DOE's $660M electric power contract for Paducah Plant awarded to Electric Energy, Inc. over 18 years
Contract Overview
Contract Amount: $660,448,359 ($660.4M)
Contractor: Electric Energy, Inc.
Awarding Agency: Department of Energy
Start Date: 1999-12-15
End Date: 2017-05-31
Contract Duration: 6,377 days
Daily Burn Rate: $103.6K/day
Competition Type: NOT AVAILABLE FOR COMPETITION
Pricing Type: COST NO FEE
Sector: Energy
Official Description: ELECTRIC POWER FOR PADUCAH PLANT
Place of Performance
Location: PADUCAH, MCCRACKEN County, KENTUCKY, 42001
State: Kentucky Government Spending
Plain-Language Summary
Department of Energy obligated $660.4 million to ELECTRIC ENERGY, INC. for work described as: ELECTRIC POWER FOR PADUCAH PLANT Key points: 1. Contract value represents significant, long-term investment in energy infrastructure. 2. Sole-source award raises questions about potential for competitive pricing. 3. Extended duration suggests a stable, ongoing need for services. 4. Performance context is critical given the essential nature of power supply. 5. Sector positioning is within the critical energy infrastructure domain. 6. Lack of competition may limit opportunities for cost savings. 7. Contract type indicates a fixed agreement for a substantial period.
Value Assessment
Rating: fair
The total value of $660 million over nearly 18 years averages approximately $36.7 million annually. Without comparable sole-source contracts for similar large-scale power provision to federal facilities, a direct value-for-money assessment is challenging. However, the extended duration and sole-source nature suggest a potentially higher cost than a competitively bid contract might yield. Benchmarking against commercial power purchase agreements for similar volumes would be necessary for a more precise valuation.
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. This typically occurs when only one responsible source is available or capable of meeting the requirement. The lack of competition means that price discovery through market forces was bypassed, potentially leading to less favorable pricing for the government compared to a competitive scenario.
Taxpayer Impact: For taxpayers, a sole-source award means the government did not leverage competitive pressures to secure the lowest possible price for this essential service, potentially resulting in higher overall expenditure.
Public Impact
The primary beneficiary is the Paducah Plant, ensuring continuous operation through reliable electric power. Services delivered include the provision of essential electricity, crucial for the plant's functions. Geographic impact is localized to the Paducah, Kentucky area where the plant is situated. Workforce implications are indirect, supporting the operational staff at the plant through uninterrupted service.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price competition, potentially increasing costs for taxpayers.
- Long contract duration (nearly 18 years) locks in terms, reducing flexibility for renegotiation.
- Lack of transparency in pricing due to non-competitive nature.
- Potential for vendor lock-in given the critical infrastructure nature of the service.
Positive Signals
- Ensures stable and reliable electric power supply to a critical federal facility.
- Long-term contract provides predictability for both the government and the contractor.
- Contractor has a sustained relationship, potentially leading to deep understanding of facility needs.
Sector Analysis
The energy sector, particularly electric power provision, is a critical component of national infrastructure. Contracts for supplying power to federal facilities are substantial and often long-term due to the continuous nature of energy demand. This contract fits within the broader category of utility services, which can range from local distribution to large-scale power generation and transmission. Comparable spending benchmarks would involve analyzing other large federal power purchase agreements or utility service contracts.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the contractor, Electric Energy, Inc., is likely a larger entity given the scale of the contract. There is no explicit information regarding subcontracting plans for small businesses within this award, suggesting limited direct impact on the small business ecosystem for this specific contract.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of Energy (DOE), specifically the agency responsible for the Paducah Plant's operations. Accountability measures would be embedded in the contract's terms and conditions, focusing on reliable power delivery and adherence to agreed-upon rates. Transparency is limited due to the sole-source nature, but contract award details are publicly available. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract.
Related Government Programs
- Department of Energy Utility Services
- Federal Power Purchase Agreements
- Paducah Gaseous Diffusion Plant Operations
- Critical Infrastructure Energy Supply
Risk Flags
- Sole-source award
- Long-term contract duration
- Lack of competitive bidding
- Potential for above-market pricing
Tags
energy, department-of-energy, paducah, kentucky, definitive-contract, not-available-for-competition, sole-source, utility-services, critical-infrastructure, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $660.4 million to ELECTRIC ENERGY, INC.. ELECTRIC POWER FOR PADUCAH PLANT
Who is the contractor on this award?
The obligated recipient is ELECTRIC ENERGY, INC..
Which agency awarded this contract?
Awarding agency: Department of Energy (Department of Energy).
What is the total obligated amount?
The obligated amount is $660.4 million.
What is the period of performance?
Start: 1999-12-15. End: 2017-05-31.
What is the historical spending pattern for electric power at the Paducah Plant prior to this contract?
Detailed historical spending data prior to this specific $660 million contract is not provided in the given data. However, the contract's start date of December 15, 1999, and end date of May 31, 2017, indicate an 18-year period of consistent electric power provision by Electric Energy, Inc. The total value suggests a significant and sustained annual expenditure. To understand historical patterns, one would need to examine prior contracts or internal DOE energy expenditure records for the Paducah Plant, looking for trends in volume, pricing, and supplier changes over time.
How does the annual cost of this contract compare to commercial rates for similar electricity volumes?
The provided data does not include specific annual costs or electricity volumes, only the total contract value of $660 million over approximately 18 years. This averages to about $36.7 million per year. To compare with commercial rates, we would need to know the kilowatt-hour (kWh) consumption of the Paducah Plant and the contracted price per kWh. Without this granular data, a direct comparison to commercial rates is not feasible. However, given the sole-source nature, it is plausible that the rate might be higher than what could be achieved through competitive bidding in the commercial market.
What specific risks are associated with a sole-source award for critical infrastructure like the Paducah Plant?
A primary risk of a sole-source award for critical infrastructure is the lack of competitive pressure, which can lead to inflated prices and reduced value for money. This can result in higher costs for taxpayers. Another risk is vendor lock-in, where the government becomes dependent on a single provider, potentially limiting future negotiation leverage or the ability to switch to more cost-effective solutions. Furthermore, without competitive benchmarking, it can be harder to identify inefficiencies or opportunities for cost savings. The absence of multiple bidders also reduces the pool of potential solutions and innovations that might be brought to bear on the service provision.
What performance metrics were likely included in this long-term contract?
While specific performance metrics are not detailed, long-term contracts for critical services like electric power typically include metrics related to reliability, availability, and quality of service. For electricity, this would likely involve uptime percentages, frequency and duration of outages, voltage stability, and adherence to delivery schedules. Penalties for failing to meet these metrics and potential incentives for exceeding them are common. The contract would also likely specify reporting requirements for the contractor to demonstrate compliance with these performance standards.
What is the track record of Electric Energy, Inc. in providing similar services?
The data indicates that Electric Energy, Inc. was the sole provider of electric power to the Paducah Plant for the duration of this contract (1999-2017). This long tenure suggests a consistent ability to meet the plant's power needs over an extended period. Without further information on contract performance history, customer satisfaction, or any disputes, it's difficult to provide a comprehensive assessment of their track record. However, being awarded and fulfilling such a long-term, critical contract implies a level of capability and reliability recognized by the Department of Energy.
How does the $660 million total contract value translate to annual spending for the Department of Energy?
The total contract value of $660,044,835 was awarded over a period of approximately 18 years and 5.5 months (from December 15, 1999, to May 31, 2017). This duration is roughly 6,577 days or about 216 months. Dividing the total value by the duration in years gives an average annual spending of approximately $36.7 million ($660,044,835 / 17.46 years). This figure represents the average annual expenditure for electric power for the Paducah Plant under this specific contract.
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
Pricing Type: COST NO FEE (S)
Contractor Details
Parent Company: Ameren Corporation (UEI: 364138990)
Address: 2100 PORTLAND RD, JOPPA, IL, 62953
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $373,959,359
Exercised Options: $373,959,359
Current Obligation: $660,448,359
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Timeline
Start Date: 1999-12-15
Current End Date: 2017-05-31
Potential End Date: 2017-05-31 00:00:00
Last Modified: 2016-07-27
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