Department of Defense Energy Contracts
Army Base Operations Support
Long-Term Utility Agreements
North Carolina Electric Services

Risk Flags

Lack of Competition
Long Contract Duration
Potential for Above-Market Pricing
Single Point of Failure Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $260.0 million to DUKE ENERGY PROGRESS, LLC. 199703!2100!0212!KF40 !DIRECTORATE OF CONTRACTING !DAKF4074C0320 !A!*!0068 !19961023!19961031!006997217!006997217!006997217!N!0CU59!CAROLINA POWER & LIGHT COMPANY!411 FAYETTEVILLE STREET M !RALEIGH !NC!27601!24260!051!37!FORT BRAGG !CUMBERLAND !N CAROLINA!0001!+000003176361!N!N!000000000000!S112!ELECTRIC SERVICES !S1 !SERVICES !1000!NOT DISCERNABLE OR CLASSIFIED !4911!3!*!*!*!A!N!B!B !N!J!0!0

Who is the contractor on this award?

The obligated recipient is DUKE ENERGY PROGRESS, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $260.0 million.

What is the period of performance?

Start: 1996-10-23. End: 2022-09-30.

What was the specific justification provided by the Department of the Army for awarding this contract on a sole-source basis?

The provided data indicates the contract was awarded under 'NOT AVAILABLE FOR COMPETITION' (NAFOC). While the specific detailed justification is not included in the abbreviated data, NAFOC awards are typically made when only one responsible source is capable of providing the required goods or services. For utility services at a large installation like Fort Bragg, this could be due to existing infrastructure, geographic exclusivity of service territory, or unique technical requirements that only one provider can meet. A full review of the contract file would be necessary to ascertain the precise justification documented by the agency at the time of award.

How does the average annual cost of this contract compare to similar electric utility contracts for other large military installations?

The total award of $260 million over approximately 26 years (from 1996 to 2022) averages to roughly $10 million per year. Benchmarking this against similar contracts for other large military installations is challenging without access to a comprehensive database of such agreements. Factors like the size of the installation, energy consumption patterns, local electricity rates, and the scope of services (e.g., distribution, generation, maintenance) vary significantly. However, given the lack of competition, it is plausible that the annual cost might be higher than what could be achieved through a competitive bidding process, assuming comparable service levels and infrastructure.

What are the potential risks associated with a 26-year fixed-price contract for electric services?

A 26-year fixed-price contract presents several risks. For the government, the primary risk is paying above-market rates if energy prices or competition dynamics change significantly over the contract's long lifespan. The fixed price may not adequately reflect future market fluctuations, potentially leading to overpayment. Conversely, the contractor assumes the risk of rising operational costs or unforeseen expenses. Additionally, the long duration can make it difficult to adapt to technological advancements in energy distribution or to incorporate new energy efficiency mandates. The government is also locked into a single provider, limiting flexibility and potentially hindering the adoption of more innovative or cost-effective solutions that might emerge.

What performance metrics or service level agreements (SLAs) are typically included in such long-term utility contracts to ensure contractor performance?

Long-term utility contracts, especially for critical infrastructure like military bases, usually incorporate detailed performance metrics and Service Level Agreements (SLAs). These typically cover aspects such as power availability (uptime), response times for outages or service calls, power quality (voltage and frequency stability), and adherence to safety and environmental regulations. Penalties are often stipulated for failing to meet these SLAs, such as service credits or financial deductions. While the specific SLAs for this contract are not detailed in the provided data, it is standard practice for the Department of the Army to define clear performance expectations and remedies to ensure reliable and adequate service delivery throughout the contract term.

Has Duke Energy Progress, LLC (or its predecessor Carolina Power & Light) had other significant sole-source contracts with the Department of Defense?

The provided data focuses on a single contract awarded to Carolina Power & Light Company (now Duke Energy Progress, LLC) for electric services at Fort Bragg. It does not offer information on other contracts this company may have held with the Department of Defense, whether sole-source or competitively awarded. To determine if this is part of a pattern of sole-source awards, a broader search of federal procurement databases (like FPDS or USASpending) would be necessary, looking for contracts awarded to Duke Energy Progress, LLC and its affiliates across various Department of Defense agencies and installations.

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

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Duke Energy Corporation

Address: 410 S WILMINGTON ST, RALEIGH, NC, 27601

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $229,288,880

Exercised Options: $229,288,880

Current Obligation: $260,030,233

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline