Interior Department's $76M electrical energy contract for Arizona irrigation project shows fair value

Contract Overview

Contract Amount: $76,275,032 ($76.3M)

Contractor: Barclays PLC

Awarding Agency: Department of the Interior

Start Date: 2007-12-21

End Date: 2011-08-31

Contract Duration: 1,349 days

Daily Burn Rate: $56.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: PURCHASE OF ELECTRICAL ENERGY FOR SAN CARLOS IRRIGATION PROJECT, COOLIDGE, ARIZONA.

Place of Performance

Location: COOLIDGE, PINAL County, ARIZONA, 85128

State: Arizona Government Spending

Plain-Language Summary

Department of the Interior obligated $76.3 million to BARCLAYS PLC for work described as: PURCHASE OF ELECTRICAL ENERGY FOR SAN CARLOS IRRIGATION PROJECT, COOLIDGE, ARIZONA. Key points: 1. The contract secured electrical energy for a critical irrigation project, ensuring operational continuity. 2. Competition was robust, with multiple bidders likely contributing to a competitive price. 3. The fixed-price structure limits cost overruns for the government. 4. Contract duration was substantial, indicating a long-term need for services. 5. The award was made by the Bureau of Indian Affairs, highlighting support for tribal infrastructure. 6. Geographic focus on Arizona aligns with the project's location and operational needs.

Value Assessment

Rating: good

The contract's total value of approximately $76.3 million over its duration suggests a significant investment in essential services. Benchmarking against similar large-scale energy procurement contracts for infrastructure projects indicates that the pricing was likely competitive, especially given the full and open competition. The firm fixed-price nature of the contract provides cost certainty for the Department of the Interior, mitigating risks associated with fluctuating energy markets. While specific per-unit cost data is not provided, the overall value appears reasonable for the scale and duration of the service.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of multiple bidders, as suggested by the award notice, typically fosters a competitive environment. This process allows for price discovery and encourages contractors to offer their best pricing and terms to win the award. The level of competition is a positive indicator for achieving value for taxpayer money.

Taxpayer Impact: Full and open competition generally leads to more favorable pricing for taxpayers by ensuring a wide range of offers are considered, driving down costs through market forces.

Public Impact

The San Carlos Irrigation Project in Arizona benefits from a reliable and continuous supply of electrical energy. Agricultural operations within the project's service area are supported, contributing to food production. Local communities and tribal lands in the Coolidge, Arizona region benefit from the infrastructure's continued operation. The contract supports jobs related to the operation and maintenance of the irrigation project and its power supply.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases in future contract renewals if market conditions change significantly.
Dependence on a single energy provider for a critical infrastructure project could pose a risk if not managed proactively.
Ensuring long-term energy infrastructure maintenance and upgrades are adequately funded beyond the current contract.

Positive Signals

The firm fixed-price contract provides budget certainty and protects against market volatility.
Full and open competition suggests a competitive award process, likely resulting in favorable pricing.
The contract supports a vital agricultural and water management infrastructure, contributing to regional stability.
Awarded by the Bureau of Indian Affairs, indicating support for essential services on tribal lands.

Sector Analysis

This contract falls within the Energy sector, specifically focusing on the procurement of electrical power. The market for large-scale energy supply contracts is often characterized by established utility providers and specialized energy service companies. The value of this contract, approximately $76.3 million, is substantial and reflects the significant energy demands of major infrastructure projects like the San Carlos Irrigation Project. Comparable spending benchmarks would typically involve other large federal or state contracts for utility services to public infrastructure.

Small Business Impact

Information regarding small business participation, including set-asides or subcontracting goals, was not explicitly detailed in the provided data. However, for a contract of this nature and scale, it is common for prime contractors to engage small businesses for specialized services or supplies. Further investigation into the subcontracting plan would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Interior's Bureau of Indian Affairs, the awarding agency. Standard oversight mechanisms would include contract performance monitoring, financial audits, and compliance checks. Transparency is generally facilitated through contract databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.

Related Government Programs

Bureau of Indian Affairs Operations
Bureau of Indian Education Operations
Water Resource Management Projects
Federal Energy Procurement
Irrigation Infrastructure Support

Risk Flags

Contract Duration
Contract Value
Contract Type
Competition Level

Frequently Asked Questions

What is this federal contract paying for?

Department of the Interior awarded $76.3 million to BARCLAYS PLC. PURCHASE OF ELECTRICAL ENERGY FOR SAN CARLOS IRRIGATION PROJECT, COOLIDGE, ARIZONA.

Who is the contractor on this award?

The obligated recipient is BARCLAYS PLC.

Which agency awarded this contract?

Awarding agency: Department of the Interior (Bureau of Indian Affairs and Bureau of Indian Education).

What is the total obligated amount?

The obligated amount is $76.3 million.

What is the period of performance?

Start: 2007-12-21. End: 2011-08-31.

What was the specific nature of the electrical energy services procured under this contract?

The contract, "PURCHASE OF ELECTRICAL ENERGY FOR SAN CARLOS IRRIGATION PROJECT, COOLIDGE, ARIZONA," specifically procured electrical power to support the operations of the San Carlos Irrigation Project. This likely includes powering pumps for water distribution, maintaining water levels, operating control systems, and supporting other essential functions required for the irrigation of agricultural lands in the region. The service is crucial for the continued viability of the project and the agricultural activities it supports.

How does the contract's duration of 1349 days compare to typical energy procurement contracts for similar projects?

A duration of 1349 days, approximately 3.7 years, is a substantial period for an energy procurement contract, especially for a fixed-price agreement. Typical energy contracts can range from one to five years, with longer durations often negotiated for large, critical infrastructure projects where stability and predictable pricing are paramount. This duration suggests a long-term commitment by the Bureau of Indian Affairs to ensure consistent energy supply for the San Carlos Irrigation Project, balancing the benefits of price stability against the potential for market shifts over time.

What does the 'BARCLAYS PLC' designation as the contractor imply about the nature of this award?

Barclays PLC is a multinational universal bank. Its designation as the contractor, particularly for the 'PURCHASE OF ELECTRICAL ENERGY' contract, suggests that this award might not be for direct energy generation or distribution by Barclays itself. Instead, it could represent a financial instrument, such as a power purchase agreement facilitated or financed by Barclays, or potentially a broader energy services contract where Barclays acts as an intermediary or financier. Further clarification on the specific role of Barclays PLC in fulfilling this contract would be beneficial.

What are the potential risks associated with a firm fixed-price contract for electrical energy over nearly four years?

While firm fixed-price contracts offer budget certainty, a significant risk over a nearly four-year term for electrical energy is the potential for market price fluctuations. If energy prices were to decrease substantially after the contract was awarded, the government would be locked into paying a higher price than the prevailing market rate. Conversely, if prices were to rise dramatically, the contractor might face challenges in fulfilling the contract at the agreed-upon price, potentially leading to disputes or performance issues, though the risk is primarily on the contractor in this structure.

Can the $76.3 million total contract value be broken down into annual spending or per-unit costs for better analysis?

The provided data indicates a total contract value of $76,275,031.57 over a duration of 1349 days. To determine annual spending, we can divide the total value by the approximate number of years (1349 days / 365.25 days/year ≈ 3.7 years), resulting in an average annual spending of roughly $20.6 million. However, this is an average and does not account for potential variations in spending throughout the contract period. Per-unit cost analysis (e.g., cost per kilowatt-hour) cannot be performed without data on the total energy consumed over the contract's life.

What is the significance of the contract being awarded by the Bureau of Indian Affairs (BIA)?

The award by the Bureau of Indian Affairs (BIA) signifies that this contract is directly related to supporting the infrastructure and operational needs of Native American tribes and their communities. The San Carlos Irrigation Project serves tribal lands, and the BIA's involvement underscores its mission to provide essential services and manage resources for these communities. This highlights the contract's role in fulfilling federal trust responsibilities and supporting economic and agricultural development within tribal territories.

Industry Classification

NAICS: Utilities › Electric Power Generation, Transmission and Distribution › Electric Power Distribution

Product/Service Code: UTILITIES AND HOUSEKEEPING › UTILITIES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: ALTERNATIVE SOURCES

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1 CHURCHILL PL, LONDON

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $76,275,032

Exercised Options: $76,275,032

Current Obligation: $76,275,032

Contract Characteristics

Multi-Year Contract: Yes

Timeline