NASA's $105M electric service contract for LARC and LAFB awarded to Virginia Electric & Power Co
Contract Overview
Contract Amount: $104,888,975 ($104.9M)
Contractor: Virginia Electric & Power CO
Awarding Agency: National Aeronautics and Space Administration
Start Date: 2000-01-20
End Date: 2008-11-30
Contract Duration: 3,237 days
Daily Burn Rate: $32.4K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Other
Official Description: ELECTRIC SERVICE FOR LARC AND LAFB
Place of Performance
Location: HAMPTON, HAMPTON (CITY) County, VIRGINIA, 23681
State: Virginia Government Spending
Plain-Language Summary
National Aeronautics and Space Administration obligated $104.9 million to VIRGINIA ELECTRIC & POWER CO for work described as: ELECTRIC SERVICE FOR LARC AND LAFB Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Long contract duration of over 8 years suggests potential for price escalation. 3. No small business set-aside indicates limited direct benefit to small businesses. 4. Firm Fixed Price contract type offers some cost certainty but may not reflect market fluctuations. 5. The contract covers essential utility services, a critical operational need. 6. Awarded by NASA, a civilian agency with a focus on research and development.
Value Assessment
Rating: fair
The contract value of approximately $105 million over its duration represents a significant commitment for essential utility services. Benchmarking this price is challenging without specific kilowatt-hour usage data or comparable utility contracts for similar large federal facilities. However, the lack of competition suggests that the pricing may not have been subjected to the most rigorous market testing, potentially leading to a less favorable price than if it were competed.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning Virginia Electric & Power Co. was the only vendor considered. This approach is typically used when only one source is capable of providing the required service, often due to geographic or infrastructure limitations. The absence of multiple bidders means there was no direct price negotiation or comparison against competing offers, which can limit the government's ability to secure the lowest possible price.
Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competitive bidding. Without a competitive process, there is less assurance that the price reflects the best value achievable in the market.
Public Impact
Provides essential electricity to NASA's Langley Research Center (LARC) and Langley Air Force Base (LAFB). Ensures continuous operations for critical research, development, and military functions at these facilities. Supports the workforce at both installations by providing reliable power for daily operations. Geographic impact is localized to the Hampton Roads area of Virginia where the facilities are located.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pressure on pricing.
- Long contract duration could lead to above-market rates if energy prices fluctuate significantly.
- Lack of transparency in the sole-source justification process.
Positive Signals
- Ensures reliable and continuous electric service, critical for NASA's mission.
- Firm Fixed Price contract provides budget certainty for the agency.
- Virginia Electric & Power Co. is an established utility provider with existing infrastructure.
Sector Analysis
The energy sector, specifically utility services, is characterized by regulated monopolies or oligopolies in many geographic areas. Federal agencies often rely on established utility providers for essential services like electricity. The market size for federal utility contracts is substantial, but individual contracts are often dictated by the location and infrastructure of government facilities. This contract fits within the broader category of essential services procurement for government operations.
Small Business Impact
This contract did not include a small business set-aside, and there is no indication of subcontracting requirements for small businesses. Therefore, this specific award is unlikely to have a direct positive impact on the small business ecosystem. The focus appears to be on securing essential utility services from an incumbent provider.
Oversight & Accountability
Oversight for this contract would primarily fall under NASA's contracting officer and administrative contracting officer. Accountability measures are inherent in the contract terms, particularly the firm fixed price structure. Transparency is limited due to the sole-source nature of the award, with justifications typically being internal documents. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.
Related Government Programs
- Federal Utility Contracts
- NASA Procurement
- Energy Services Contracts
- Base Operations Support Contracts
Risk Flags
- Sole-source award may limit price competition.
- Long contract duration increases exposure to market fluctuations.
- Lack of small business participation.
Tags
energy, nasa, virginia, sole-source, large-contract, utility-services, firm-fixed-price, electric-power-distribution, research-and-development, defense-support
Frequently Asked Questions
What is this federal contract paying for?
National Aeronautics and Space Administration awarded $104.9 million to VIRGINIA ELECTRIC & POWER CO. ELECTRIC SERVICE FOR LARC AND LAFB
Who is the contractor on this award?
The obligated recipient is VIRGINIA ELECTRIC & POWER CO.
Which agency awarded this contract?
Awarding agency: National Aeronautics and Space Administration (National Aeronautics and Space Administration).
What is the total obligated amount?
The obligated amount is $104.9 million.
What is the period of performance?
Start: 2000-01-20. End: 2008-11-30.
What is the historical spending pattern for electric services at LARC and LAFB prior to this contract?
Historical spending data prior to this contract would provide crucial context for evaluating the $105 million award. Without specific figures, it's difficult to ascertain if this represents an increase, decrease, or stable spending trend. Analyzing previous contract values, durations, and any adjustments made over time would help determine if the current award is in line with historical costs or if there have been significant shifts. Understanding past spending also sheds light on the consistency of service needs and potential changes in energy consumption patterns at the facilities.
How does the per-unit cost of electricity under this contract compare to other federal facilities in Virginia or similar climates?
Comparing the per-unit cost of electricity (e.g., cost per kilowatt-hour) under this contract to similar federal facilities in Virginia or comparable climates is essential for value assessment. However, such a comparison is difficult without knowing the specific usage rates and the exact pricing structure (e.g., tiered pricing, demand charges) within the firm fixed price. If Virginia Electric & Power Co. is the sole provider in the area, direct comparison might be limited. Benchmarking against average commercial or industrial rates in the region, adjusted for federal purchasing power, could offer some insight, but a true apples-to-apples comparison requires detailed usage data and rate structures from comparable contracts.
What specific justifications were provided for awarding this contract on a sole-source basis?
The justification for a sole-source award typically rests on specific criteria outlined in federal acquisition regulations (FAR). For electric services, common justifications include the existence of a natural monopoly where only one provider has the necessary infrastructure (e.g., power lines) to serve the location, or that the existing infrastructure is so integrated with the facility that switching providers would be prohibitively expensive or disruptive. Another possibility is that the contract was a follow-on to a previous sole-source award where the original justification still holds. A detailed review of the Justification and Approval (J&A) document associated with this contract would reveal the precise reasons cited by NASA.
What are the potential risks associated with a sole-source contract of this magnitude and duration?
The primary risks associated with a sole-source contract of this magnitude and duration include potential overpayment due to lack of competition, reduced incentive for the contractor to innovate or improve efficiency, and vulnerability to price increases if market conditions change unfavorably. The long duration (over 8 years) increases the exposure to these risks. Furthermore, reliance on a single provider can create operational risks if that provider experiences financial difficulties or service disruptions. The government has less leverage to negotiate favorable terms or pricing adjustments over the life of such a long-term, non-competitive agreement.
What mechanisms are in place to ensure contractor performance and service quality given the sole-source nature?
Despite the sole-source award, performance and service quality are typically managed through the contract's terms and conditions, including service level agreements (SLAs), performance standards, and inspection clauses. NASA's contracting officer and technical representatives would monitor Virginia Electric & Power Co.'s adherence to these requirements. Regular performance reviews, site inspections, and customer feedback mechanisms (e.g., from LARC and LAFB personnel) would be employed. Penalties for non-performance or failure to meet standards, as defined in the contract, would also serve as an incentive for the contractor to maintain quality.
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 COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Dominion Energy, Inc. (UEI: 101715035)
Address: 171 ELDEN ST, HERNDON, VA, 11
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $104,888,975
Exercised Options: $104,888,975
Current Obligation: $104,888,975
Parent Contract
Parent Award PIID: GS00P98BSD0086
IDV Type: IDC
Timeline
Start Date: 2000-01-20
Current End Date: 2008-11-30
Potential End Date: 2008-11-30 00:00:00
Last Modified: 2010-03-13
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