HUD's $22.2M electric service contract with Potomac Electric Power Co. awarded without competition

Contract Overview

Contract Amount: $22,245,950 ($22.2M)

Contractor: Potomac Electric Power CO

Awarding Agency: Department of Housing and Urban Development

Start Date: 2008-09-27

End Date: 2018-09-26

Contract Duration: 3,651 days

Daily Burn Rate: $6.1K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: PROVIDE ELECTRIC SERVICE AT HUD HQ BUILDING

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20004

State: District of Columbia Government Spending

Plain-Language Summary

Department of Housing and Urban Development obligated $22.2 million to POTOMAC ELECTRIC POWER CO for work described as: PROVIDE ELECTRIC SERVICE AT HUD HQ BUILDING Key points: 1. The contract represents a significant, long-term commitment for essential utility services. 2. Lack of competition raises concerns about potential overpayment and limited market responsiveness. 3. The extended duration of the contract (nearly 10 years) suggests a stable but potentially inflexible arrangement. 4. Performance context is limited due to the nature of the service, focusing on reliability. 5. This contract falls within the 'Utilities' sector, a critical but often non-competitive area for government facilities. 6. The firm fixed-price structure provides cost certainty but may not capture potential savings from market fluctuations.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its utility nature and lack of competition. While the total value of $22.2 million over nearly 10 years averages to approximately $2.2 million annually, direct comparisons to similar sole-source utility contracts are difficult without specific service level agreements and local market data. The absence of competitive bidding means there's no market-driven validation of whether this price represents optimal value for money. However, for essential services like electricity, ensuring reliable supply is paramount, which may justify a premium over highly competitive markets.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning Potomac Electric Power Co. was the only vendor considered. This typically occurs when a service is only available from a single provider, such as a local utility company for a specific geographic area. The lack of competition means there was no opportunity for other vendors to bid, potentially limiting price discovery and the government's ability to secure the most cost-effective solution through market forces.

Taxpayer Impact: Taxpayers may have paid a higher price than necessary due to the absence of competitive bidding. The government missed the opportunity to leverage market competition to drive down costs for essential electricity services.

Public Impact

Federal employees and operations at HUD headquarters in Washington D.C. benefit from reliable electricity. Essential government functions are supported by the continuous provision of electricity. The geographic impact is localized to the District of Columbia, specifically the HUD HQ building. Workforce implications are minimal, as this contract primarily covers utility provision rather than direct employment generation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price negotiation and potential savings.
Long contract duration (nearly 10 years) may not adapt to changing market conditions or technological advancements.
Lack of competition hinders transparency in pricing and service level justification.

Positive Signals

Ensures continuous and reliable provision of essential utility services.
Firm fixed-price contract offers budget certainty for the agency.
Awarding to an established utility provider likely minimizes risk of service disruption.

Sector Analysis

This contract falls within the Utilities sector, specifically focusing on electricity supply. The market for utility services, particularly electricity, is often characterized by natural monopolies or heavily regulated environments, especially at the local level. Government agencies rely on these services for their facilities, and contracts are frequently awarded to the sole provider in a given geographic area. Benchmarking is difficult as utility rates are often regulated, but the scale of this contract suggests it covers a significant facility.

Small Business Impact

This contract does not appear to involve small business set-asides or subcontracting opportunities. As a sole-source award to a large utility provider, the focus is on securing essential services rather than fostering small business participation. There are no indications of specific provisions aimed at benefiting the small business ecosystem through this particular contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Housing and Urban Development's contracting and financial management offices. Accountability measures would focus on ensuring the continuous and reliable delivery of electricity as per the contract terms. Transparency is limited due to the sole-source nature, but the agency is responsible for justifying the necessity and reasonableness of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Federal Building Utility Contracts
Government Facility Energy Procurement
District of Columbia Utility Services

Risk Flags

Sole-source award
Long contract duration
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Housing and Urban Development awarded $22.2 million to POTOMAC ELECTRIC POWER CO. PROVIDE ELECTRIC SERVICE AT HUD HQ BUILDING

Who is the contractor on this award?

The obligated recipient is POTOMAC ELECTRIC POWER CO.

Which agency awarded this contract?

Awarding agency: Department of Housing and Urban Development (Department of Housing and Urban Development).

What is the total obligated amount?

The obligated amount is $22.2 million.

What is the period of performance?

Start: 2008-09-27. End: 2018-09-26.

What is the historical spending pattern for electric services at HUD HQ?

Historical spending data for electric services at HUD HQ prior to this contract award is not directly available within the provided data. However, this contract, awarded in 2008 and ending in 2018, represents a significant expenditure of $22.2 million over its duration. This averages to approximately $2.2 million per year. Understanding past spending would require accessing prior contract awards or utility bills for the facility. The long duration and sole-source nature suggest a consistent need and potentially stable pricing over the contract period, though without competitive benchmarks, it's hard to assess if this spending was optimal.

How does the annual cost of this contract compare to similar federal facilities?

Comparing the annual cost of approximately $2.2 million for this contract to similar federal facilities is challenging without specific data on facility size, energy consumption, and location-specific utility rates. However, for a large federal headquarters building, this figure might be within a reasonable range, assuming significant energy demands. The lack of competition prevents a direct value-for-money comparison against other potential providers. To conduct a robust comparison, one would need to analyze energy usage data (kWh), peak demand (kW), and the regulated tariff rates applicable to large commercial consumers in the District of Columbia during the contract period.

What are the risks associated with a sole-source utility contract of this duration?

The primary risks associated with a sole-source utility contract of this duration (nearly 10 years) include potential overpayment due to the absence of competitive pressure, inflexibility in adapting to market price changes or technological advancements, and a reduced incentive for the contractor to innovate or offer superior service. Taxpayers may bear a higher cost than if the contract were competed. Furthermore, if the utility provider faces financial instability or operational issues, the government has limited recourse beyond the single provider. The long term also means the agency is locked into a specific provider, potentially missing out on better rates or service offerings that might emerge in the market.

What performance metrics were likely used to evaluate Potomac Electric Power Co. under this contract?

Given the nature of providing electricity, performance metrics likely focused on reliability, continuity of service, and adherence to safety standards. Key indicators would include uptime percentages, response times to outages, adherence to voltage and frequency standards, and compliance with all relevant electrical codes and regulations. While the contract is firm fixed-price, ensuring the consistent delivery of power is paramount. The agency would monitor service reliability and potentially track any service interruptions or deviations from expected performance, although specific quantitative metrics are not detailed in the provided data.

Could this contract have been competed, and what would be the benefits?

Whether this contract could have been competed depends heavily on the specific regulatory and infrastructure landscape of electricity provision in the District of Columbia at the time of award. In many jurisdictions, electricity distribution is a regulated monopoly, making true competition for the physical delivery of power impossible. However, if deregulation or alternative energy sourcing options were available, competition might have been possible. The benefits of competition would include potentially lower prices through bidding, greater transparency in pricing structures, and the opportunity to negotiate service level agreements that better meet the agency's needs. It could also drive innovation and efficiency from providers.

Industry Classification

NAICS: Utilities › Water, Sewage and Other Systems › Steam and Air-Conditioning Supply

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: Exelon Corporation (UEI: 001807150)

Address: 701 9TH STREET NW, WASHINGTON, DC, 20068

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $22,245,950

Exercised Options: $22,245,950

Current Obligation: $22,245,950

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline