TVA's $393.5M Electric Utility Service Contract for Oak Ridge Reservation: A Long-Term, Sole-Source Agreement
Contract Overview
Contract Amount: $393,507,089 ($393.5M)
Contractor: Tennessee Valley Authority
Awarding Agency: Department of Energy
Start Date: 2007-05-01
End Date: 2020-09-30
Contract Duration: 4,901 days
Daily Burn Rate: $80.3K/day
Competition Type: NOT AVAILABLE FOR COMPETITION
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Energy
Official Description: ELECTRIC UTILITY SERVICE FOR OAK RIDGE RESERVATION
Place of Performance
Location: OAK RIDGE, ANDERSON County, TENNESSEE, 37831
Plain-Language Summary
Department of Energy obligated $393.5 million to TENNESSEE VALLEY AUTHORITY for work described as: ELECTRIC UTILITY SERVICE FOR OAK RIDGE RESERVATION Key points: 1. This contract represents a significant, long-term commitment for essential utility services. 2. The sole-source nature of this award warrants scrutiny regarding potential cost efficiencies and market alternatives. 3. Performance duration of nearly 13 years suggests a stable, ongoing need for these services. 4. The fixed-price contract type offers some cost certainty but may limit flexibility for unforeseen changes. 5. The geographic concentration in Tennessee highlights regional utility dependencies. 6. The absence of small business set-aside indicates a focus on large-scale utility providers.
Value Assessment
Rating: fair
Benchmarking the value of this contract is challenging due to its sole-source nature and long duration, making direct comparisons difficult. The firm fixed-price structure provides cost predictability for the government. However, without competitive bidding, it's harder to ascertain if the pricing reflects the best possible value or if there are opportunities for cost savings through alternative providers or renegotiation. The total value over nearly 13 years is substantial, underscoring the importance of ensuring efficient service delivery.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when a specific vendor possesses unique capabilities or when it's deemed impractical or uneconomical to solicit bids from others. The lack of competition means that price discovery through market forces was not a factor in this award, potentially leading to higher costs than if it had been competed.
Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure to drive down prices. The government did not benefit from the potential cost savings that often arise from a competitive bidding process.
Public Impact
The primary beneficiary is the Department of Energy's Oak Ridge Reservation, ensuring continuous operation of its facilities. Essential electric utility services, including power supply and distribution, are delivered. The geographic impact is concentrated within the Oak Ridge Reservation in Tennessee. The contract supports the ongoing operations and missions of the Department of Energy at this critical site.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price competition and potential taxpayer savings.
- Long contract duration may reduce flexibility to adapt to changing energy markets or technologies.
- Lack of small business participation might limit opportunities for smaller, specialized utility providers.
Positive Signals
- Firm fixed-price contract provides budget certainty for the government.
- Long-term award indicates a stable and predictable need for essential services.
- Award to TVA suggests a reliable, established utility provider for a critical government site.
Sector Analysis
The electric utility sector is characterized by significant infrastructure investment, regulatory oversight, and often, natural monopolies or limited competition within specific geographic areas. Contracts for utility services, especially for large government installations like the Oak Ridge Reservation, are crucial for maintaining operations. The Tennessee Valley Authority (TVA) is a major regional power provider, and its involvement in supplying electricity to federal facilities is common. This contract fits within the broader landscape of energy provision for government operations, where long-term agreements are often necessary due to the nature of utility infrastructure.
Small Business Impact
This contract does not appear to include any small business set-aside provisions, nor is there information suggesting subcontracting goals for small businesses. The award to the Tennessee Valley Authority, a large public utility, indicates that the primary focus was on securing reliable, large-scale energy provision rather than fostering small business participation. This means that opportunities for small businesses within the utility services sector to engage with this specific contract are likely minimal.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of Energy's contracting and program management offices, given that the Oak Ridge Reservation is a DOE facility. As a sole-source award, the justification and terms would be subject to internal DOE review and potentially external audits. Transparency regarding the specific performance metrics and any cost-overrun controls would depend on the contract's detailed clauses and the DOE's reporting practices. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.
Related Government Programs
- Department of Energy Utility Contracts
- Oak Ridge Reservation Operations
- Tennessee Valley Authority Services
- Federal Energy Procurement
Risk Flags
- Sole-source award lacks competitive pricing validation.
- Long contract duration may not reflect current market rates or technological advancements.
- Lack of small business participation noted.
Tags
energy, utility-services, department-of-energy, tennessee-valley-authority, oak-ridge-reservation, definitive-contract, sole-source, firm-fixed-price, large-contract, federal-facility, tennessee, energy-provision
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $393.5 million to TENNESSEE VALLEY AUTHORITY. ELECTRIC UTILITY SERVICE FOR OAK RIDGE RESERVATION
Who is the contractor on this award?
The obligated recipient is TENNESSEE VALLEY AUTHORITY.
Which agency awarded this contract?
Awarding agency: Department of Energy (Department of Energy).
What is the total obligated amount?
The obligated amount is $393.5 million.
What is the period of performance?
Start: 2007-05-01. End: 2020-09-30.
What was the specific justification for awarding this contract on a sole-source basis to the Tennessee Valley Authority?
The provided data does not detail the specific justification for the sole-source award. Typically, sole-source contracts are justified when only one responsible source is available or capable of meeting the government's needs. For utility services at a large federal reservation like Oak Ridge, this could be due to existing infrastructure integration, unique geographical requirements, or the inability of other providers to serve the site effectively and reliably. A thorough review of the contract file and associated documentation within the Department of Energy would be necessary to ascertain the precise rationale, which might include factors like cost-effectiveness of using existing integrated systems, specialized technical requirements, or national security considerations that preclude open competition.
How does the annual cost of this contract compare to other large federal electric utility service contracts?
Direct annual cost comparison is difficult without knowing the specific services included and the energy consumption patterns of other federal facilities. The total contract value of approximately $393.5 million over nearly 13 years averages to roughly $30.3 million per year. This figure needs to be contextualized by the scale and energy demands of the Oak Ridge Reservation. To benchmark effectively, one would need to compare this average annual cost against similar-sized federal installations or research facilities with comparable energy needs, considering factors like base load power, peak demand, and any specialized power requirements. Without such detailed comparative data on energy usage and pricing structures across different federal sites, a precise value-for-money assessment relative to other contracts is challenging.
What are the key performance indicators (KPIs) and service level agreements (SLAs) associated with this contract?
The provided data does not specify the Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this contract. However, for an electric utility service contract of this magnitude and duration, typical KPIs would likely include metrics related to power reliability (e.g., frequency and duration of outages), power quality (e.g., voltage and frequency stability), response times for service requests or emergencies, and adherence to safety standards. SLAs would define the expected levels of performance for these metrics, often with associated penalties for non-compliance or incentives for exceeding targets. The Department of Energy would have established these to ensure the continuous and efficient operation of the Oak Ridge Reservation.
What is the historical spending trend for electric utility services at the Oak Ridge Reservation prior to this contract?
The provided data focuses on a single definitive contract awarded in 2007 and ending in 2020. It does not offer historical spending trends for electric utility services at the Oak Ridge Reservation prior to this period. To understand historical spending, one would need to examine previous contracts awarded for these services, potentially dating back further. Analyzing past contract values, durations, and any modifications would reveal trends in energy consumption, pricing, and the government's investment in utility infrastructure at the site. This would help in assessing whether the $393.5 million awarded under this contract represents an increase, decrease, or stable level of spending compared to previous periods.
Are there any provisions for renewable energy integration or energy efficiency improvements within this contract?
The provided data does not contain information regarding provisions for renewable energy integration or energy efficiency improvements within this contract. Given the contract's duration (2007-2020), it predates some of the more aggressive federal mandates and initiatives for renewable energy adoption and efficiency that have become prominent in recent years. While the Tennessee Valley Authority (TVA) itself is involved in various energy sources, including renewables, the specific terms of this sole-source utility service contract would dictate whether such elements were incorporated. Further investigation into the contract's statement of work and any amendments would be required to determine the extent of any such provisions.
Industry Classification
NAICS: Utilities › Electric Power Generation, Transmission and Distribution › Hydroelectric Power Generation
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: Government of the United States (UEI: 161906193)
Address: 400 W SUMMIT HILL DR, KNOXVILLE, TN, 37902
Business Categories: Category Business, Government, U.S. National Government, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $691,512,060
Exercised Options: $691,512,060
Current Obligation: $393,507,089
Actual Outlays: $61,492
Contract Characteristics
Multi-Year Contract: Yes
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Timeline
Start Date: 2007-05-01
Current End Date: 2020-09-30
Potential End Date: 2020-09-30 00:00:00
Last Modified: 2021-12-27
More Contracts from Tennessee Valley Authority
- Electricity — $56.7M (Department of Defense)
Other Department of Energy Contracts
- Federal Contract — $48.1B (Lockheed Martin Corp)
- ,Ct::igf Contract Award De-Na0003525 to the National Technology&engineering Solutions of Sandia, LLC (ntess) for the Management and Operation of the Department of Energy, National Nuclear Security Administration's Sandia National Laboratories (SNL) — $41.7B (National Technology & Engineering Solutions of Sandia, LLC)
- Management and Operation of the OAK Ridge National Laboratory — $40.8B (Ut-Battelle LLC)
- TAS::89 0240::TAS This Performance-Based Management Contract (pbmc) IS for the Management and Operation of the Lawrence Livermore National Laboratory (llnl). the Contractor Shall, in Accordance With the Provisions of This Contract, Accomplish the Missions and Programs Assigned by the U.S. Department of Energy (DOE) and Manage and Operate the Laboratory. the Laboratory IS ONE of Does Office of Defense Program Multi-Program Laboratories. the Laboratory IS a Federally Funded Research and Development Institution (established in Accordance With the Federal Acquisition Regulation (FAR) Part 35 and Operated Under This Management and Operating (M&O) Contract, AS Defined in FAR 17.6 and Dear 917.6 — $40.8B (Lawrence Livermore National Security, LLC)
- M&O of Lanl BR of U of CA — $35.3B (Regents of the University of California, the)