GSA Spends $26.9M on Natural Gas for DC Plant Amidst Firm Fixed Price Contract

Contract Overview

Contract Amount: $26,925,765 ($26.9M)

Contractor: NRG Business Marketing LLC

Awarding Agency: General Services Administration

Start Date: 2014-10-01

End Date: 2016-09-30

Contract Duration: 730 days

Daily Burn Rate: $36.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: SUPPLY OF NATURAL GAS SERVICES FOR GSA, CENTREAL HEATING REFRIGERATION AND CO-GENERATION PLANT AT 13TH&C STREETS, SW, WASHINGTON, DC 20407. IGF::CT::IGF

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20407

State: District of Columbia Government Spending

Plain-Language Summary

General Services Administration obligated $26.9 million to NRG BUSINESS MARKETING LLC for work described as: SUPPLY OF NATURAL GAS SERVICES FOR GSA, CENTREAL HEATING REFRIGERATION AND CO-GENERATION PLANT AT 13TH&C STREETS, SW, WASHINGTON, DC 20407. IGF::CT::IGF Key points: 1. The contract for natural gas services at a key GSA facility in Washington D.C. totals $26.9 million. 2. NRG BUSINESS MARKETING LLC was awarded the contract under full and open competition. 3. The firm fixed price contract structure locks in costs, potentially limiting upside for the government if market prices fall. 4. The natural gas distribution sector is subject to volatile market prices, posing a risk to long-term cost predictability.

Value Assessment

Rating: fair

The contract value of $26.9M over two years for natural gas services appears substantial. Benchmarking against similar large-scale utility contracts is necessary to determine if the pricing is competitive, especially given the firm fixed price structure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, which generally promotes competitive pricing. However, the firm fixed price (FFP) contract type means the government bears the risk of price increases, and may not fully benefit from potential price decreases.

Taxpayer Impact: Taxpayers are exposed to potential price volatility under the firm fixed price contract, as the government is obligated to pay the agreed-upon rate regardless of market fluctuations.

Public Impact

Ensures continuous heating and cooling for a critical federal building in the nation's capital. Supports the operational needs of the General Services Administration's Public Buildings Service. The contract's fixed price nature provides budget certainty for the agency, but shields NRG Business Marketing LLC from market downturns.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Firm Fixed Price contract exposes government to market price risk.
Natural gas prices are inherently volatile.
Lack of small business participation noted.

Positive Signals

Awarded under full and open competition.
Contract provides essential utility services.
Clear contract duration and delivery location.

Sector Analysis

This contract falls under the energy sector, specifically natural gas distribution. Spending benchmarks for utility services can vary significantly based on location, facility size, and market conditions. The $26.9M value for a two-year period for a central plant suggests a significant operational scale.

Small Business Impact

The data indicates that this contract was not awarded to small businesses (ss: false, sb: false). There is no specific set-aside for small businesses mentioned, suggesting a missed opportunity for small business participation in this significant federal contract.

Oversight & Accountability

The General Services Administration (GSA) is responsible for managing federal buildings and procurement. Oversight would involve monitoring contract performance, ensuring compliance with terms, and managing any potential disputes or changes related to the natural gas supply.

Related Government Programs

Natural Gas Distribution
General Services Administration Contracting
Public Buildings Service Programs

Risk Flags

Price volatility risk due to FFP contract.
Potential for overpayment if market prices decline.
No small business participation.
Dependence on a single supplier for critical utility.
Contract duration limits flexibility for market adjustments.

Frequently Asked Questions

What is this federal contract paying for?

General Services Administration awarded $26.9 million to NRG BUSINESS MARKETING LLC. SUPPLY OF NATURAL GAS SERVICES FOR GSA, CENTREAL HEATING REFRIGERATION AND CO-GENERATION PLANT AT 13TH&C STREETS, SW, WASHINGTON, DC 20407. IGF::CT::IGF

Who is the contractor on this award?

The obligated recipient is NRG BUSINESS MARKETING LLC.

Which agency awarded this contract?

Awarding agency: General Services Administration (Public Buildings Service).

What is the total obligated amount?

The obligated amount is $26.9 million.

What is the period of performance?

Start: 2014-10-01. End: 2016-09-30.

What is the potential financial exposure for the government due to the firm fixed price contract in a volatile natural gas market?

The firm fixed price (FFP) contract means the government is locked into paying the agreed-upon rate for natural gas, regardless of market fluctuations. If natural gas prices decrease significantly during the contract period, the government will overpay compared to market rates. Conversely, if prices rise sharply, the government is protected from those increases. The total exposure depends on the magnitude and duration of price changes over the 730-day contract term.

How does the lack of small business participation impact the overall value and competition for this contract?

While the contract was awarded under full and open competition, the absence of small business involvement suggests potential limitations in reaching a broader supplier base. Federal policy encourages small business participation. A lack of small business awards might indicate that the contract requirements were not conducive to small business capabilities or that outreach efforts were insufficient, potentially missing out on innovative solutions or competitive pricing small businesses could offer.

What are the key performance indicators (KPIs) used to measure the effectiveness of this natural gas supply contract?

Effectiveness would likely be measured by the consistent and reliable delivery of natural gas meeting specified quality standards to the GSA plant. Key performance indicators could include on-time delivery rates, adherence to pressure and purity specifications, and responsiveness to any supply disruptions or emergency needs. Maintaining the agreed-upon fixed price throughout the contract term without disputes would also be a measure of effectiveness from a financial management perspective.

Industry Classification

NAICS: Utilities › Natural Gas Distribution › Natural Gas Distribution

Product/Service Code: UTILITIES AND HOUSEKEEPING › UTILITIES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: TWO STEP

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Centrica PLC (UEI: 778557603)

Address: 1 HESS PLZ, WOODBRIDGE, NJ, 06

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

Financial Breakdown

Contract Ceiling: $26,925,765

Exercised Options: $26,925,765

Current Obligation: $26,925,765

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00P13BSC0994

IDV Type: IDC

Timeline